The past three years haven’t exactly been smooth-sailing for the global supply chain. In many ways, it still feels like we’re grasping for the new normal. Nevertheless, enterprises across the Retail and CPG industry are looking ahead and planning for the future in novel ways. With that in mind, in this blog we’ll take a look at three trends in Retail and CPG to keep your eye on for the coming year.
Let’s begin by looking back at the past few years and the jarring impact the global pandemic had on our personal and professional lives. The effects were all-consuming, challenging the supply chain with operational nightmares, ushering in channel blurring across the retail landscape, and accelerating the growth of digital — none of which is to the consumer has evolved.
Even before the pandemic entered the global scene and transformed our reality, the fight just to keep up with an increasingly dynamic marketplace, using a mix of historical data and gut-feeling, to both adjust for the now and anticipate the future environment was a taxing feat for players in the Retail & CPG industry. The pandemic only compounded these challenges.
But now that we are stepping onto more solid ground after being shaken by the pandemic, Retail & CPG organizations are shifting away from the reactive in favor of the long-term. In this spirit, here are the three most important trends and priorities reshaping Retail & CPG in 2023:
- Digital Acceleration and the “always on” environment
- Hyper-personalization
- The evolving value equation
In order to drive success today and secure tomorrow’s fair share, industry players need to make nonlinear connections that enable agility and allow rapid insight to action. How can this be done? Allow us to walk you through it.
Digital Acceleration: “Always On” as the New Norm
The pandemic has shaped new norms, including how we define e-commerce. Nearly 10% of Grocery (US) sales were online in 2021, attesting to growing availability across a sweeping cross-section of categories. Gone are the (recent) days of purchase now and receive a day or two later; here are the days of purchase now, get hours or even minutes later.
Express delivery players like Instacart, Gopuff, and DoorDash have helped transform how we think of speed and a frictionless experience by catapulting us closer to immediacy. Tomorrow’s success hinges on navigating “rapid commerce,” whether through pure-play or third-party players, and thriving in an always-on environment by remaining relevant to consumers. It also relies on understanding the competitive retail landscape — how it is changing and reshaping itself — as well as one’s own supply chain network, with the help of solutions like Dataiku’s Distribution Spatial Footprint.
To thrive in this digital age and remain relevant, where speed is king and a frictionless experience is the expectation, retailers and brands alike must develop a digital dialogue with consumers. Before a purchase is made, 60% of consumers consume digital reviews and digital content to incorporate into their purchase decision. Targeted messaging, including the use of user-generated content, should therefore be considered the means to creating a multifaceted dialogue with consumers. This should be a dialogue that welcomes a call-and-response to consumer expectations across online platforms, enhances relationships with consumers, and builds brand trust. Companies listen to what their consumers and retail shoppers are saying — and generate insight for action — with tools like our Customer Satisfaction Reviews solution.
Hyper-Personalization: Moving Away From the Transactional Interaction
The rise of direct-to-consumer (DTC) has transformed the Retail and CPG landscape, challenging traditional brands and heightening consumer engagement. It has set new expectations for consumers — they expect brands to relate to them and meet them where they are (online, in-store) for every occasion.
Rise of the Retail Media Network
Retailers are a gateway for CPGs to unlock DTC insights; they provide access to first-party data and allow CPGs to gain deeper insights into the path to purchase, all with the goal of elevating the consumer experience through tailored content. This is a necessary project that retailers and CPGs must partner on in order to successfully build customer lifetime value and grow loyalty by better understanding consumer behavior. Companies can discern their customers’ lifetime value and begin to act on them with tools like our RFM-Enriched Customer Lifetime Value solution.
Consumers are everywhere and all at once thanks to digital expansion. As a result, there is now a requirement to know and connect with consumers across a multitude of channels at the right time and in the right way — opening the door to the need for omni-channel marketing that resonates with the individual.
So what must retailers and brands employ to drive the right impact while maximizing returns? Marketing Mix Modeling, which equips industry leaders with the ability to model the impact of investment on business outcomes, is a powerful avenue in this direction; in other words, marketing mix models marketing choices from a business perspective. It all comes down to effectively linking the right messaging on the right platforms.
The Evolving Value Equation
Consumers continue to re-evaluate their priorities, as economic pressures, shifting social consciousness, and digital proliferation spread across our societies and forge a new global connectivity. This re-evaluation is showing up in what consumers buy and how they buy it, as well as when and where they buy. This is why methods like market basket analysis are being deployed; they reveal consumer purchasing behavior in detail, allowing companies to maximize consumer experience by following trends and anticipating needs.
Among the most important recent value-shifts is the continued emergence of the “less is less” philosophy, which will remain an important factor for many consumers because it equates to less strain on consumers’ wallets. But “less is less” can also be reflected in branding decisions, e.g., to shrink the size of consumer products on shelves (called “shrinkflation”), in part to counteract the inflationary constraints that are sure to linger into 2023.
Despite persistent economic uncertainty, consumers are committed to making purpose driven decisions as global citizens. And what will remain a priority for the global citizen 2023 is alignment with brands that are attuned to their personal values and reflect their beliefs in the importance of collective responsibility for our environment and for shaping the future. In turn, organizations are tasked with setting into motion sustainability plans that are built on the twin pillars of transparency and trust. Organizations that take steps to accurately forecast demand among their customers will be better prepared for developments in public sentiment.
Consumers are not the only ones taking a second look at what’s important to building a better future. Retailers and CPGs are re-evaluating a supply chain that is becoming more and more informed by the globally conscious consumer. This, along with the growing demand for companies to support claims with action and own their partnership in eco-responsibility, is leading to greater adoption of “traceability” in companies’ supply chain operations. With the help of platforms like Dataiku, many enterprises are equipping themselves to remain ahead of the ecological curve. The proof, for eco-conscious companies and consumers alike, is in the pudding.
More than ever before, harnessing the always-changing landscape of Retail and CPG requires advanced analytics. Putting AI and machine learning to work is a critical lever not only to keeping pace with everyday demand, but also to anticipating future demand and changes by unlocking valuable insights that drive differentiation and success. Now is the time to employ transformative analytics that seamlessly connect with the digital consumer and deliver customized experiences that resonate with individuals everywhere. It is a big task, but one that can be orchestrated and optimized with the right tools.