8 Key Trends Driving Profound Digital Transformation in Consumer Goods (CPG)
Consumer goods companies are experiencing a profound digital transformation led by a digitally-anchored shopper whose attention has shifted to the immediacy, convenience, and value of online shopping.
Digital commerce was the #1 growth driver both globally and locally in the U.S. at the turn of the year, forecasted to capture 25% of all U.S. retail chain sales by 2024. However, due to the impact of COVID-19, digital commerce was accelerated as a critical shopper lifeline, capturing 27% share of U.S. retail sales in the first part of 2020 alone.
What does this mean for consumer goods companies?
This digitization of shopper behavior and the COVID-19-accelerated surge in ecommerce as a way of life have ushered in a promising new future for consumer goods companies who strategically respond to change and proactively and continuously centralize their business around the consumer.
We see eight profound trends that are impacting how consumers engage with brands and how they are directly reshaping retail and brand direction in 2020 and beyond.
- The unification of the shopper and the consumer: Because of digital commerce, the consumer and the shopper have now merged into a single identity, resulting in virtually unlimited permutations of who the potential shopper is for any SKU.
- The Amazon 3P effect: The growth of Amazon’s marketplace model has raised shopper expectations for retailers and brands alike to deliver the benefits of vast assortment, competitive prices and convenient fulfillment offerings.
- Shopper attention – where and how to engage: With shrinking consumer attention spans and ever non-linear paths to purchase, brand advertising, now more than ever, must tell a story quickly, concisely and compellingly to engage and hook consumers to discover more.
- Proliferation of DTC and marketplaces among CPG firms: New and emerging platform capabilities are enabling brands to collect and harness shopper data themselves to better drive their commercial and product innovation and direct, more authentic customer engagement.
- Brands incubating as retailers: Many scaled brands have started to explore new P&L approaches, assortments, and advertising campaigns designed around specific consumer segments, personalization capabilities, and recurring revenue subscription models.
- New era of unconventional partnerships for CPGs: An unprecedented set of skills has emerged beyond the traditional retailers, creating opportunities for CPGs to collaborate with new technology and capability partners to sell and engage directly with consumers and launch new types of consumer engagement programs to develop new domains of strength.
- Re-emergence of technology as an asset vs. service: CPG brands have traditionally seen IT organizations as service organizations that provide tech and software support, but IT has become critical for future leadership with a new, more central role to play.
- Measuring success: The modern consumer is no longer shopping through easily measurable channels, and scaled brands are finding themselves for the first time only able to measure 50% of their business sales without new partnerships and owned business models.
Are you responding to these trends? Are you ready for this dynamic shift and how are you preparing to deliver value and build loyalty in this new future, dictated by a profound digital transformation?
Download the full Executive Brief which dives deeper into each of these key trends, strategic implications and growth opportunities for CPG leaders across retail, B2B and DTC.