Top CPG industry trends to watch out for in 2019

The CPG industry is at a major inflection point whereby next-generation consumer needs are driving the creation of new experiences through E-commerce, mobile platforms and omnichannel retailing. While the overarching framework stems from a digital transformation of CPG businesses, specific applications and functionalities are seeing an increased pickup in the marketplace. Here’s a look at some of the big trends and changes that are shaking up the CPG industry in 2019 and even beyond.

Maintaining direct consumer relationships via online services and social media

Brands continue to assign due importance to maintain direct consumer relationships. By engaging directly with consumers, brands are able to increase loyalty and improve insights on individual consumer needs, which in turn leads to more accurate targeting of promotions and products. Many companies are providing specialized online services to consumers, apart from their products. Kraft, for instance, has created a website and an app where consumers can share recipes, which works much like a social network. Johnson and Johnson have built the Baby Center to be a leading online parenting community where parents can ask for advice, share advice and product recommendations.

Apart from that, an increasing number of companies are expected to broaden and deepen their engagement with consumers on social media. While running contests and sharing information on social media handles is now passé, other techniques such as monitoring social networks and blogs for brand references are catching up. Social media is becoming a key tool for marketers to understand and shape consumer opinion. 

Increased usage of Augmented reality applications

Augmented reality helps CPG companies deliver immersive and memorable experiences to drive business. Augmented reality can:

• Significantly enhance the way product information is delivered to consumers
• Provide a way to value enhance product packaging
• Help demonstrate unique product features to strengthen brand loyalty and speed up the buying process
• Drive consumer engagement and create wow moments by utilizing 3D environments, interactive games, video and audio

Some significant use cases for Augmented reality include:

• Digital cataloguing combined with visual product placement in the user environment. Product scanning from the catalogue can help display additional information such as eco-friendliness, product features, how to videos and other enhancements. This kind of visual product placement is becoming common in the furniture industry
• Product visualization and virtually trying on products
• Brand sponsored games, quizzes, lotteries etc. – virtual games and experiences
• AR integrated product packaging     

Implementing Mobile-based services and solutions

As far as applications within the enterprise go, CPG companies are increasingly using mobile and location-based services to manage shelf space, pricing and improve promotion strategy. CPG companies can monitor the amount of shelf space allocated to brands when compared to competitors and if retailers are demonstrating compliance with promotional agreements. Mobile-based solutions can also be used to implement warehouse asset tracking, support data collection and improve supplier collaboration.      

As far as customer-facing applications go, mobile messaging is a method by which CPG companies are increasingly driving customer engagement. Hershey, for instance, has been using SMS campaigns to deliver mobile coupons, run promotions and engage in-store shoppers for a few years now. It has found a lot of success with its mobile SMS based campaigns. By sending deals directly to consumers, traditional messaging barriers are removed, and consumers are encouraged to act immediately.

Zatarain has become one of the first CPG brands to utilize Bluetooth-based beacon technology to drive engagement when consumers are inside a store. The implementation recognizes when consumers are at a retail location and sends them content like ads, recipes, coupons and shopping list reminders by working with shopping apps.      

Predictive analytics gains prominence

Traditionally, CPG companies have used historical performance, channel demand data and gut feel estimates to determine promotions, prices and replenishments. Now, some CPG companies have started investing in frameworks for running predictive analytics in order to refine the associated decision making.  Predictive analytics refers to the analytics processes that seek to forecast shopper behaviour over a particular time-span and help manufacturers anticipate shifts in demand and retailers anticipate buying trends. Multiple prediction models work in conjunction with real-time data to provide businesses with a deeper understanding of the impact of business decisions on sales growth. Predictive analytics helps to come up with higher quality forecasts for trends, future outcomes and behaviour patterns.

Amazon is one company that is famous for investments in predictive analytics, notably to run its recommendation engine. McCormick, the spice manufacturer is also well known for effective implementation of predictive analytics with the personalized recipe recommendation engine FlavorPrint. Some of the most popular applications of predictive analytics include brand portfolio optimization, consumer/shopper marketing, consumer planning and category strategy. 

Predictive analytics involves integrating data from several sources:

• Brand shares and Volume/value sales data for offline retailers from syndicated providers like Nielsen
• PoS data from retailers
• Sales data from ECommerce
• Data from shopper cards and panel data
• Internal firm data such as promotion calendar, priority search terms and pricing strategy

Predictive analytics provides insights into different areas:

Content and Communications

Analytics is very useful in optimizing content and syndication across e-retailers. Causal analysis of product sales with product information helps to optimize the content.   

Partner-specific analytics

Various optimizations are possible including assortment optimization in order to provide adequate coverage of price points and consumer segments for each of the retail partners.

Pricing and Promotions

Availability of high-quality partner data helps calculate granular RoIs with regards to promotional activity – what worked, when and where 

E-category management becomes more important

With online retailer searches influencing a significant portion of in-store sales also, it has become extremely important that e-category management strategy is addressed with due importance because it is influencing the shopping experience across all channels, not just online. Many suppliers have so far done poorly at recognizing the extent to which e-category management is different from conventional category management and have hence failed at building appropriate e-category capabilities. 

The development of e-category capabilities requires that insights related to online shopping behaviour are tapped in order to understand retailers, shoppers and categories fully enough. This further demands a clear focus on category insights, defining online categories and the importance of optimizing the ‘digital shelf’.       

While some companies are creating exclusive online brands, others are achieving brand differentiation by associating specific products with specific channels. L'Oréal, for instance, offers a unique recharging hydration kit specifically for Walmart.com. Keurig is selling large pack sizes on Amazon while offering a 24-pack of K-cups on its website. The company is offering the broadest product assortment online while using the digital channel as a learning lab for the other channels.    

We have talked about some of the top CPG industry trends of 2019. Are you a decision-maker in a CPG business? What sort of initiatives are you planning this year as part of your transformation and innovation agenda?

If you are looking for a technology partner for your initiatives, contact Ameex Technologies.