May 11, 2020
Eric Krueger

7 CPG Industry Trends

2020 has been quite the whirlwind of shattered assumptions and unexpected disruption across the global economy. From travel to restaurants and everything in-between, the world is adjusting to a laundry list of “new normals” as this year proves to be one full of challenges and transformations.

Business leaders especially are curious as to how the world will look when the pandemic recedes, wondering what changes and trends are in store for the Consumer Packaged Goods industry. After all, among all the uncertainty of 2020, one thing is still constant—from food to toiletries, consumers will always need products.

Here are seven key trends that we at Crisp see on the horizon for the CPG industry. Some are a result of the transformations brought about by COVID-19, others are part of the natural evolution of consumer behavior and supplier practices.

1. Growth of Online Ordering and At-Home Delivery

While many stores around the world have been offering online ordering and home delivery for several years now, 2020 has seen this option grow from a “nice to have” convenience to a critical part of safety and the economy. While global lockdowns and stay-at-home orders are only temporary, more consumers than ever before are realizing how convenient and efficient online ordering can be.

Die hard consumers who would otherwise prefer in store shopping are now having to make the transition to remote shopping, and many are discovering the benefits and ease. While online ordering and delivery have both already been trending upwards within the CPG industry, 2020 is proving to be the tipping point for making these options a staple within the consumer mindset as they decide to keep using this option in the long run.

2. Supply Chain Transparency and Sustainability

This is a trend that has been growing in step with the consumers’ global awareness. The public is increasingly basing their purchase decisions on the ethical and environmental impacts of their shopping habits, holding companies responsible for operating in a manner that does more good than harm.

Having a supply chain that is as transparent as possible will be the first step in proving to your customer that you are operating in line with their expectations. The high-end goods and specialty item industry saw this trend first, as consumers expected jewelers to prove that their products were conflict free and fair trade labels began appearing on items such as coffee beans. This expectation is increasingly becoming the standard across the board as consumers want to know where their money is going.

For example, during the COVID-19 pandemic, consumers are clued in and listening to how companies are treating their employees and how their business practices are affecting the health of factory workers up the supply chain. Events like these are opportunities that the public is using to learn how transparently a business is operating.

In addition to being transparent, consumers in 2020 expect a CPG supply chain to be as efficient and sustainable as possible. Using eco-friendly packaging, reducing carbon emissions, and streamlining production practices to consume as few natural resources as possible are all key factors that today’s consumers will be looking for in any company.

3. Direct to Consumer Sales

One of the easiest methods that consumers are using to both stay informed on product sourcing and order online is to go straight to the producer. Direct to consumer (D2C) sales have been on the rise as customers expect manufacturers to be more approachable online (more on that in the next section).

4. Digital Engagement On Social Media

In line with greater transparency and a more direct relationship, consumers are increasingly expecting CPG manufacturers to have a social media presence where the public can interact with business leaders and provide direct feedback. Both Twitter and Facebook have evolved into platforms for official business announcements.

Beyond those two big channels, Instagram has become a major avenue for spreading the word on special promotions and marketing campaigns through the use of hashtags. This was exactly how Starbucks’ Unicorn Frappuccino went viral so quickly. Social media was (and still is) a significant driver of traffic and sales for the global coffee giant.

This is another trend that has only been magnified due to the global pandemic of 2020. When consumers look for a company’s response to COVID-19, social media is where they check how brands are responding. .

5. Increased Reliance on Customer Reviews and Recommendations

According to Forbes, the highest paid YouTube personality of 2019 was not a video game streamer, comedian, or musician. It was Ryan Kaji, an eight-year-old boy who earned $26 million dollars by giving honest reviews of children’s toys and clothing. With 23 million subscribers and 34 billion views, Kaji is the perfect example of another trend that the CPG industry will be adapting to in the coming year—authentic customer reviews.

Different from promotional videos and paid advertising, authentic customer reviews—whether through written comments, social media photos, or YouTube videos—have become a primary factor in influencing consumer purchase decisions. In fact, it has become so important that, in a survey conducted with 14,000 Americans, 60% of consumers stated they would turn to social media and blog posts to get opinions about a product, and 70% of Millennials said they prefer a stamp of approval from a consumer within their friend group rather than celebrities and traditional advertising.

Beyond traditional online customer reviews, some of these recommendations actually come as a by-product of the content creator’s primary purpose. For example, many YouTube personalities primarily showcase their content as comedy but, throughout the course of the video, they might use a product, mention it by name, or even promote its usefulness as part of their script—all without being compensated by the company. One recent video that showcases this trend was filmed by Safiya Nygaard and titled “Mixing Every Bath Bomb From Lush Together”. Even though this was not a promotional video paid for by Lush, Nygaard talks about their soap products in a highly positive way throughout the 30-minute video—resulting in free marketing and product placement seen by Nygaard’s 8.8 million subscribers. For a consumer to talk about a product for 30 minutes in front of millions of engaged viewers without any compensation from the company would have been unheard of just a few short years ago.

With more and more consumers not only shopping online but also turning to fellow customers to see the product in action, a CPG business’ positive online presence and interaction with the public is more important in 2020 than it has ever been in the past.

6. Variety through Customization

Shifting gears from the theme of an online presence, consumers are showing greater demand for personalized products as opposed to buying stock models.

According to a report by Deloitte, “1 in 5 consumers who expressed an interest in personalised products or services are willing to pay a 20% premium,” as consumers view the things they own as a self-expression of their personality and identity. On top of that, consumers also expressed a desire for their interactions with these companies to be tailored, as well. In today’s world, consumers want to maximize the benefits of every dollar they spend. This means paying for exactly what they want while not paying for anything extra they may not want.

Deloitte further forecasts that, “In the future, businesses that do not incorporate an element of personalisation into their offering risk losing revenue and customer loyalty.” This may be a significant challenge for CPG manufacturers whose supply chains are optimized to maximize volume and distribution and cannot easily shift to production that is tailored to specific consumer needs. However, with proper consumer and supply chain analytics, a company can be better equipped with the insights they need to make these changes while still maximizing efficiency.

7. Data Analytics

In a different report from Deloitte for predicting 2020 CPG trends, they state that:

“Companies should focus on committing themselves to investing in digital technologies with built-in analytic capabilities that help them better understand their consumers and the operational problems they are trying to solve. Collecting data is just the first step. Data is only useful to the extent that it can be harnessed to generate insights.”

In other words, data tools such as supply chain analytics and consumer insights are critical in helping CPG manufacturers keep up with the growing demands of the modern consumer. Without granular data on what kind of customizations consumers care about, what supplier options exist that best meet the manufacturers’ needs, and other key insights, then adapting to these oncoming trends will prove incredibly difficult and businesses will run the risk of losing both relevance and revenue.

This is where Crisp can help. Our solutions can help your business streamline its supply chain processes and generate accurate predictions on consumer behavior to help you adapt to the world’s ever evolving needs. Contact us today to learn more and get started with a demo.      

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