For CPG Brands Not Everything Should Return to Normal
If you find yourself fantasizing about walking through a store without a mask on, you’re not alone. Working from home in PJs and binging on Netflix has its advantages, but after a year of minimal social interaction, we’re ready for things to go back to “normal.” At least some things.
When it comes to the world of CPG, not everything actually should go back to normal. The pandemic stretched supply chains to the breaking point, and this forced some long-overdue improvements that we shouldn’t take for granted in our rush to forget 2020. Brands that focus on maintaining their hard-won advantages will be in a strong position moving forward. Here are just a few examples of what this looks like:
The Benefits of SKU Rationalization
If you’ve ever run to your local grocery store to pick up a simple item, tomato sauce, for example, you may have found it difficult to make a selection. Not because the thing is hard to find, but because there are so many options. Dozens of brands with many different SKUs covering everything from aggressively chunky to silky puree.
This isn’t just an issue for your spaghetti dinner. SKU proliferation has been a growing problem across many categories, leading to a poor consumer experience. Decision paralysis is real, and the number of choices on shelves has been increasing for several years.
But then COVID hit, and everyone decided to stock-up like the world was ending. To keep items in stores, brands had to quickly trim down underperforming products and focus on their core competencies. Mondelez announced a plan to reduce 25% of their SKUs, and Coke and Procter & Gamble took similar steps. It worked. In the words of Mondelez’s CEO:
“We were already obliged in this crisis to work with a much smaller set of SKUs in order to make sure that the key SKUs are on the shelf. And what do we see? Our sales are better, the shelf looks cleaner, and we get some benefits from it. So we’re pushing through using the opportunity to say, this is the moment we do it.”
It turns out that when brands focus on the products consumers want most, they are rewarded with simpler supply chains and better profits. This isn’t a lesson we should forget.
Rethinking Trade Spend
For decades, CPG manufacturers have set their annual trade spend based on minor improvements to what they gave retailers the year before. But when the pandemic hit, many promotions were put on hold as the supply chain struggled to keep up with consumers. CPG organizations shifted surplus marketing funds to other areas of their businesses or added them to bottom line profits.
As the world normalizes, CPG Organizations shouldn’t rush to resume their old approach to advertising and promotions without pausing to evaluate their strategies. Consumer behavior has shifted significantly over the last twelve months, and the way brands reach their audiences should also.
People are shopping online or taking advantage of curbside pickup and delivery services far more often than they did before. Relying on reaching in-store foot traffic via displays and banners may not be as effective as it once was. In the digital era, you may want to give more thought to a direct to consumer approach.
Cement Your Advantage
The entire point is this: just because sales increased during the pandemic, we shouldn’t assume they have to return to pre-pandemic levels when the crisis is fully past. Brands need to understand why consumers were drawn to them and think strategically about maintaining that new connection in the future.
For many people, ready to eat meals like canned soup and boxed dinners became the defacto alternative to restaurants. Eventually, consumers will go out to eat again, but if these brands can think creatively about their messaging, they may maintain some of their gains. What if buying a can of soup isn’t a replacement for dining out? What if it is a way to become a better cook or spend more time with family?
There is light at the end of the tunnel, but the world still won’t be back to “normal” for several more months. Just keep in mind that when we are in public without masks again, not everything should return to the way it was before. Think strategically and cement your advantage.
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