Pepsi is investing in a $1 billion part of its business to avoid the retail apocalypse that wrecked Sears and Macy's (PEP)

pulse

February 13, 2018 3:57 PM

PepsiCo is investing in e-commerce to avoid the downward spiral that is dooming retailers like Sears and Macy's.

E-commerce already accounts for roughly $1 billion in Pepsi's annual retail sales.
Analysts have said that

PepsiCo is investing in e-commerce to avoid the downward spiral that is dooming retailers like Sears and Macy's.

On Tuesday, the beverage and snack industry giant announced it is investing some of its savings from the new GOP tax plan in its e-commerce business, as well as in digital skills and brand marketing.

Impulse buys make up roughly 30% of overall beverage sales, Ali Dibadj, an analyst at Bernstein, said at Beverage Digest's Future Smarts conference in New York in December. As people increasingly shop online, those sales are in danger.

"That's something that's not being addressed right now," Dibadj said.

Without customers grabbing a Diet Coke while checking out at Walmart or a two-liter bottle of Pepsi at the grocery store, the beverage industry could be in trouble. As sales of soft drinks by volume have dropped for 12 consecutive years in the US, companies like Coca-Cola and PepsiCo do not want to risk losing an opportunity to get their products in customers' hands.

"I don't think most beverage companies are particularly well-prepared" for the rise of e-commerce, Caroline Levy, a senior analyst at Macquarie Capital, said at the conference.

Dibadj added: "I think the discourse around e-commerce remains an antiquated discourse ... On average, they don't know what they're doing to capture impulse, but they will out-buy smaller brands."

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