Authors: Kishor Gummaraju
It is almost cliché to say that COVID 19 has accelerated the adoption of digital by consumers and corporations. It has resulted in a fundamental shift in the way consumers shop, the retail environment, the way brands engage with their consumers, and the way CPG companies work. Adapting to this new change in environment is no more a key differentiator but a requirement for survival.
So what exactly is the shift?
Let’s take each of the areas:
– The way consumers shop: Consumers have had no choice but to adopt online shopping for all their purchase needs. Online retail sales increased by 32.4% in 2020. Intermediaries like Instacart, Uber eats, Deliveroo saw their business soar. Consumers may revert back to stores but certain shoppers will continue to shop online. Omnichannel behavior is here to stay.
– The Retail environment: Every retailer accelerated their shift to providing e-commerce services. Retailers are trying to give their customers an omnichannel experience. Walmart integrated its flagship and grocery mobile app experience to make it easier for customers to shop everything from fresh groceries to apparel, electronics, and more. It also integrated its in-store and online merchandising teams to form a single Omnichannel team. Most large retailers have also started acting like media houses – Walmart Connect, Kroger Precision Marketing, Carrefour Links to name a few.
– The way brands engage with consumers: The shift from traditional to digital media was happening even prior to 2020, however, the last year has accelerated this even further. “In a traditional world, promotions and mass media were the limited touchpoints for brands with their consumers. In a digital world there is an accelerated fragmentation of touchpoints and an increasing demand for personalization”, says Tarun Kataria, Sr. Director of Digital Insights at Mars. He adds “Earlier campaigns run by CPG companies were at best planned on a quarterly or monthly basis, however in a digital environment there is fragmentation not only in terms of the number of channels but also in terms of the time dimension, where decisions are to be taken near real-time”. All this, he says, leads to a significant increase in the number of complex decisions being taken by executives. In addition, the trend of retailers becoming media houses brings in an additional opportunity and complexity in the decisions taken.
– Way CPG companies work: Digital business models necessitate speed of response. The work-from-home environment has driven digitization in a lot more CPG companies. People have learned to collaborate online thus reducing the time taken to roll out initiatives.
While CPG companies did well in the last year to adapt to these shifts, a number of challenges remain. Adapting to this shift is what will separate the winners from the Also-Ran.
What issues does this create?
All the trends mentioned above have resulted in a very significant increase in the variety, complexity, and velocity of decision-making. This presents three key challenges that CPG companies need to overcome:
– Solution challenge: How do you create a common fidelity across decisions being taken:
– Trade decisions are at a PPG Level, while media decisions are at a brand level
– ROI computation varies across every retail partner and investment channel.
– Mindset challenge: In this ever-changing environment there is a need to be more agile and experimentative. There is also a need for multiple parts of the organization – Trade, Marketing, Shopper Marketing, Customer, Supply Chain – to come together. Making this happen will need a change in mindset which will need to be enabled by education, enabling structures, and goal alignment.
– Industrialization challenge: At the end of the day the solution needs to be human-centric. The solution needs to meet the mind of the user across markets, businesses, and categories. Implementing solutions that deliver value at scale requires tools, technical support, and appropriate engagement methodologies.
What are some of the leading practices?
Solution components: Tiger Analytics has helped Mars Foods develop solutions around the Perfect Framework: Perfect Product, Page, Pricing, Assortment, and Marketing. These solution components have helped optimize the ROI of spends across channels by developing appropriate sales attribution models
Continuous Innovation: As Tarun says, the key is to be customer-centric. Which involves designing everything around the consumer. In a digital world, this involves being agile and experimentative. This is something that Mars was able to very successfully establish during the peak of COVID 19. They were able to establish agile teams to respond to the changes in the demand environment and address challenges in product availability. This agility and experimentation have now become very key capabilities.
Scalable solutions: In an evolving space like Omnichannel, investing in proprietary solutions does not have any merit. Solutions need to evolve to meet emerging business needs and need to have the flexibility to accommodate competitive differentiators which are not available to competition for use. Tiger has invested in such Lego blocks which give the required flexibility and speed to market for our clients like Mars.
Omnichannel is a huge area of interest for CPG companies. Catch the full fireside chat between Tarun Kataria and me at the Food & Beverages Digital Connect Conference, where we discussed the various opportunities omnichannel presents CPG companies worldwide here.Tags: AI for CPG CPG Analytics CPG Analytics Trends