4 CPG Trends That Will Impact the Industry in 2021I
n response to the evolving consumer habits over the past year, the consumer packaged goods (CPG) industry is focused on adapting supply chains and retail operations to reach more customers across different channels. Companies are expanding their distribution and fulfillment capabilities as more customers turn to online shopping.
Here’s a look at 4 CPG trends that will impact the industry this year.
Omnichannel Shopping for Consumer Goods Increases
In 2020, U.S. shopping for consumer goods grew by 50%, and nearly half of all consumer goods purchases were made via eCommerce, according to research from Nielsen. Companies adapted to increased demand by developing omnichannel experiences for customers and transforming their supply chains with new digital technologies to help them increase agility and build resiliency. Companies that have a strong digital presence will reach more consumers and increase sales as shopping grows online.
New Shopping Habits Increase CPG Demand and Reshape Supply Chains
Demand for consumer packaged goods will slow from the extreme highs seen during the height of the pandemic, but will remain above pre-COVID levels, even as vaccines become easily available, according to a new report from the Consumer Brands Association. With empty shelves not far from consumers’ minds, CPG companies have learned from the coronavirus and are improving their supply chains. When asked what CPG companies could do to boost consumer confidence emerging from COVID-19, improving the supply chain to reduce disruptions was on the top of the list, on par with investing in greater workplace safety measures that promote safety and hygiene.
Going forward, supply chains will be focused primarily on resiliency, not only efficiency. From higher inventory levels to efficient distribution, CPG companies have already adapted and innovated their supply chains based on the pandemic and will continue to do so. For example, PepsiCo recently launched a micro-fulfillment center in Joliet, Illinois. As the fulfillment approach quickly gains ground with retailers, PepsiCo will use this capability to meet the eCommerce demand of its key customers, and to gain important data through working with retail partners to build fully integrated and highly efficient solutions.
Food and Beverages Have Become the Largest Online CPG Segment
Turning more food shoppers into online customers represents a $58 billion growth opportunity for grocery retailers and CPG companies, according to NielsenIQ research. Online food and beverage sales, including grocery plus restaurant online delivery, jumped 125% to $106 billion over the 52 weeks ended Nov. 30. As a result, food and beverages have become the largest online CPG segment.
Out-of-home occasions have shifted to in-home consumption. A huge percentage of the population is on the go less and have replaced social occasions with in-home consumption of food and beverage products. More than 20 million new CPG customers entered the online arena in 2020. CPG online food and beverage dollar sales reached $66 billion in 2020, more than double the $31 billion generated in 2019. Looking ahead, NielsenIQ forecasts CPG food and beverage online sales could reach $103 billion this year.
CPG Companies Use DTC to Build Customer Relationships
CPG companies have traditionally relied on retail stores and eCommerce sites to reach their customers. By doing this, they lose a direct relationship with their end-customers, have no data on the customers themselves, and lack the ability to personalize marketing campaigns. To remain competitive and move forward in an increasingly digital retail landscape, CPG companies are now realizing that investing in direct-to-consumer (DTC) models helps them to build direct relationships with customers, maintain control of their brand, collect customer data, and personalize the customer experience.
Multiple CPG companies have begun growing their relationships with customers directly. Clorox launched Objective Wellness, a supplement company, as a digitally-native, mobile-first brand to appeal to younger consumers. They use an internal data system to create conversations with consumers and incorporate feedback into their product design. Unilever opened an online store for Ben & Jerry’s fans to order ice cream, T-shirts, and other merchandise for home delivery. Nestle launched a DTC online store called the KitKat Chocolatory, which allows consumers to design their own chocolate bars and customize packaging as well.
Over the past year, online shopping has left an indelible mark on the CPG industry. The companies that prioritize innovation and creating personalized, interconnected customer experiences across all channels will achieve long-term growth and success in a post-pandemic world.
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