Lisa Griego | Director, Retail & Consumer Goods, Microsoft
Delighting consumer goods (CG) customers has a different meaning today than it did more than a year ago. Every aspect of how we work, live, and shop has shifted since the COVID-19 pandemic, and I don’t think anyone would have imagined just how extensively this world event would affect the retail industry.
Pantry loading and mass product shortages revealed tremendous vulnerabilities in retail and consumer goods supply chains that resulted in poor customer experiences, brand shifting, and changes in shopping behavior. During the pantry loading surge, I wasn’t the only Charmin Blue customer going to Costco to stock up. But when I was met with an empty pallet, I simply walked across the parking lot to Lowe’s Home Improvement and restocked with success.
The closing of many brick-and-mortar stores caused a fundamental shift in consumer buying behaviors as consumers became reliant on safe and socially distanced options to meet their demand with online retailers, direct-to-consumer (DTC) selling, and subscription services. Customers who were able to shop with the click of a button, instead of braving potential COVID-19 exposure in the early stages of the pandemic, felt safer and more willing to try new brands. In fact, with many products and shopping outlets unavailable, 75 percent of consumers opted to try a new brand or buying channel. With this change comes a momentous opportunity for brands to seek creative ways to win their customers back.
The role of innovation during times of crisis
After spending 16 years at P&G, I was fortunate to “grow up” and establish my “street cred” in a company driven by innovation. P&G leverages data and consumer insights to launch improved and new products leading to increased market share. With the consumer at the center of each initiative, P&G continues to address unmet needs while creating new experiences to engage with their brands.
Now more than ever, global brands must continue to innovate, not only with products but also by engaging with new social media outlets to reach customers with a level of differentiation unmatched for their target market. Those companies that have imbedded innovation across all lines of business are quickly reestablishing any brand equity and loyalty lost during the pandemic. They are able to add consumer value and enrich customer relationships while driving market share and shareholder return.
With the rise of global vaccinations and the new normal upon us, I have three pieces of advice to armor retailers and consumer brands moving forward:
1. Meet consumers and customers where they are.
Genuine empathy helps drive brand loyalty. In order to be empathetic, you must keep the consumer and customer at the heart of every decision. Gaining a full understanding of your target audience will yield dividends. Those brands unwilling or unable to remain agile and pivot fast find that challenger brands are breaking into the market, capturing share, and excelling at connecting with customers by:
- Developing products from a deep understanding of consumer needs.
- Cultivating direct consumer relationships.
- Designing social and digital engagements beyond the point of purchase.
- Capturing customer feedback in real-time.
- Developing digital platforms to introduce new products and services.
Incumbents must get better at doing these things to stay relevant and compete. Technology can help capture consumer insights and connected IoT products can help brands better understand consumption needs, while artificial intelligence (AI) and machine learning (ML) can be leveraged to drive better demand sensing and forecasting to optimize the supply chain.
2. Be agile and smart.
Agility is critical to the success of any consumer goods company. COVID-19 underscored the importance of the level of responsiveness needed to empower employees to work wherever they are—in a building, at home, on the manufacturing floor, or in the store.
In order for consumer goods companies to win, they must have real-time operational insights to build a data-driven, intelligent enterprise that not only collects data across their multiple functions, geographies, and applications but also turns that data into insights, while identifying trends within their market, as well as within their operations.
Consumer goods companies are leveraging customer signals and AI to better predict consumer trends. Those signals are then incorporated into new product development to be proactive, rather than reactive, in meeting the consumer’s unmet need. Digitized product development processes (especially with remote collaboration) can help introduce products to market more rapidly than ever before.
3. Innovate everywhere.
Innovation can take many forms, not just with products. Don’t get me wrong, I love how consumer insights led to P&G innovations that continuously deliver on unmet needs (for example, Tide Pods, Swiffer, and Mr. Clean Magic Eraser). However, the pandemic has highlighted the opportunity to go beyond the product and find innovations across every end-to-end touchpoint to engage and build affinity with customers.
Here are just a few examples of customer experiences outside of the product itself:
- Price: Consumer price sensitivity and perception of value have shifted. Both brands and retailers are looking at everyday low prices (EDLP), shallower discount levels, and economy or bonus packs to incentivize loyalty as consumers limited their number of shopping trips to multiple stores once stock levels started to restabilize.
- Portfolio rationalization: Apply the 80/20 rule to your SKU and product portfolio. Focus on delivering a reliable and sustainable supply chain for your top-selling items across key categories to match consumer demand and help drive brand loyalty.
- Commerce channels: Expansion into different commerce channels has been the lifeblood for brands previously selling primarily in brick-and-mortar stores.
- Mixed reality, augmented reality, and digital selling tools: What is true today will not be true tomorrow. Mixed reality will continue to transcend how you interact with your customers and drive collaboration within organizations.
- Smart packaging: Environmental concerns haven’t disappeared during the pandemic and will continue long afterward. As more mandates require reduced reliance on single-use plastics, smart packaging will help defray the cost of reusable materials by building an ongoing consumer-brand relationship.
- Supply chain management: With a connected ecosystem, consumer goods companies can partner with their retailers to capture real-time demand signals to drive in-stock levels.
What remains true? Consumer goods companies need to develop strategic partnerships with their technology partners to achieve their business outcomes, move faster, stay closer to evolving trends, and drive the innovation needed to remain relevant with their consumers. There is no doubt that technology has and will continue to play a critical role in the changing consumer dynamics and brand engagement. Behavior has shifted. New marketplaces, “endless aisles,” and buying habits will continue to evolve. It’s up to each of us to help drive the change we want to see in the digital world and to help democratize technology to enable every person on the planet to truly achieve more.
To read get more insights into retail innovation, read the e-book Reimagine Retail in the Digital Age.