No matter what stage of the ever-evolving journey of transformation consumer goods companies are on, 2018 is the year to commit to having a dynamic “moving to modern” agenda that is focused on the goal of unlocking new sources of value.
Here are five trends and predictions facing the consumer goods industry in the year ahead:
1. Some of the CPG powerhouses will begin to scale following the new rules.
Where once multinational CPG companies dominated the market, today, new, small and fast companies are capturing consumers’s attention — and wallets. We are seeing that, now more than ever, competition is between brands and not companies, with consumers increasingly drawn to the multitude of smaller players who are stealing market share from historical leaders. We have also seen disruptors expanding their place in consumer by satisfying unmet, and often unidentified, consumer wants and needs.
Some CPGs have started to adapt to this new world order by building an extended ecosystem through which they can learn from their smaller counterparts. Collaborating with niche players will not only provide an invaluable opportunity to gather insights, it will also provide access to new capabilities and the opportunity to co-create complete consumer solutions. In 2018, the number of CPGs moving in this direction will rise but there will likely be new leaders.
2. Be the “data master” of your categories and market combinations.
To maintain a competitive edge, CPG companies must, on one hand, continue to be the experts in their category and, on the other, be responsive and relevant in meeting consumers’s enduring needs. While retailers have a broad knowledge of shoppers, CPG organizations can compete on depth of knowledge and understanding around specific consumer demands. And in this scenario, knowledge and understanding is power. This implies the next generation of category management, in which the CPG uses its deep consumer insights to extend beyond existing products to expand the definition of categories to serve end-to-end consumer solutions, allowing successful leaders to stay one step ahead of the rest.
3. The home is increasingly the “point of choice” for consumers with voice as the gateway to those choices.
Consumer behavior is notoriously difficult to predict; however, consumers are increasingly willing to try out the latest, greatest, must-have innovations. Voice is the first medium in which we learn to communicate, so is it any wonder that it is now working its way into our homes through myriad devices? We’re seeing a fundamental shift towards the home as the battleground for consumer attention and engagement. For instance, voice ordering is giving busy consumers a level of ease and convenience they’ve never had before. Voice may be the “latest thing” but it won’t be the last. Finding a way to be welcomed into the homes of consumers will be the ultimate test for CPGs in the future.
4. Impulse is everywhere as the new generation of consumers emerge.
The rise of data-driven social campaigns combined with the emergence of a new generation of young consumers, known as Gen Z — who have grown up in a social-first world — will mean that more and more choices will be impulse based. Catering to the demand of the tech-savvy, generation, which seeks instant gratification by demanding same-day delivery of purchases, will require CPG companies to work with their ecosystem partners to create better experiences as well as fast sales and delivery through an omnichannel operation.
5. Collaboration and development of connected ecosystems will help deliver innovation consumers want.
The challenge for CPG companies is to be outstanding at the core business while simultaneously fostering an environment that supports the incubation, experimenting and iterating ideas as they are built and tested. No single company will be able to generate and harness the full range of innovation available from the broader ecosystem. CPG companies will need to learn from a broad range of both disruptors and agile incumbents who continually reinvent how they reach consumers in the digital age, embrace a truly consumer-centric mindset and seek to create connections that magnetically pull brands through every available channel.
At the same time, CPG companies need to focus on working alongside multi-channel retailers as they seek to redefine their own end-to-end experiences. Build an ecosystem of suppliers, peers, distributors, start-ups, and customers to support the expansion of the digital value chain and help widen the sources for creating and prototyping new innovative products and services.
Make “Moving to Modern” CPG your resolution for 2018
In what is an increasingly dynamic CPG landscape, speed and agility are where the battle for growth will be lost or won. This makes the move to modern an essential play for CPG companies.