Consumer Packaged Goods Consulting

In Consumer Goods, the digital agenda is accelerating as companies look to drive growth in turbulent times.

Consumer Packaged Goods (CPG) organisations need to constantly evolve to stay competitive. The speed of this evolution continues to accelerate, with a range of internal and external pressures driving change throughout the sector. The key challenges we see with our clients are:

• ‘Low cost’ supermarket chains (‘Discounters’) benefiting from hyper efficient operating models and offering consumers everyday low-price alternatives to major CPG brands

• ‘Buying groups’ increasing retailer power, driving down prices and CPG margins

• ‘Disruptive’ challenger brands offering new products, channels and distribution mechanisms channels degrading CPG organisations market share

• Pressure from consumers, shareholders and employees to shift to more sustainable business models and brands with purpose

• Increasingly saturated first world markets with ever reducing margins and limited opportunities for growth

• The impact of new media, and particularly social media, on everyday consumer behaviour

• The shift to on-line, through a complex mix of eCommerce channels and business models (pure play, omnichannel, direct to consumer, etc)

• Changes resulting from the Global pandemic, particularly accelerating the shift to on-line

• The blurring of traditional trade (via distributers) and modern trade (direct to retail) in many regions breaking down traditional market archetypes

However, reacting to these pressures in the right way can turn potential threats into opportunities for CPG organisations looking to increase profitability and drive growth.

Recognising the value of data and the insights generated through analytics

The application of net revenue management (NRM), also known as revenue growth management (RGM), methodologies is now industry standard, enabling CPGs to optimise product pricing, pack formats, assortment and promotions while also taking a holistic view on trade spend. Trade Promotions Management (TPM) capabilities are also maturing rapidly, with foundational capabilities for promotions management and pre- and post- event analysis moving towards automated optimisation.

Data is the fuel that drives this type of analysis, including internal finance and sales data but also external data such as market share, weather and geopolitical data. Organisations are looking to find quicker and more cost-effective methods to organise data and exploit it. At the leading edge a number of companies are experimenting with Artificial Intelligence (AI) and Machine Learning (ML) powered predictive analytics tools that could, if implemented and adopted correctly, prove game changing.

Digital is also changing execution in market, as the role and capabilities of field salespeople, merchandisers and distributors is increasingly transformed through technology.

Outside of sales, analytics is also providing significant opportunities for both supply chain and finance. Predictive models have been proven to significantly improve demand forecasts, meaning that CPGs can plan more effectively, driving efficiencies throughout the supply chain. Automation is becoming industry standard for order-to-cash and treasury management processes, delivering efficiencies and reducing errors.

Digital has also clearly transformed marketing (as it has in all sectors), providing a vehicle for direct consumer engagement. CPG organisations are also using social media ‘mining’, powered by artificial intelligence, to better understand consumer needs.

Combined these new digital capabilities represent a significant step towards truly integrated business planning, driving efficiencies throughout the organisation. They also provide the transparency required for CPGs to change the conversation with their customers from one of confrontation to collaboration.

Building impactful eCommerce channels that are profitable for both CPGs and retailers

CPG organisations now have the data needed to develop targeted omnichannel strategies for retailers and consumers. These approaches incorporate a clear generational shift away from traditional channels driven by changing consumer priorities and lifestyle choices. CPGs increasingly look to engage directly with consumers, both through interactive marketing strategies, including those driven through social media, and eCommerce channels that both allow and incentivise shoppers to buy direct.

The growth of the eCommerce channel represents both a significant opportunity and a challenge for CPG organisations. ‘Traditional’ CPG organisations are still set up to serve ‘bricks and mortar’ operations first and foremost and so, to fully benefit from eCommerce growth, they will need to adapt and even transform their operating model and core capabilities to compete.

The global pandemic has led to a rapid acceleration in eCommerce penetration. There are strong indications that these changes are here to stay and CPGs are looking at opportunities to rapidly develop these capabilities in a sensible and sustainable way.

Putting sustainability at the heart of business strategy

For most CPG organisations, moving to more sustainable business models means making significant changes, including increased investment in research and development, targeted acquisition strategies, marketing initiatives and initiatives to drive increased traceability through supply chains. To ensure that these changes happen and demonstrate their commitment some CPG organisations have chosen to put sustainability visibly at the heart of their future strategies.

Technology is a key enabler, and organisations are also looking to digital solutions to help drive the sustainability agenda, providing the information required to optimise product portfolios, provide full traceability, and reduce wastage throughout the supply chain.

Investing in emerging markets as a vehicle for future growth

The growth powerhouse continues to be developing and emerging markets - but winning in these markets requires a different approach in a range of key areas, for example in terms of routes to market (with these markets being largely distributor led, and dominated by General Trade, or only localised Modern Trade), and in terms of the competitive landscape (with more local brand domination requiring a different ‘local vs. global’ mindset and organisation structure).