The consumer goods and retail industry is breaking into a new era: Virtual shopping. E-commerce has just been established, yet more innovative ways are already in place to flood the market, providing completely different customer experiences.
An expanding, wealthier and ageing population based in a smaller number of urban centres creates a new set of challenges and opportunities for retailers and consumer goods companies.
Millennials value services and experiences over ownership, and new entrants are responding by offering services in the sharing economy, focusing on improving shopping experience and creating a more personalized offer.
Consumers are also trading down and buying on the basis of value and convenience, as they seek budget retailers, online shopping and more frequent purchases from smaller stores.
There are opportunities for fast movers to provide new shopping experiences, through the use of m-commerce channels and home based assistants, combined with the use of physical retail outlets as showrooms and experience centers rather than traditional High Street stores and hypermarkets.
Data analytics and machine learning offer opportunities to both improve supply chain operations and increase revenues by targeting specific offers to customers based on their shopping history.
This makes the ability to pivot to a new way of retailing a top priority, from the perspective of digitalization, as well as making the best use of physical retail asset.
In consumer packaged goods, consumers increasingly demand healthy, minimally processed and more artisanal and locally food products, but without compromising on taste, price and convenience. Millennial consumers are more likely to buy on the basis of value, rather than brand.
This creates a major challenge for large companies with long-established mega-brands on how to evolve them to meet the changing needs of the consumer whilst maintaining the pricing power that branded items can traditionally achieve.
The world’s largest food and beverage companies face declining top line growth as a plethora of smaller companies emerge to meet new consumer needs. These large companies now face a major growth gap and pressure from activist investors, and are required to launch more new and successful products to compensate.
Consumers, retailers and governments now expect food and beverage companies to minimise their environmental and social impact, whilst simultaneously maximising production and minimising costs.
However, major challenges remain in ensuring sustainable intensification, reducing food and packaging waste, minimising water and energy use and responding to environmental change, whilst ensuring supply chain security and making sure that ingredients are ethically sourced.
Food transparency and traceability is growing in importance, both to meet consumer expectation and ensure quality and safety in increasingly complex supply chains and products food quality and safety.