The CPG Industry has witnessed accelerated growth over the last 4-5 years, thanks to changes in the general consumption of products and services brought on by the pandemic. The rapid acceleration of e-commerce impacted how consumers shopped for products. At-home delivery became a safe and secure option, which reduced the need for pickups and in-person shopping. Some CPG companies that had the capacity and resources to scale quickly in meeting these demands, gained immediate success, while others took time in finding their footing.

With the comfortability of e-commerce shopping, increased access to social media, and the reliance on convenience when buying, consumers' preferences and tastes have changed. Changes in the CPG Industry that would take 1-2 years could now happen within 1-2 months! To remain competitive or acheived long-term success as a new player entering the CPG industry, companies need to be wary of these 3 trends.

1. Increase in D2C business models via E-Commerce channels

   Amazon gained their notoriety and became a trillion-dollar business solely based on masterminding a platform whereby consumers can shop from the comfort of their home with expected at-home delivery no matter the item. This model of convenience brought on by technological innovations has revitalized top CPG companies like Walmart, Netflix, Native and Target and propelled newer players like Instacart and UberEats to scale as a D2C player. Today's consumers are more willing to buy if their shopping experience can be enhanced to their convenience. The traditional brick-and-mortar model of shopping is no match for scalable and cost-effective e-commerce alternatives. Consumers are more willing to buy if they're not required to physically be in store and can obtain their desired products with quick shipping. Convenience is the main driver for the D2C model, and businesses that implement strategies to serve customers via this model will experience faster growth rates. Companies adopting this model will do exceptionally well if they utilize rigorous conversion tracking methods, extensive digital-marketing analytics, and flexible partnerships with suppliers and 3PLs.

   
   

2. Increase in social media-driven purchases and convenience needs

   The power and reach of social media have been one of the main drivers of consumers seeking more convenience when shopping for products they may now desired but rarely searched for indefinitely. The availabilty of various platforms with built-in functionalities have allowed smaller brands and individuals to showcase products and sell directly to consumers. A consumer's final purchase depends on a wide variety of conversion factors such as the simplicity of finding a product, shipping convenience, availability of in-app purchases, quality engagement, and most importantly, seeing appealing content with that product. Platforms such as Instagram and TikTok have allowed brands and smaller players to increase their convenience power by having direct shopping integrations alongside their social media accounts. This increases a brand's convenience rating among social media users, who will obtain quick insights into their product offerings. CPG companies that comes out on top will be those that invest in these capabilities to keep pace with digital consumers.

   
   

3. Increase in value-driven purchases

   With the rise in input costs and potential volatility in prices, consumers may take a more holistic approach when considering value for their money/looking for ways to save. This approach may increase switching costs for many companies that offer similar goods if consumers can find convenient alternatives at much affordable rices. This is the "lower price as a value" concept. While value is subjective, some consumers may purchase higher-priced items if they see value. CPG companies looking to capitalize must leverage strategies that add value to their entire sales funnel. These could include optimizing their online/in-store shopping experience, improving customer support, improving shipping time, or adding "sustainable" branding to health-conscious products etc. These methods and others could add value to product offerings while keeping price above most competitors.

The above chart represents the likelihood of some future trends in the CPG industry occurring over the next 10 years and their level of impact on profit margins. Many general product companies i.e snacks and bakeries tend to overlook the "rise in value segment" factor in Group 3 before considering how much they can increase their margin by offering more value with these products.

All in all, the constant changes in global consumer, retail, and supply markets over the coming

years will impact many business models and industry approaches. Businesses that are scaling and adjusting to accommodate these trends are likely to be rewarded. Leveraging extensive consumer-driven and market data to optimize business models should be standard for future success.