How to Overcome the Top 4 Challenges Facing the CPG Industry
The conventional wisdoms that long guided the consumer products goods (CPG) industry are quickly falling to the wayside. Consumer preferences, how we shop and what we spend our money on are changing. You could say CPG brands and retailers face an uncertain future. Or, you could embrace the change and begin building the business of the future. At Label Insight, we’re all about the latter option. That’s because the business of the future will be built on transparency, a principle central to who we are and what we do.
So, what issues are turning the CPG industry on its head? Barb Renner, vice chairman and US Consumer Products leader at Deloitte, recently shared her 2016 Consumer Products Industry Forecast. In it, she outlines the industry’s top four challenges. But like with all challenges, opportunities abound. Read on for our assessment of how consumer product brands and retailers can tackle these challenges.
Challenge 1: Declining Brand Loyalty
According to Deloitte, three out of four consumer product categories saw a decline in brand loyalty since 2011. And, consumers are basing purchase decisions on attributes beyond product taste, performance and price. For example, almost half of US consumers strongly prefer brands and products that align to drivers like health and wellness, safety, corporate citizenship and transparency.
Solution: Chances are you’ve heard about SmartLabel. This transparency initiative led by the Grocery Manufacturers Association (GMA) is all about giving consumers quick access to detailed product information in a consistent format. Simply put, it’s an easy way to help consumers understand how your products stack up in the areas that matter most -- from health and wellness to safety to corporate citizenship.
Want to learn more about how SmartLabel can help your brand become more transparent? Label Insight has helped several leading consumer product brands participate in the initiative. We’re happy to tell you all about it.
Challenge 2: Uncertainty About Consumer Spending
According to IRI’s latest Times & Trends report, consumer spending will remain conservative in 2016. In addition to being slow to spend, consumers will be doing their research before heading to the store. In fact, 57 percent of consumers will make their purchase decisions before they enter the store, with many basing their decisions on coupons and loyalty card discounts (33 and 29 percent, respectively).
Solution: Brands and retailers need a smart digital strategy that differentiates their offerings and delivers the information consumers seek long before they visit a store. Label Insight can help you do exactly that. We work with retailers to improve their website search functionality, enabling visitors to find all products with specific attributes (e.g., gluten-free breads or paleo desserts). When consumers have full view of your offerings, they can make better buying decisions.
What’s our trick? No tricks, just deep product data attribution (our specialty). Let us show you how we can help organize your granular product data and improve product discovery.
Challenge 3: Ineffective Innovation Capabilities
It’s no secret that brands are competing for limited shelf space by launching new products to meet changing consumer demands. But often these products fail. In this third challenge, Renner addresses the many factors hindering brands from rapidly commercializing ideas, including increasing pressure to maintain near-term performance of existing categories, the rise of nimble new entrants that can scale more quickly, and the complexity of creating an environment that successfully breeds breakthrough innovation. So how do manufacturers improve their odds?
Solution: As our team recently shared with Food Dive, strategic analysis, including white space analysis and competitive attribute analysis, is core to improving the chances of a new product’s success. Label Insight is a go-to tool for many companies as they collect and analyze this information. Our product data engine enables brands and retailers to gather data on positioning of products within a category, as well as emerging ingredients, flavors, fragrances and functionalities. We also help companies conduct product attribution analysis to create a framework for differentiation from existing products.
Want to see our product data engine in action? We’ll gladly take you through a demo that looks at everything from key categories and competitors to the emerging attributes meeting new consumer need states.
Challenge 4: Increased Regulatory Scrutiny
In her fourth point, Renner highlights how regulators -- in the US and abroad -- are increasingly focused on issues related to product safety, sustainability and transparency. She notes how agribusiness and food manufacturers will soon need to comply with the Food Safety Modernization Act, as the FDA recently finalized rules to implement the act. Staying ahead of these regulations and planning for compliance will become more critical for brands in the very near future.
Solution: Brands large and small can benefit from aligning with a partner who has deep expertise in food industry regulations. Label Insight has worked with the FDA for the past seven years and we are experts in FDA regulations and compliance. In fact, we helped the agency develop and maintain the industry’s first scientifically accurate database of food ingredients, attributes and health claims.
Want to ensure your brand is properly making on-package claims? You guessed it: We can help.
Yes, the future is uncertain for CPG brands and retailers. Consumers are fickle and our tastes and preferences are quickly changing. How we shop and what we buy is evolving. But keeping pace -- better yet, getting ahead -- is possible. At Label Insight we look forward to helping as many brands and retailers as possible embrace the business of the future.