Are you ready, CPG brands? Brick-and-mortar resurgence ahead
As consumers head back to physical stores, CPG brands must double down on their retail execution to ensure buyers have positive in-store experiences.
Toilet paper shortages. Long waits for disinfecting wipes. Massive demand for…yeast?
That was 2020’s wild ride in the world of consumer packaged goods, or CPG. As in every other industry, it was an unprecedented year. As we look to CPG retail trends for the year ahead, we can expect the effects of the COVID-19 pandemic to affect CPG companies well into 2021 and beyond.
2021 CPG retail trends: Massive change, big adjustments
The pandemic put a spotlight on a vast array of previously humdrum products, driven by stay-at-home orders and cleaning needs, as well as new consumer behaviors and vastly-accelerated use of shopping options including BOPIS (buy online, pick up in store), curbside delivery and mobile e-commerce.
Of course, the reality is that CPG as a retail segment, and retail as a whole, are industries that have been undergoing massive, constant, disruptive change for years.
Consumer preferences and expectations have shifted rapidly over the past decade, thanks to social media, e-commerce, and Amazon Prime.
Brick-and-mortar retailers have struggled to adapt in an era of online shopping, omnichannel and direct-to-consumer brands. And during a time of growing awareness of climate change, consumers of all ages are increasing demands for eco-friendly products.
All these changes will continue to be disruptive forces for CPG companies in 2021.
These are some of the top CPG retail trends we’re likely to see rise in importance:
- The digital shelf will become a battleground of epic proportions
- Sustainability will rise, thanks to consumer demands
- CPG retail will model DTC (or D2C; whichever you choose) practices
- The customer experience will become more important
- Delivery methods (including at-home, BOPIS and curbside delivery) and supply chain distribution will become focus of transformation for CPG
1. CPG retail in 2021: Brands have to work even harder to win the digital shelf
E-commerce boomed in 2020, even in the typically slow-growth areas of CPG. According to eMarketer, e-commerce sales will jump nearly 36% over 2019, as social distancing still keeps skittish holiday shoppers away from brick-and-mortar stores.
The good news is, CPG brands are finding new audiences online, as consumers are more willing to try something new when demand is so high.
But CPG companies will have to up their game dramatically when it comes to personalization and promotions, if they want to stand out on an increasingly crowded digital shelf.
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2. CPG retail brands zero in on sustainability
Today’s consumers — particularly millennials and Generation Z — are demanding that brands take sustainability seriously.
That includes reducing the use of plastic packaging; better product labeling to highlight recycling; developing biodegradable options and the sustainable use of water.
According to the Conference Board Global Consumer Confidence Survey, conducted in collaboration with Nielsen, 81% of global respondents feel strongly that companies should help improve the environment, while nearly half of American consumers say they would change their consumption habits to reduce their impact on the environment.
3. Traditional CPG learns from upstart DTC brands
Growth was once all about massive scale in CPG-land.
Now, however, the rise of smaller, customer-centric, digital-native brands have turned the traditional CPG growth model on its head.
Direct-to-consumer CPG brands like Dollar Shave Club — whose online sales doubled Gillette’s in just three years — have completely changed the CPG game over the past few years.
In 2019, major CPG brands like the 106-year-old Clorox were building their own DTC capabilities in-house, began testing their own DTC brands, learning from results and, of course, gathering plenty of customer data in the process. And now, CPG brands such as Nike, Ocean Spray, Colgate and Nestle are using DTC to stay competitive as online shopping continues to boom and traditional retail struggles.
4. Bigger CX focus for CPG retail in 2021
CPG has always been primarily about products. However, as CPG e-commerce booms and brands look to bypass retailers, they are expanding their focus on how to foster a good customer experience online.
To accomplish this, even the most established CPG brands will be playing CX catch-up. They’ll be moving from shelf optimization to establishing contact centers; working to understand the entire customer journey; and developing UX designs that create a friction-free shopping experience.
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5. Tackling the delivery dilemma
With the COVID-19-driven rise of delivery options, including at-home, BOPIS and curbside delivery, CPG companies need to digitally transform to take advantage of the “new normal,” which will continue in 2021 and potentially stick around for years to come.
According to a Deloitte study completed early on in the pandemic, more than 50% of consumers reported spending more on convenience to get what they need, often defined by contactless shopping, on-demand fulfillment, delivery app usage and BOPIS adoption. That expectation of convenience isn’t likely to disappear anytime soon.
In 2021, the biggest CPG risk is staying put
In 2021, the top CPG retail trends are all about keeping up with the pace of change that has resulted from consumer shifts and digital disruption, by innovating and experimenting across touch points.
CPG decision-makers can no longer rely on old ways of doing business; CPG brands need to get ahead of their competitors or risk becoming irrelevant.
