The consumer packaged goods (CPG) industry is experiencing significant disruption to the advertising and supply ecosystem right now. And, merchants wait too long snap out of the shock and do something about it, they could find themselves closing their doors permanently. But, just because its hard at the moment doesn’t mean that you should give up.
In fact, many businesses have made it through recessions and come out stronger than ever in the end by playing their cards right. If that’s what you want, then you need to look at what’s happening in your industry and implement creative solutions. Here, you’ll see a summary of the current state of CPG amidst the global COVID-19 pandemic and insights that can help you make informed operational decisions.
First, a Summary of the Current State of CPG Sales
Right now, the packaged goods industry has taken a major hit. And, the situation is evolving rapidly. So, to start your journey to recovery from the hit you’ve taken, look at a few key changes that have happened on the playing field.
- Amazon’s decision to halt shipments of non-essential goods from sellers
- Local communities are experiencing shortages of crucial products
- Major retailers are moving to online-only retail and closing physical doors (and, some online retailers are even closing temporarily)
While these facts are hard to believe, there is no need to panic. The truth is that there is a silver lining here and an optimistic attitude can help you find it. Let’s read a story with a happy ending to set the mood.
Next, This is How a Simple CPG Brand Came Out on Top After the 2008 Recession
In 1953, a man named K.R. Perry opened the first Ben Franklin variety store in Norfolk, Virginia. At this time, he had the novel idea to offer every product in the store at a single price point. And, this worked well. People loved the idea and, within 17 years, Perry was able to grow his holdings to over 130 similar stores along the East Coast of the United States. The company had become a success.
The retail victory lasted until September 29, 2008, the official start of the recession. That week, the CPG brand took a 3.18% hit. And, the next week, their stock went down another 10.18%. Most companies were plummeting right alongside them, so they weren’t in it alone. But, it still hurt.
While many stores opted to close their doors, instead of giving up, the company turned to the idea of growth. In an economic recession that lasted a year and a half, this CPG brand decided to lay a strong foundation on which they could stand when the economy turned around.
The company added freezers and refrigerators for food products to stores, freshened up their displays, and invested in new lighting for a more pleasant shopping experience. Some of these decisions were risky and all of them were expensive. But, they paid off.
The brand invested in the experience that contemporary consumers wanted and needed. And, within less than a year from the onset, this chain opened hundreds of stores in prominent locations. By the end of the recession, on July 27, 2009, the company experienced a complete recovery.
Moreover, since the end of the last recession, they have continued to exponentially thrive and grow. While they have changed their branding several times throughout history, you know the company that has become a household name as Dollar Tree.
The point of all this is that you don’t have to fail right now. Instead, you can look at this unfortunate situation as an opportunity to rise above. Use this as an opportunity to learn and grow. Let’s get your wheels turning so you can start plotting a long-term action plan.
|For more information about Dollar Tree, refer to the following:|
Now, How Can You Carpe Diem to Create a Successful Future for Your CPG Company?
One of the key points from the anecdote above (which seems to be at the center of every successful venture) is that Dollar Tree gave consumers what they needed and wanted. So, as you move through the final part of this piece, try to keep your customers or and target audience at the center of your mind.
Here are some actionable steps you can take to develop your strategy.
1. Use This Time as an Opportunity to Develop Relationships With Your Products’ End Users
One of the first things you need to do is find out what your customers want. Surveys are traditionally a decent model for asking what buyers are interested in. But, the fact is that many consumers aren’t able to directly voice what they want right now, and they don’t necessarily have the time to take a survey or reply to your emails.
So, instead, watch people. If you aren’t already monitoring consumer behavior, this is something to add to your operations. Website visitor behavior, for example, can be an indicator of what people are most interested in online. Social media monitoring can be another channel to collect attitudes and desires from your target demographics.
The bottom line: If you’ve put off any operational changes that relate to getting to know your customers better, now is the time to implement those changes. As you begin to understand your users, you can deliver a more satisfying buying experience. And, this is sure to be crucial for CPG companies who want to come out of this situation in one piece.
2. Uncover Holes in Your Industry and Fill Them
Could you alter an existing product, sales outlet, or supply hurdle to better appeal to your customers? If so, now is the time to put a plan into action. A move like this can have a major impact on your future success in a time like this.
A Chinese furniture manufacturer, Loctek, who traditionally offers height-adjustable standing desks and desk converters for offices, is adding a new and timely product to its catalog. In the thick of the Coronavirus outbreak, they noticed a need for a new style of mobile medical carts for care facilities. And, it didn’t take much after adding wheels to a newer desk design to make it happen.
Most companies are not likely to make bulk orders on office equipment like desks right now since they are making the transition to remote work. At the same time, hospitals are looking for solutions to make their workplace more efficient. Decision-makers at Loctek must have recognized this and took the opportunity to fill a hole in the furniture and equipment industry.
When it comes to consumer goods, identify where brands in your niche or adjacent niches are unable to deliver on customer satisfaction. Then, come up with a way to deliver where they are lacking. Doing this will set you apart from the competition and establish you as the brand people can turn to in a time of need.
3. Watch Where Your Competitors are Letting Up on Ad Spend
Many CPG brands are decreasing and altogether stepping back from advertising and locking down their marketing budgets. Let’s not debate whether this is the right move. Instead, do some sleuthing to dig up dirt. This might be an exceptional opportunity to rise above your top competitors to get your brand in front of consumers.
One obvious example of this might be for merchants who are in competition with L Brands, the holder of Bath & Body Works, Victoria’s Secret, and Pink. Recently, the company closed all of its brick and mortar shops and moved operations solely online. Then, a couple of days later, Victoria’s secret temporarily shut down online sales as well. Competitors had/have the chance to walk through a wide-open door here.
Anywhere L Brands (or any major retailer) traditionally monopolizes a corner of digital or PPC advertising, to compete is expensive. Now, there is less competition in several areas. So, watch your industry to find these hidden opportunities.
The goal here is to keep your spirits high and motivate you to keep going. CPG brands with the will to weather this storm are going to come out on the other side stronger than before. So, be one of those brands. And, if I can help you learn how to get closer to your customers or identify gaps in sales or advertising for your industry, please let me know.