Jonathan Feeney, CFA, Athlos Research and Andrew P. Wolf, Managing Director, BB&T Capital Market shared their thoughts on the industry. They both felt the CPG industry is responding to the economy’s low-interest rates and investors’ demands by returning cash to stockholders and focusing on cost containment. But this is impacting growth. In fact, volume has been the worst for CPGs in the last three years and there seems to be more focus on short-term vs a long-term view.
Price is impacting a lot of things and cutting cost is the biggest driver. As a result, innovation suffers in general. But there are glimmers of innovation hope. Take a look at Kroger who listened to their customers’ issues about standing too long at the checkout line. They looked at the flow situation and found an innovative solution to reduing the time from four minutes to 26 seconds. Read the full details.
From a CPG perspective, you will see innovation coming through in ways to add value to existing products. Three examples of this are the single serve coffee, hand-to-mouth trend of mini candy bars and protein snacking which is adding cache to beef jerky. CPGs are also looking at the implications of the omni-channel and the value they can get from owning the consumer which will provide deeper insights than what is available now through the moderated lens of the retailer data.
These innovations are stemming the following trends:
- Fresh foods as part of a healthy diet is becoming more important in the consumer’s life.
- A need for convenience to eat in our on-the-go culture we live in.
- Available data to create occasions for consumption. An example is of Kraftrecipe.com which is providing ideas and coupons. These investors also saw data as an opportunity to “Uber-ize” pricing based on consumption.
Myth Busting: Straight Talk Directly from Consumer
Candice Corlett of WSL Strategic Retail led a panel of five female shoppers of all different ages and ethnicities to understand today’s typical shopper. Based on the research her companies does, she shared the following perspectives from shoppers:
- 47% feel the #1 obstacle to good health is stress
- 70% shop online because it saves them time
- 75% feel smarter shopping online
In terms of connecting to the brand, many shoppers revealed:
- 44% use shopping apps to make them feel smarter. Of this group, 67% were millennials and 52% were Gen X.
- 1/3 of shoppers use technology to pre-shop. 90% don’t change their mind in the store.
Some of the insights from the shoppers were technology is prevalent as part of the pre-store, in-store and post-store event. Technology helps them:
- Create their shopping list
- Receive alerts for sales via emails, online coupons and apps
- Use reviews to determine best product
- Scan bar codes to find the best price
- Feel smarter as they win points and discounts as part of rewards apps
How can a purpose-built Retail Execution Solution impact your business? Let Ian Michelson at Ian.Michelson@afsi.com, or 1 972-715-4044 show you today.