Shifts in consumer demands and buying behavior are reshaping the consumer-packaged goods (CPG) market. Large legacy companies that have dominated the landscape for decades are transforming long-standing business models to compete in an era of mobile shopping and multichannel transactions.
The growth of online shopping is accelerating, according to a study conducted by Nielsen and the Food Marketing Institute.¹ While online shopping offers consumers convenience, savings and more control over brand selection, CPG manufacturers and retailers lose the ability to influence shopping behavior and are forced to rethink traditional brand awareness strategies geared toward television advertising and in-store promotions.
Social media and smartphone apps are further fueling the growth of CPG e-commerce, while also offering a level playing field for new niche brands. Small startups are not only able to compete online with entrenched brands, but their digital business models often give them an edge over industry giants. Brands draw on customer data and feedback to form a personal connection with consumers and customize offerings based on their preferences and needs.
Traditional CPG manufacturers have taken note and are shedding the distribution layers that have separated them from their end-users. In recent years, more companies have been embracing direct-to-consumer (D2C) models that put them—often for the first time—in control of the end-to-end customer experience. Direct access to consumer behavior data also enables companies to optimize the effectiveness of brand promotions while reducing operational costs.
The evolution of e-commerce and digital channels has more U.S.-based CPG companies considering emerging markets for growth opportunities.² Succeeding in the global marketplace will require U.S. companies to take a “think globally, act locally” approach: To earn the trust of local consumers, they must first create a presence in the regions in which they are expanding.
Empowered consumers have raised their expectations for the brand experience for everything from big-ticket items like cars and televisions to low-cost food and household products like soda or soap. Traditional consumer packaged goods companies that previously had little control over the in-store brand experience now have been tasked with building relationships with their end-users if they want their brands to remain relevant in the age of social media and mobile shopping. Key customer service challenges for consumer packaged goods companies include:
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CustomerServ’s call center vendors provide the following services for CPG companies:
¹In 2017, 49% of U.S. consumers reported shopping for CPG products online, and that percentage is predicted to rise to 79% over the next five to seven years.
²According to Deloitte’s “2018 Consumer Products Industry Outlook,” global retail sales of packaged foods is expected to rise to over $3 trillion by 2020 with emerging markets being the primary driver.