While many Consumer Products (CPG) companies have withstood the initial economic shock brought on by COVID-19, all will need to prepare for longer-lasting effects, including an erosion of consumer confidence that will drive recessionary behavior, changing shopping behaviors that will require new and innovative forms of consumer engagement, government-imposed physical working restrictions that will impact employee productivity and collaboration and subsequent waves of supply chain disruption that will force the adjustment and maturation of global supply chain networks.
As CPG companies plan for the post-COVID world, a number of imperatives are likely to dominate the planning process:
1. Reimagining the end-to-end consumer experience
The current crisis reinforced the need for CPG brands to seek purpose and differentiation through personalized, relevant consumer experiences. As the CPG marketplace becomes increasingly competitive and routes to market continue to proliferate, CPG companies will transition from a product focus to a consumer focus and the battlefield will inevitably shift from point-of-sale to point-of-experience. In this new paradigm, CPG brands will need to think beyond the product and look to drive consumer loyalty and advocacy by providing highly relevant, context-specific experiences at key moments that matter across the consumer journey.
In reimagining the end-to-end consumer experience, CPG brands must seek to identify opportunities for making a greater difference to the lives of the people they serve, through the products they provide and through the content and/or services delivered. Being consumer-led is about understanding the context and circumstances surrounding consumer motivations; including the frustrations, desires, problems and preferences that led the consumer to engage in the first place. In the post-COVID world, response will need to be personalized, integrated and omnipresent; leveraging a combination of physical and digital channels including emerging engagement channels and payment gateways like voice-assistants, AR/VR, wearables, and even connected cars and smart appliances.
2. Determining the optimal channel strategy across direct and intermediary channels
COVID-19 has changed how consumers shop, with greater emphasis on digital channels and new drivers of value. With consumer-decision journeys encompassing more digital touchpoints and increasing in complexity, shoppers will expect CPG companies to have a consistent presence online and offline. CPGs must deliver meaningful value to consumers to stay relevant and maintain market positioning. Doing so requires a holistic, full-funnel approach to commerce, including the right balance of distribution channels and tightly integrated routes to market.
Different channels are often siloed in different parts of the business, serving various disciplines and constrained by historical organizational fit rather than today’s omnichannel consumer. These are no longer standalone activities, so companies need to shift their thinking and create a strategy that focuses on the consumer and drives connections at all points along the journey.
Moving forward, there will be no such thing as pure e-commerce or retail commerce – it will all just be commerce. For most CPG brands, online will drive offline, offline will drive online, and consumers will be active in multiple channels, often in the context of a single shopping journey. Many CPG companies will begin to embrace consumer-first, total commerce strategies; where experience is viewed as the only channel that matters and where consumers can – at a minimum – engage the brand universally and continuously. This will require rethinking the alignment and integration of direct and intermediary channels in order to regain control of over the shopping journey and establish a stronger relationship with consumers.
3. Turning data and advanced analytics into a strategic advantage
The current pandemic has highlighted the vital role data and advanced analytics can play in day-to-day operations and decision-making of the modern enterprise. The rapid rate of technological change, growing levels of connectivity between individuals, businesses and smart devices and increasing volatility in the marketplace all favor increased use of non-human systems to identify and exploit insight-driven opportunities. With greater pressure on businesses to operate quickly and with certainty, ensuring that the right insight is made available at the appropriate touchpoint is critical to driving the right actions.
CPG companies now recognize productivity increases that result from insight-driven decision-making, yet few are equipped to fully capitalize on this opportunity. In the next few years, we’re likely to see a major shift in focus among CPG companies as they transition toward a more insight-driven business environment. Today, CPG companies struggle to analyze vast quantities of data, extract meaningful insights and use them effectively.
In order to overcome demands of an ever-changing consumer and technological landscape, the CPG company of the future will need to systematically harvest structured and unstructured data across multiple, eclectic sources and apply advanced, predictive algorithms that turn AI-driven insights into foresights and recommended actions. In the post-COVID world, expect to see an increase in investment in adaptive data platforms, advanced analytical tools, and AI/machine learning capabilities as companies turn data into a strategic advantage.
4. Building a resilient supply chain
COVID-19 has highlighted the fact that many CPG companies are not fully aware of the vulnerability of their supply chain relationships to global shocks. As CPG companies prepare for the future, expect to see the focus shift to building a smarter, more flexible, more resilient supply chain.
New technologies are emerging that dramatically improve visibility and predictability across the supply chain, including intelligent control towers that leverage artificial intelligence, IoT, robotics and “digital twins” to monitor, manage and control execution across functions to optimize the entire network. Supply chain control towers can also be used to proactively distinguish breaks and chokes in the current production network, and can help identify alternative routes to market in the event of further disruptions.
Digitalizing supply chain management strengthens capabilities in anticipating risk, achieving greater visibility and coordination across the supply chain and managing issues that arise from growing product complexity. At the same time, transitioning from a traditional linear supply chain model to digital supply chain networks – where functional silos are broken down and organizations become connected to their complete supply chain – can help to further enhance end-to-end visibility, collaboration, agility, and optimization.
5. Reinvigorating growth through agile innovation
COVID-19 has thrown an enormous amount of societal and economic uncertainty on an industry already struggling to keep up with innovation and battling inertia in their current growth models. Post-COVID-19, there will be even greater pressure on CPG companies to compete by adapting quickly to new challenges, accelerating time-to-market for new consumer experiences, as well as rapidly prototyping and releasing innovations in their “minimum-viable” state, rather than waiting to perfect them.
A new model for growth will involve embedding agility and recapturing scale advantages in the way a company operates. This new Agility-at-Scale operating model will require thinking both more broadly and more granularly about where to compete. Moreover, it will be characterized by the ability to assemble multi-functional teams to solve high-impact problems with speed and scale.
Summary
Having dealt with the initial impact of the COVID-19 crisis, CPG companies are now beginning to pivot to recovery and future-proofing their businesses for longer-term competitiveness. CPG companies will be looking to harvest new data sources to deliver more meaningful and engaging consumer experiences, innovate and experiment with new routes to market, and invest in new technology ecosystems to continuously grow and adapt their capabilities to be more efficient and cost-effective.
For companies that are able to embrace the new paradigm, bust through age-old habits and re-imagine the very essence of brand value, the future will present new, exciting opportunities. Success will require speed, scale, fortitude, a culture of rapid change and a mindset of inspired execution.
