The industry is experiencing and anticipating a growing shift of sales to online purchases. Many retailers are now offering click and collect curbside pick-up to try to capture sales. Yet, there are the ramifications to incremental sales, increased labor costs, etc. when the consumer doesn’t enter the store. Retailers and manufacturers need to partner on assortment, placement, pricing, promotion, and formats for both online and in-store options. Data will be the foundation to understanding what the consumer is looking for and how the new formats will be delivered. In-store services will be key to drawing the consumer within the traditional four walls. Yet, the “experience” needs to be inspirational for the consumer to take the time to enter the door. Entering the store is a value/time decision for the consumer.
When POI 2020 State of the Industry survey respondents were asked how they would describe their organization’s current Ecommerce capabilities:
- 2% of companies indicated that they don’t have capabilities yet. The good news is that 98% of organizations are taking some action.
- Companies with clearly defined strategy are few, 22% (+6%)
- 17% (-10) of surveyed companies are actively working on it.
- 21% of companies note they have some dedicated resources
- Only 2% of teams don’t know (-2).
- The 8% (-3) that are “opportunistically supporting purchases” often lack a strategy or a dedicated Ecommerce team to manage the workload. The Ecommerce teams have the challenge of generating consumer impressions and programs with their products, while trying to reduce confusion with consumers who receive offers, pricing, and product positioning that are different from what they see at a retailer.
Ecommerce – A Balanced Approach for Growth
On the one hand, we like the ease of our own personal online purchases, but we know there is a direct impact to brick and mortar establishments. Online will continue to grow. Yet, at the same time, in-store will remain critically important to most shoppers, and consumers will continue to shop brick and mortar stores. Both retailers and manufacturers need an Ecommerce strategy. What we find is that a balanced approach is best, but the specific approach depends on the product category. Nevertheless, what is concerning is that the majority of CPG companies don’t have a strategy based on year-over-year survey data. Most companies establish e-commerce initiatives, but not necessarily an Ecommerce strategy. If 20% of your volume shifted online, what would be the impact and what would you need to do to stay relevant with the consumer and close the revenue gap? POI recommends you set a strategy and plan today, so that your organization has a bright future when predictions become reality.
When a company’s Ecommerce business is small an Ecommerce team can utilize tactics with limited impact to the national business and without holistic organizational oversight. As Ecommerce grows within an organization, the size and impact of Ecommerce prices and promotions necessitates additional oversight. To meet the omni-channel need to be nimble yet diligent, organizations are enabling pricing, go-to-market strategy, and promotion optimization along with RGM oversight.
Digital, Ecommerce, Artificial Intelligence & Blockchain
With digital devices in hand, consumers have access to more data and buying options than ever before. Today’s consumer desires quality, availability, transparency, healthy, sustainable, convenient and local–Not to mention personalized, affordable, and received quickly. Mobile technology is changing shopper behavior, brand awareness, and how consumers interact with brands.
CPG e-commerce sales is a small but growing business. Nielsen projects that grocery Ecommerce will grow at a combined average growth rate of 12.2% through 2020
CPG manufacturers and retailers will need:
- To evolve capabilities to manage the new digital world we live in and optimize their organization’s structure & work, pricing, promotions, and strategies to ultimately offer an excellent customer experience and win the business. Consumers are also interested in the security of their personal data and transparency as they build their relationship with brands of their choosing.
- Advanced analytical and optimization capabilities to determine which brands and categories are right for driving Ecommerce growth. Not all brands are a good fit for Ecommerce. Maximizing the profitability sweet-spot will be important in order to preserve the already tight profit margins.
In most organizations there is very little linkage between traditional trade promotion and digital promotion teams. Each group is analyzing, creating, and executing programs they deem are the best fit for the brands. Both teams have full time jobs executing their respective promotional plans.
Organizations need to bridge visibility and connectedness across the two teams. The teams need help to see how the “total company promotional plan” fits together and unite the best practices applied.
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