An omnichannel strategy for a changing CPG landscape has been saved
An omnichannel strategy for a changing CPG landscape
Leveraging new and old omnichannel capabilities
Tech innovation and consumer trends are reshaping the landscape of digital, hybrid, and physical sales channels, forcing Consumer Product Goods companies (CPGs) to adapt faster than ever before. How can they achieve growth targets; maximize consumer relevancy; and provide a cohesive, end-to-end consumer experience?
New omnichannel strategy
After an unprecedented increase in online sales in 2020 driven by the COVID-19 pandemic, omnichannel activity across all categories continues to grow. Providing seamless omnichannel experiences is now more than ever an imperative for CPG companies.1 Between 2019 and 2022, eCommerce sales grew 50%.2 Last-mile delivery is projected to grow, with a compound annual growth rate (CAGR) of 13.2% to 2030.3 Social commerce is also projected to grow, with a 31.6% CAGR to 2030.4
Channels such as CPG-owned direct-to-consumer, marketplaces, last-mile delivery, social commerce, metaverse, and B2B have emerged and continue to evolve, making it increasingly difficult for CPGs to deliver consistent consumer experience across all consumer touchpoints (figure 1).
The scale and scope of what it means to be “omnichannel” has also drastically evolved. Being omnichannel goes beyond being accessible at every touchpoint. Rather, it necessitates a seamless and unified experience. Seventy-four percent of consumers are using a combination of physical and digital to research and buy products.5 Consumers do not think of themselves as digital consumers or physical consumers. They expect a consistent experience across channels (e.g., consistent pricing and the ability to conduct a transaction across channels).
The rise of social commerce, smart devices, in-game purchasing, and the metaverse provides even more opportunities to position a brand in the digital sphere. The metaverse and Web3 present significant opportunities for CPGs, but only if they can pivot to take advantage of new channels rapidly.6 To keep up with these changes, CPG companies’ active investment in technology and associated people, process, and operating models is critical.
Setting the omnichannel foundation
Ever-expanding digital channels and tech innovation create new opportunities for CPGs to deliver against growth targets. At the same time, these opportunities are placing significant pressure on CPGs to deliver on their omnichannel promise to consumers. Our analysis shows that top-performing CPGs are focused on three key omnichannel priorities (figure 2):
- Develop a comprehensive omnichannel strategy: CPGs can elevate omnichannel to have a meaningful place in the enterprise’s strategy. The strategy should be known across the company to hold leaders across the organization accountable for driving omnichannel growth. To identify omnichannel strategy, CPGs can determine the role each of their consumer channel touchpoints plays in the consumer journey and how the strategy for each channel will tie into an overall omnichannel strategy (e.g., revenue driver, brand awareness builder, consumer tracking, creating a seamless experience, etc.).
- Identify capabilities required for next-generation consumer touchpoints: To scale and integrate all the channels, CPGs can consider investments in capabilities such as eCommerce assortment strategy, dynamic pricing, and retail media to meet consumer demand and delivery expectations. It’s important for CPGs to develop a comprehensive capability map and focus on upskilling current talent, hiring new talent, and outsourcing to third parties to meet capability demands.
- Optimize operating model for agility: Making the most of the omnichannel world will require organizations to evolve their operating models tailored to their specific goals. A key component of the operating model is setting accountability and ownership for the success factors of an omnichannel strategy (e.g., cross-channel messaging, pricing, and offers). Another operating model decision is choosing the degree of centralization of omnichannel teams. When it comes to eCommerce, the degree of centralization is driven in large part by the digital maturity of the organization. The organizations that embrace centralization are typically less digitally mature and require a centralized organization to build and mature their eCommerce capabilities. Centralization allows for (1) speed, (2) growth, and/or (3) cultivating digital expertise in a digitally immature organization.
What comes next?
The rise of new channels and evolution of traditional ones leaves room for new winners, first movers, and new models. The next installments of “An omnichannel strategy for a changing CPG landscape” will dive into consumer channels introduced here in our consumer touchpoints diagram (figure 1).
1 Blake Droesch, “US ecommerce by category 2022,” Insider Intelligence, March 21, 2022.
2 Jason Goldberg, “E-commerce sales grew 50% to $870 billion during the pandemic,” Forbes, February 18, 2022.
3 Straits Research, “Last mile delivery market size is projected to reach USD 123 billion by 2030, growing at a CAGR of 13.21%: Straits Research,” press release, July 19, 2022.
4 Newsmantraa, “The social commerce market to record a CAGR of 31.6% during the forecast period owing to increasing adoption of smartphones,” Digital Journal, October 19, 2022.
5 YouGov, International omnichannel retail report 2021.
6 Deloitte, “Retail in the metaverse: Understanding opportunities,” April 2022.
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