Raising the stakes: 4 retail and CPG trends driving greater competition

Integrated business planning

Retail and consumer packaged goods (CPG) are incredibly fast-moving industries. In this article, we examine some key trends that are driving competition to fever pitch.

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Romain Colin
June 19, 2024
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5
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Create flexible and predictable sales forecasts

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Raising the stakes: 4 retail and CPG trends driving greater competition

Summary

About the author:

Romain Colin is a Solutions Consultant at Pigment. Before Pigment, Romain has held finance roles with global brands like Moet Hennessy, Reckitt, and British American Tobacco.

Perhaps no industry moves faster than retail and consumer packaged goods (CPG). It’s an incredibly complex environment to operate in: fickle customer demands, seasonality, thin margins, maintaining the correct level of stock, managing returns - the list goes on and on.

But on top of the normal complexities of the job, demand and financial planners operating within the space must also keep abreast of a growing number of emerging trends that make their jobs ever-more complex. Let’s examine just a few of them.

The rise of omnichannel and direct-to consumer

New digital channels are continuing to open up new opportunities for retail and CPG. By providing a seamless experience across these channels and physical stores/touchpoints, organizations are able to optimize the customer journey.

But doing so holds many logistical challenges: data is fragmentation across channels, the need for granular inventory management, and a requirement to satisfy customer demands for fast delivery times.

Direct-to-consumer (DTC) involves selling products or services directly to the consumer - without any intermediaries. For manufacturers, going DTC poses some challenges, but holds a number of benefits: faster access to the market, more control over the customer experience, better margins, and access to invaluable customer data (which can inform an omnichannel approach) to name just a few.

For retailers, it means there’s more competition to think about, and they’ll need to find smarter ways to compete - with KPMG forecasting ongoing growth and companies like Shopify making it easier and easier for manufacturers to connect to customers, competition is set to continue growing.

Dynamic pricing

Dynamic pricing is said to have helped Amazon boost profits by 25%. Done well, it takes into account a huge number of different factors - competitor pricing, consumer demand, stock availability, and more - to adjust prices in a way that benefits the retailer (without upsetting customers).

With the use of dynamic pricing spreading, any retailer (or D2C manufacturer) not making use of it might be leaving money on the table.

Sustainability

Both consumers and governments are putting increasing pressure on the retail and CPG industry.

Consumers are becoming more environmentally conscious and are actively seeking out products that are deemed environmentally friendly - they’re looking for eco-friendly packaging, sustainable sourcing, and lower carbon footprints.

At the same time, governments worldwide are introducing rules on single-use plastics, waste production, emissions and more.

Smart shopping

Technological innovations like smart shelves and cashier-less stores are seeing wider adoption.

They enhance both retail experience and operational efficiency, helping with inventory management, reducing theft, and improving customer engagement.

All of these trends - and others that we haven’t mentioned - combine to make the lives of financial and demand planners at retail and CPG companies even more complicated than they were 5 years ago.

Are you staying flexible enough?

There are three key qualities any retailer or CPG company requires to thrive in the complexity their industry creates. They are:

  • The ability to react quickly
  • Forecasting accuracy
  • Aligning teams across the S&OP process

We’re working with global companies like Unilever, Tommy Hilfiger, and Calvin Klein on use cases specific to the retail and CPG industry like cost forecasting, customer/SKU level scenario planning, unit plans that tie to financial impact, and more.

To learn more about Pigment for retail and CPG, join our next live tour.

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