Digital World in Consumer Package Goods

digital world in consumer package goodsConsumer package companies that embrace digitalization over the next five years will emerge as industry leaders, while those who wait are likely to become stagnant and lose market share, according to a report on the digital world in consumer package goods  released by the Boston Consulting Group (BCG).

“The cost of inaction for incumbent manufacturers is ceding control of their brands, share position, and margins in the fast-growing digital channel,” said the report’s coauthor Jamil Satchu, with IRI Global Analytics and Consulting.  “Companies that do not play in the digital game are likely looking at flat or shrinking sales. Brand equity is at risk as the purchasing pathway shifts online and consumers more often search for and discover brands digitally. But the experience of other sectors demonstrates that early movers often establish tough-to-trump positions and advantages.”

Home care and general food products are the sectors that feel the most impact from digitalization, but those numbers are likely to spread across the broader spectrum of the CPG market as digitalization is adopted in greater numbers.

“The CPG industry is fast approaching a tipping point, driven by a confluence of trends,” said Patrick Hadlock with BCG. “Consumers are embracing technologies, devices, and services that make everyday tasks such as shopping, cooking, and even commuting quicker, easier, more fun, and more efficient. This is fragmenting the purchasing pathway as consumers regularly switch back and forth between digital and physical channels, and they interact digitally both in and outside of stores.”

BCG Recommends the following ‘no regret’ moves to get on board with digitalization

  • Develop an integrated strategy for how far the company needs to go and how to get there
  • Shift investments to establish a digital brand presence
  • Build the necessary capabilities and organization for a fast-moving digital world
  • Shape the evolution to digital with channel partners.

Manufacturers should focus on existing capabilities including product placement, marketing content development, and supply chain management as critical parts of moving to the digital world.

Watch this video to see how one manufacturer was able to use Microsoft Dynamics GP to streamline their operation in the Digital World.

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