After four successful decades in a row, trends have begun to change in the consumer goods industry in recent years. Consumer goods companies had to make further changes to how they operate due to the effects of COVID-19 worldwide. Since the trends have changed, FMCG companies are rushing to digitize across all functions.
Their supply chains are under tremendous pressure as next-generation consumers pose new challenges and reshape the marketplace. Consumer goods companies now need new-age technologies to be embraced in their businesses, supported by digital Route-to-Market (RTM) to succeed.
Let's look at the changing industry dynamics pushing consumer goods companies toward digital transformation.
CPG's leading brands in different categories, such as food and beverage, home care, and health and beauty care, contribute more than 50% of total sales. However, data provided by US-Nielson from 2016 to 2020 shows that these consumer goods brands have experienced only 25% of the growth in this sector, implying that the big players in the industry need to grow as expected.
Furthermore, these companies' size and non-digitized operations are causing revenue losses. Gaining operational efficiencies to drive better growth year-over-year is becoming one of the top reasons consumer goods companies are turning to digital.
The massive digitization of consumer behavior and the growth of eCommerce have undoubtedly opened up new scenarios for those companies in the sector that are capable of strategically responding to change and developing their business proactively and continuously, putting the consumer at the center.
Eight significant trends are influencing both the way consumers and businesses interact with each other and the approach with which brands are rethinking their sales models and strategies for the coming years:
The ability to actively follow these trends and respond to the change that is already taking place is the key to success for those who work in the consumer goods industry today.
"The eight trends we have highlighted radically change how consumers and shoppers browse, search for and buy products online. Embracing not only technology but also an increasingly digital approach to retail to offer real and tangible added value to consumers and their long-term loyalty is the challenge that companies face.
They must assume, even more so in this new and uncertain normality in which the pandemic forces them to act", said Daniela Jurado, general director for Western Europe of VTEX.
To address open markets and penetrate deeper into existing markets, consumer goods companies must focus on building scalable digital capabilities. The new model must focus on centrally active distribution management, transparent operations between different hierarchies, and local decision-making capabilities to support faster growth.
These new technologies must be available and accessible on mobile phones and tablets for the ground operations team to use them best. Leap into a promising digital future with your consumer goods brand.
Millennials will play a significant role in driving retail growth in the upcoming years, and their high expectations can be challenging for retailers to meet. However, the same technologies that are popular among millennials can also benefit retailers. With the abundance of inexpensive computing power, retailers can now access advanced analytics and optimization on a previously unimaginable scale. From reducing supply chain inefficiencies, to improving demand forecasting accuracy, to executing multi-channel engagement strategies, we adopt a comprehensive, step-by-step approach to create a roadmap for success. Our retail consultants, with their vast experience, understand the industry inside-out and can help retailers undergo digital transformation to meet the needs and expectations of this new customer demographic.
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