According to a recent study by Catalina, the consumer packaged goods (CPG) market is in turmoil. Market share for the top 100 firms is quickly being lost to store and boutique brands. Further, the top 100 CPG companies have seen their sales decrease by .8% over the past year. Despite sustained growth, the food and beverage sector hasn’t always managed to maintain profit levels. A number of forces including acquisitions and mergers, financial volatility, and changing consumer demands are sending established companies into upheaval. Strategic planning and digital technologies are creating new opportunities for growth along the value change in this mature market sector. Here’s a closer look at what companies need to know about how digital technology is creating new opportunities along the value chain and how to make the most of new digital technology in the food industry.
What’s Happening in the CPG Industry Today
The CPG industry is mature; today’s companies have to work hard to find new spins on classic products, define entirely new product categories, and keep up with rapidly shifting customer preferences. Growth is about inventing opportunities as much as finding and serving unmet needs in the marketplace. Connected consumers with an increased focus on health, transparency in sourcing, and convenience in delivery are influencing the retail landscape. A small but growing segment of the population – especially affluent, urban buyers – are purchasing their groceries online. Buyers who are in the brick and mortar retailers have more options and price visibility than ever before. In other words, the CPG landscape is changing at both the supply side and retail end of the process.
As a result, companies have taken big strategic moves. They’re shedding unprofitable brands and products. There’s a focused movement on mergers, acquisitions, and playing from a place of strength. Many brands are moving in the opposite direction from consolidation, further diversifying their brands through private label and boutique brand strategies. However, the biggest upset is coming in the form of technology, which is impacting everything from how the supply chain is managed to gathering information about customers at the point of sale. For companies anxious to capture the benefits of technology in mature food markets, there are a range of technology categories impacting performance throughout the value chain.
Capturing the Benefits of Digital Technology in the Food Industry
Streamline CPG supply chain management with IOT: The food industry’s supply chain is one of the most complex in business. From sourcing to retail, the food and beverage industry can see dozens of vendors playing a role in bringing products to market. Spoilage, fraud, and other issues cost companies billions of dollars annually and encroach on revenue and profits. Today’s technology – especially smart devices such as the Internet of Things – are giving companies better access to dynamic, responsive information about what’s happening with their products. From the ability to collect temperature and location information about products in transit to smart shelves which let retailers know that it’s time to restock shelves, IOT technologies are helping CPG companies eliminate waste and more effectively manage the supply chain.
Enhanced strategic intelligence helps companies better understand customers: Understanding the customer – and keeping a pulse on fast-changing preferences – is essential. Today’s CPG companies have more tools at their disposal than ever before. Social monitoring tools evaluate brand mentions and online discussions to track whether the general sentiment is positive or negative. Surveys, beacons, and mobile devices are allowing companies to ask questions or passively collect data on what influences consumers’ buying behaviors. Options such as online concept testing and shopper intelligence programs are letting companies see what their competition is doing and its impact on the market. As a result, companies are investing more – and reaping rewards – from a wide variety of data collection approaches. It’s easier than ever before for CPG companies to make their most important strategic decisions informed by the market.
Delivering a better customer experience: Today’s customers have higher standards and expectations than ever before. Technologies are allowing companies to deliver personalized, high-value experiences throughout customer points of action. For example, apps and retargeting technologies are helping companies to better target their advertising to customers’ interest. Beacon-based technologies use the GPS feature of consumers’ phones to relay information on what they’re looking at while they’re in the store and provide relevant, timely promotions and information. Better technology is allowing CPG companies and retailers to diversify how they share information about ingredients, sourcing, and other issues that matter to food consumers. By harnessing technology to deliver a better customer experience, companies are building brand loyalty and ensuring every interaction with customers is on point.
The consumer packaged goods industry – especially the food and beverage segments – is at a critical juncture. Companies are seeing tremendous opportunities from technological innovations. But capturing those benefits requires an understanding of strategic priorities, your customer base, and where the specific opportunities lie for your business. Contact Incito Consulting today to learn more about our work helping leaders with their company’s most important strategic challenges.
Image source: onedollarphotoclub.com