Competing with small CPG brands
Smaller companies continue to grow their share of the CPG market. More than $17 billion in sales has shifted to startups since 2013, and 90 percent of CPG e-commerce growth is attributed to startups. Huge social shifts drive this, and they’re likely to continue. More and more companies are using personalization to digitally reach out to targeted individual customers. Customization is on the rise. Consumers expect products to be designed with them in mind, and to build relationships with brands based on their personal values.
Small brands driving change
Targeting a niche group of customers is more natural for small companies than for big brands that are designed for scale and durability. But big brands have some tools smaller ones may lack. For one thing, many big companies have tackled this shift by buying up successful small brands, which can be a win for both parties.
Companies are also speeding up their evolutions to appeal to consumers. Consumer Goods Forum found that about 180,000 products globally were redesigned in 2016 to meet consumer demands for healthier diets and lifestyles, more than double the 84,000 reformulations in 2015, and eight times the 22,500 in 2014.
Consider the sudden massive trend in fermented foods, which by one account, rose by 149 percent in 2018 alone.
Data is the key to competition
While it can be tough to tell which trend is going to take off, there is one tool that rises above the other in predicting: data.
CPG companies have the tools to collect and employ real-time data on how consumer tastes are changing through loyalty apps, in-store execution tools, and third parties. Real-time data is essential because the changes happen fast. Nimble companies with agile supply chains that are poised to respond to the data will be the ones that keep customer loyalty. Consumers now expect their shopping experiences to be personalized and they’re willing to share their data if that expectation is met.
One Harvard Business Review article, talking about how important it is for big brands to pay attention to local brands in global markets said:
“Big brands need to get closer to local consumers and empower teams on the ground to generate new ideas. They can utilize their scale by leveraging their access to data in service of those ideas and facilitating rapid testing, just as they once built an advantage with global supply chains in service of getting big brands to consumers.”
Collaborations between retailers collecting data through loyalty apps and brands collecting data on shelf sales and promotions in individual stores—as well as online customer behavior—can create a more accurate and complete picture of customers and what they respond to. Having the data makes it possible to get ahead of the trends and to craft offers that give customers a personalized experience.
Customization at the store level
Offering bespoke or custom experiences, or highly personalized ones, is easier in a digital marketplace than in a brick-and-mortar one. Loyalty apps generally offer the most specific customer experience in the store, but customers are using fewer apps and they’re only going to use the ones they feel really benefit them. So rewards should be tailored to the customer and not just limited to coupons.
Customization is possible to a degree at the store level as well. Understanding sales patterns in real time at the store level allows the retailer to get more granular about product mix, product groupings, and promotions.
Many factors are driving constant change in the CPG landscape. Small CPG companies will continue to be a defining force pushing new product creation, innovation, and driving changes like increased package sustainability. The good news for both large and small CPG companies is that they both have access to data, which is the most important tool to stay ahead of change and keep tuned to what customers really want.
Latest posts by Bruce Nagle (see all)
- Three Trends in Competitive Pricing From Top Grocery Retailers - April 1, 2021
- For CPG Brands Not Everything Should Return to Normal - February 2, 2021
- Three Ways to Enhance Category Insights – Improving Retail Execution in 2021 - January 6, 2021
Comments are closed.