Meeting Millennial Expectations: Renee Sang, Accenture Customer Innovation Network

The growing buying power of millennial shoppers will challenge the ability of consumer packaged goods (CPG) manufacturers and their retailers to capture buying preferences like never before. 

Empowered by technology, the millennials will demand products and services that meet constantly changing expectations and will expect to access them from anywhere, at any time. This, combined with the U.S. market's increasingly fragmented and diverse demographics, attitudes and behaviors, will result in the need for more customized and tailored products.

Responding effectively to this market shift will require manufacturers to further optimize supply chains to provide new product introductions to the right niche groups of consumers at the right place and right time, interfacing more frequently with retailers. This change in the way consumers will be introduced to new products will likely mean smaller, but more stores, increasingly tailored assortments and shorter product lifecycles. 

Therefore, this shift will require greater collaboration and information -- sharing between manufacturers and retailers to understand what these consumers want and satisfy their needs across multiple channels. Effective execution will be required for manufacturers to keep pace with buying preferences, reduce operational costs and increase sales for both them and the retailer. 

Successful CPG manufacturers are collaborating more with retailers -- sharing information regarding demand plans, trade promotion calendars and replenishment processes. The most advanced companies are investing to build true demand-driven operating models. In addition, they are developing the processes and technology needed to share point-of-sale data, and then using that data to drive demand plans, replenishment inventory management and supply chain planning.

These leading companies understand and utilize such consumer-demand information to improve their ability to manage product lifecycles and SKU proliferation, optimize portfolios, innovate, introduce products that better address consumer needs, and maintain competitiveness. Their approach offers valuable insights for CPG manufacturers who have an opportunity to focus on the commercialization and lifecycle processes as well as new product introductions. 

By marrying the demand from retail partners with identification of the specific attribute of each product, companies can determine the product value to individual consumers and target assortments to customize offerings. They can also recognize and retire underperforming products -- helping to maintain inventory targets to meet near term demand while enabling them to carry a full in-stock assortment for hottest selling items. This allows CPG manufacturers to balance the need for bringing customized product to the millennials with the costs of maintaining the inventory on the shelf and in the pipeline. 

Having a truly demand-driven supply chain requires demand signal repository (DSR) capabilities and systems. This should be seen as a natural extension of consumer analytics, and companies should appreciate that DSR capabilities are required to achieve actionable insights-- deep knowledge that product developers and marketers can use to consistently deliver products that consumers really want.

To meet the challenges that the millennials will present and to continue on the path to high performance, CPG manufacturers will need to establish processes and systems throughout their organizations to enable increased retailer collaboration, actionable insight generation and truly demand-driven operating models.