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Rethinking The Fundamentals

2/24/2014
The recently concluded 2014 NRF Convention & EXPO confirmed that omnichannel, the emerging key trend, is here to stay. Retailers across all sectors are focusing on improving personalized consumer experiences across all channels of engagement.  

Consumer packaged goods (CPG) marketers have always built propositions around demand moments and shopping occasions based on consumer research. However, for the first time, they now have the ability to identify the right context and persuasion, while the shopping basket is being filled online.

This shift is significant and has far-reaching implications to the operating landscape of CPG companies focused on providing their consumers with a rich 360-degree consumer experience.

Right Strategy and Operating Model: Most leading CPG companies of late are focused on e-commerce as an important channel. They are now beginning to establish organization structures and policies on how they will deal with this new channel. Do they sell directly to the consumer? Do they only work closely with the online retailers? Do they direct traffic to retailers from their brand sites? Do the same sales teams also drive online business? How do they bring the much-needed agility in their businesses to be able to quickly create benefit bundles and influence consumers? These are some very basic choices that need to be made for long-term success.

Right Processes: Omnichannel commerce, whether through retailers or direct to consumer for CPG companies, is small in size today. But, it will have high growth and need the establishment of core processes and rethinking around demand planning, promotions and financial planning, forecasting and replenishment. In addition, category management processes around pricing, promotions, e-content and space (online real estate) will need a fundamental rethink.

Right Tools: CPG companies and brands will need the right tools, including:
  • Commerce & Engagement: Technology to support the underlying business processes to support e-commerce and omnichannel consumer engagement
  • Offer Optimization: Tools required to enable retailers to build the right set of targeted offers from an optimal offer bank that maximizes the relevance and attractiveness of the offer to the consumer. The real challenge is in doing so while aligning with the retailer’s merchandising strategy and the CPG company’s priorities and mutual margin expectations.
  • Consistent Brand Experience: As each retailer continues expanding its online and mobile presence, it is interesting to see the inconsistencies in the way CPG brands are represented on each channel. Whether it is the image, the brand attributes, relevant videos and content, there is a lot that the CPG company needs to do to ensure an optimal brand experience on these channels.

In Conclusion: The opportunity is immense and the possibilities are endless. The traditional approaches that have served CPG companies so well for a long time will now require a rethink. The ones that evolve rapidly as well as work closely with retailers in this journey will prove to be the category captains of tomorrow.
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