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Top Trends Shaping the Consumer Products Industry in 2021

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Reva: You’re listening to Next in Consumer Products from Publicis Sapient. The podcast that shares insights on unlocking what’s next in digital and consumer products.

Reva: As we all know, the global pandemic brought with it many challenges and disrupted nearly every aspect of the consumer products industry in 2020. Over the past 12 months, we’ve seen CP firms making sharp strategic pivots and unforeseen investments to cope with the significant changes in demand, shopping behavior, channel shifts and supply chain disruptions. With the pandemic likely to continue throughout 2021, the question lingers: How can CP firms accelerate their transformation efforts to drive growth and remain competitive?

In this episode, we’re going to discuss what CP companies should embrace with both trends and technology in the year ahead. Joining me today is Publicis Sapient’s CP Industry Lead in North America, Kristen Groh, and our Industry Lead in Europe and Asia, Scott Clarke. I’m your host for the session, Reva Bhatia. Now, let’s dive in.

I’m going to kick things off with a question for both of you. How would you summarize the transformation consumer product firms have gone through and the trends that have emerged in 2020? And how do you expect these trends to continue in 2021? Kristen, I’m going to start with you.

Kristen: Yeah, I think first of all, one of the biggest and earliest things that we saw in the pandemic was stockouts. I think we’re all very familiar with the, the great toilet paper outage of March 2020, and, and how that affected all of us. And I personally remember stockpiling toilet paper and paper towels and hand sanitizer and cleaner. And these things just weren’t available in the stores and, even if, it’s funny because extended out to things that you wouldn’t even think about as the months kind of continued down, such as bread makers and even the Nintendo Switch was hard to find.

So it was kind of interesting to see what thing people were searching for out there that they couldn’t find, but, you know, largely this was due to a lot of issues when the manufacturers just obviously not prepared for something of this nature, not prepared for the panic buying that happened with consumers both on the delivery side of getting those products out to the retailers, but also on the supply side. You know, stores weren’t the only thing shutting down. The manufacturing was shutting down. The suppliers didn’t have people coming in to work, so they weren’t getting the supplies out to those manufacturers. And so really the whole system started to shut down.

The challenge with that is, you know, when consumers go to the store, they’re loyal to the brands as long as the brand is present. They’re not going to go search out their brands in most cases, especially in the in the CPG world. So, you know, over half of them are just going to switch to whatever is available at the time. And the implication to the manufacturers of course is that, you know, it actually costs about five times as much for these brands to acquire new consumers as it does to keep them within the franchise. And so, you know, this really opened up a new level of challenge for them in those early days of the pandemic.

Reva: Great. Thank you, Kristen. Scott, over to you, what is your take?

Scott: I think, first of all, I think is worth paying tribute to the extraordinary creativity and resilience that the consumer products industry showed last year and in times of unprecedented uncertainty. An industry that was already facing tremendous amounts of societal and economic change now had to deal with the unforeseen challenges and issues around the global pandemic. And I think the way they’ve reacted, that in the speed by which they reacted, that has been anything short of amazing.

First of all, this shift in demand patterns and shopping behaviors has forced consumer product companies to rethink how they provide value in the market, how the exchange value with their consumers, how they go to market. I think they’ve invested significantly in direct-to-consumer models and ecommerce as more and more shopping has moved online. The supply chain disruptions that Kristen commented about has forced CPG companies to boost their supply chains and shift to new agile models, using data, using AI in ways to create more transparency across the end-to-end supply chain process to ensure that products get into the stores and on the shelves at the time that they need to be.

And then the third, I think, is really around brand purpose. We’ve heard many consumer products companies talking about importance of purpose of social justice and sustainability for quite some time, often as a marketing rallying cry, but I think we saw last year through philanthropy, through education, through restructuring and reprioritization, that this is more than a rallying cry. And for many CPG companies around, purpose became a focal point of all that they were doing in the market and the way in which they were engaging and providing value to consumers.

Reva: Excellent and you both touched on something I think that is really critical, which is the innovativeness and resiliency that consumer product firms have largely been focusing on for many years, but really needed to double down on last year in 2020 in order to keep share of consumer base. And, you know, with that I would say that one of the key changes that you both had articulated that we’ve been seeing consumer product firms embracing are new commerce channels and business models in order to meet shoppers in different ways than they had had to previously.

And so, you know, you touched on things like direct to consumer and social commerce being emerging trends that we saw a lot more of in 2020. I’d love for you guys to maybe shift gears now and talk about how you think this trend will continue to evolve into 2021. Kristen, I’m going to start with you again.

Kristen: Yeah, thank you. I, I think what’s really interesting is that in, you know, if you read any article in 2020, the rapid pace of digital transformation was exponential. And, you know, these companies that were maybe headed down that path had to do it a lot faster than they anticipated. And so I agree with Scott, the great deal of resiliency on the parts of these companies. And I think they put a lot of good things in place, such as the D2C, you know, making partnering with retailers to ensure that they could do the buy online, pick up in store, really amping up their e-tail presence and all these sorts of things, and they did those quickly.

And likely as they continue to mature down this path, again going back to that that supply chain, while I think, you know, this past year was really about, you know, just kind of hedging and making sure that, you know, they survived and got things where they need to be, going forward I think a lot more focus on this massively distributed channel mix is going to put some more focus on how they manage the supply chain, both on the distribution side as well as kind of the supply side. So, you know, thinking about how you leverage all of those consumer demand signals to really optimize that distribution side. You know, ensuring you have coverage across the various channels, so, you know, if your consumer wants something and where they want it, and how they want to get it, and you’re making sure that you get it there, or provide them with an additional path in their journey should they not get where they want to go on their first path.

And so I think to do this, you know, companies are really going to have to get a handle on their data and their consumer data, and those signals that are coming from all sorts of directions and pulling those together, and really tying those into how they do demand planning and how they think about, you know, what it is that they need to produce, and where they need to get those things distributed out. Typically that data comes in from the retailers, but it’s delayed. And so oftentimes the retailers don’t even necessarily know exactly what’s on their shelf. They’ll probably send the manufacturers the point-of-sale data, but it’s delayed. And so, you know, your ability to manage to disruptions is really challenged by that. You know, the typically demand to regular cycles of holiday and seasonality but can’t accommodate too many sorts of disruptions that happen, so I think we’re going to see a shift there in, you know, how companies leverage enterprise and consumer data to really better enable their entire supply chain.

Reva: Great, thanks. And, Scott, over to you. What’s your take here?

Scott: Yeah, I think on, on direct to consumer specifically, D2C is not new to the industry by any means, and I think there’s very few large traditional CPG companies who have not been debating whether or not to go direct to consumer for quite some time. The benefits of going direct to consumer are clearly understood from increased profitability, to access the first party data, the ability to control and shape the end-to-end brand experience, regaining their brand control is, is critical in a world where relevance is everything. But I think last year, it was very difficult to ignore the importance of finding a new path to market, new routes to market for many of the traditional CPGs who may have rejected or deprioritized the importance of D2C in the past. And I think a lot of those who have now taken the leap forward have started to reap the benefits. And I think as we go into 2021, D2C moves from, from just being in the game to being an area of potential differentiation.

It’s worth calling out that direct to consumers is more than just having the opportunity to buy directly from the manufacturer. It’s much more than that. It’s more around having a direct-to-consumer relationship, engaging with the consumer with meaning, with purpose throughout the end-to-end value chain. So the focus is shifting and needs to shift from the point of sale to the point of experience. And how do we inspire consumers to want to engage the brand directly? What are we giving them that they’re not getting from a traditional retailer or from an e-retailer? How do we inspire people to the site with rich personalized content? How do we understand the context of their buy as they’re going through the buying process that we can meet them in the moment? Then when they’re visiting the site, how do we keep them there longer? How do we provide amazing experiences that consumers want to rave about and shout about and gives them a purpose gives a reason to want to re-engage the brand directly in the future? And what are the types of services that we can wrap around the products in order to give the or provide a much more formidable value exchange between manufacturers and consumers?

So I think that’s what we’re looking forward to in 2021. There’s not just the emergence of new D2C models like subscription and social commerce, but really creative ways in which CPG companies across all categories are looking to create that one-to-one relationship, that one-to-one dialogue with consumers using creative content and using data in a much more impactful way.

Reva: That’s great, Scott, and it’d be impossible to talk about direct to consumer without mentioning, you know, you mentioned data, and it’d be impossible not to double-click into that, frankly, given that the role that data plays in unlocking success in D2C and vice versa is of paramount importance to CP firms. So you know what we found is with the emergence of these unique commerce channels, you know, CP firms now no longer necessarily struggling as much as they once did with acquisition of data. They now have more data than perhaps and arguably ever before.

But now the question looms, which has been the retailer quandary for quite some time frankly, which is, “Alright, now what the heck do I do with all this data that I now have and how do I actually harness it to drive true business value?” And so, you know, I’d love for you guys to unpack a little bit more how you feel CP firms in the year ahead should look to use data in a more meaningful way. I’m going to start with you, Scott, since you started touching on this with your prior response.

Scott: You touched on it, Reva. Be careful what you ask for when it comes to data, right? Wherever you turn with telling organizations they need to win with data, they need to capture data from a myriad of different sources if they want to be relevant and impactful with their consumers. And many companies are now drowning in much of the data they’ve captured, or at the minimum struggling to understand how to turn that data into value, into business outcomes into business benefits.

And I think it really kind of gets back to the essence of why you exist as an organization, and do you understand some of the fundamental questions regarding your existence. And the first one is, is: Why the consumers buy from you? Do you understand why they buy from you? Do you understand why they buy from you some of the time, but not all of the time? Do you understand why they buy from your competitors? Do you understand what value consumers get from the products and services you provide? And the data needs to inform that first and foremost.

Beyond that, it’s understanding all of the opportunities that exist to create more value to the consumer, right? To the human who buys your products and buys your services and at each point of interaction, there is an opportunity to change outcomes for the better and that requires understanding the context of each interaction, the why of the buy, the why of the experience ultimately and then ensuring that you provide the right data at the right time to drive that positive outcome and to do consistently. And those are the questions you need to be asking by, first and foremost is, what decisions do I want to make and what are the opportunities to really make a difference to human lives? And you work back from that to understand what data you need, in what format, and what precise point in time to move from decisions that may have historically been guided by intuition and experience to decisions that are now being based on facts and figures.

And then you figure out what business processes need to be in place and which of the process is needed to be automated to ensure that data does get to the right channel or the right decision maker at the right time. And then we can start to look at the underlying technology ecosystem that makes that possible with velocity and with scale. But I think quite often when we’re tackling the data problem, we want to go straight to the technology, straight to the toolkit. And therein lies the mistake. Until we figure out how data can make a difference to the value exchange we have with consumers and the decisions we have to make every day related to our business, then we’re not yet in a position to talk about process or technology.

Reva: That’s great, Scott. And you talk a lot about the what. Like what data would be used for and what that golden panacea looks like. Kristen, maybe if you want to touch on the how. I mean I know, Scott, you started to touch on glimmers of this, but, you know, I think the the how is really important to hone in on as well.

Kristen: Yeah absolutely. I think one really great example of what Scott is describing is the area of customer service. Companies have a wealth of data and insight about their consumers that they probably don’t even realize that they have, that’s going to come in handy as we move forward in this even more digital journey that consumers are going through. You know, it’s interesting, we saw in addition to the massive changes in consumer behaviors towards digital shopping that we saw as a result of the pandemic, there were also some really interesting business acquisitions in the market towards the end of the year, notably Salesforce acquisition of Slack and Facebook’s acquisition of Kustomer. Both are chat-based platforms, and it’s really interesting to think about this and why those acquisitions took place.

But if you take a step back and note, I think it was Twilio published data stat that said 89% of consumers actually prefer to use messaging to communicate with the brands. So now here I am I’m at home. I’m doing the majority of my shopping online; I have a question, or I need some help with something at some point in my journey whether that’s in the discovery phase or, you know, post purchase returns, that sort of thing. I don’t want to pick up the phone and call someone. I want to hop online and just have an interaction through a digital platform maybe while I’m on a Zoom call or, you know, wrestling my kids to do their homework, or, or whatever it might be. That’s my preferred channel, or on my mobile device.

You know, I want to interact with brands in the same way I interact with the people in my lives. And so here now, we have this in addition to all of your call center data that has all this wealth of information about consumers, and what they are interested in, and what language they used to talk about your product. So how do you process that? How do you use that to really enable that journey, really enable that experience to be better? And I think here we have an opportunity to leverage all of that through AI, to help with chatbots and things like that, help to create these self-guided discoveries in service situations for consumers, so that it frees up your human customer service folks to handle the more complex interactions.

And I’ll give you a great example. I think Beauty is going to be the biggest one to capitalize on this. You, you have an industry where it used to be very much about going to the store and maybe talking to a beauty consultant about the products, and really touching and feeling and trying. You do not want to do all those things right now. So I recently went to do something about my aging wrinkles. And I went online, and I’m like I don’t know what to buy, I don’t know who to talk to. And I just started to engage in a chat on the brand website, and that chat session actually led me to purchase the product that the company recommended based on a few different criteria that I entered.

But it was really a nice experience. It felt very much like I was interacting with a real beauty advisor. I happen to know what’s going on behind the scenes, and I know it wasn’t a real beauty advisor, it was a chatbot, but it led me to, to the product that hopefully is working for me. But I think these experiences are going to become more and more frequent, and I think it’s on those manufacturers and brands to really leverage the data that they have available to them in ways that improve the journey for each of their consumers. I think so often we hear from CPGs so we don’t have the data, or we don’t have first party data, we don’t have this, and I think you know shifting and thinking about that strategy and like Scott said what, what is your value to these consumers and really honing in on that and using what you do have to improve the experience can be really, really valuable and something that I hope to see progress in the next year.

Reva: So, you both have done a really great job at highlighting some of the specific details of commerce mechanisms, data mechanisms that will unlock value for CP firms. You know, I’m wondering what some of your more general recommendations would be that you would give to CP firms to catch up with maybe some of the trends that emerged largely in 2020 and 2021. I’m going to start with you, Scott.

Scott: I think we’ve talked about data, and I think obviously finding a way to capture the types of data that are necessary to create the kind of relevancy and experiences that are so important and will be so important in this industry I think is important. The other is really how we adapt to change. As I mentioned at the outset, I think it’s, it’s quite inspiring how the CP industry has managed to deal with such tremendous uncertainty and change in the last 12 months, but that uncertainty is going to continue in the foreseeable future and far beyond. So the ability to move quickly is going to be critical. I think what we expect in the next year or two is pretty much what we were already seeing from the consumer products industry.

They’re doing a lot of the same things but doing it much more quickly and not trying to perfect innovation before getting it out to market, so accelerating the time to market and new experiences. Coming out with minimal viable products rather than trying to perfect an idea or perfect a new product or service before you take it to market and learning from those innovations, from those prototypes, and making adjustments in rapid fashion I think is going to be increasingly important.

I think the other one, I think, this is I think kind of a breakthrough moment to a large extent in the industry. We talked about the different phases of digital transformation. I think to a large extent, we’re on the precipice of a new phase of digital with physical and digital realities are going to converge even more. It’s not going to be ecommerce or in-store commerce anymore, it’s just commerce. First of all, I think we’re going to start seeing increasing convergence of technologies. We’ve talked about specific point solutions like AR and VR and IoT and AI and cognitive computing and blockchain and go on and on and on, but I think bringing those technologies together in new innovative ways to create new integrated realities is going to be important.

Perhaps the most important of all though is the democratization of experience. We’ve talked a lot about the relationship between manufacturer and consumer, but I think going forward we’re going to see smart consumer product companies embracing their consumers as business partners. We’re almost democratizing the experience to a large extent, where employees of those companies and consumers and special interest groups even other companies are going to be pulled together in these new democratized business ecosystems, where consumers are working side-by-side with the CP manufacturers, the brands we love, to create new innovations. And together, to tackle society’s tougher challenges and tougher problems. It doesn’t matter where great, great ideas come from, so long as the great ideas anything pulling together consumers in these new ecosystems and breaking down the distinction between supplier and consumer, I think is going to be extremely important, but also exciting innovation in the next 12 to 16 months.

Reva: That does sound exciting. Kristen, what’s your take?

Kristen: Yeah, I mean, I, I think you know it’s really going to be a how do you enable all these things to happen. And what changes do you have to make to your organization in order to ensure your ability to adopt and adapt. And I think, you know, right now CPs are largely organized in silos. You have large multi brand, multinational organizations who are essentially, lack of better word, a conglomerate of many businesses. And, you know, in some ways that, that works, but in other ways, that causes a lot of problems in realizing the true value that the business could have.

Data is a great example of that, where the data silos that are put up artificially by the structure of the organization really limit your ability to think about the total value of your consumers across the enterprise versus kind of a brand-by-brand lens. And so the more a large or any, you know, CPG company can, can look at their consumer as a total consumer, and not the consumer of brand X, the better off they are going to be. And we’ve actually worked specifically with clients to help them use some machine learning to identify where they have consumers that cross their entire portfolio and how to really optimize their total value to that consumer beyond just the brand.

In addition, I think, you know, you’ve got these employees who are not necessarily digital natives. And as you introduce more technology and more capability into the business to enable automation and different ways of working, ways of improving the consumer experience, there are going to really have to shift the way they work. And that requires quite a bit of learning. It requires quite a bit of change management. And so I think, you know, these enterprises are going to really focus in on their people. And how do you upskill? How do you help with that adoption that they need to have in order to become successful in their jobs? I think it’s going to be really critical to enabling all of those things that Scott talked about, and something that I hope to see the CPGs focus on in the years to come.

Reva: Excellent. Thank you, both. That was great. So I know you guys touched a little bit on what we expect to see in 2021. I think a fun closer for the both of you would be: What you hope to see in 2021? So, maybe some of the areas where we feel CP firms have been completely neglecting or under indexing on evaluating opportunities therein. There may be some corollaries with a lot of what you guys have shared already, but I’d love to maybe shift gears to more pie in the sky thinking of, you know, more opportunistic areas that we’d love to see CP firms dabble more into in the coming year. I’m going to start with you, Scott.

Scott: It’s a great question to ask, and certainly during the middle of the Consumer Electronics Show. I know Kristen and I are both disappointed we can’t be there in person. For both of us, the first time in a number of years we’ve not been walking those corridors and seeing innovation happening in real time. And, you know, it’s funny I think sort of observed what’s coming out of the Consumer Electronics Show this year, there’s so much talk about drones and droids, right? Robots that clean your house, that mow your lawn, that cook your dinner. Life can never be easier if you listen to the, the startups and see some of this technology in flight.

I think the technology that inspires me the most, that I’m getting very excited about and certainly seeing examples of it in in the real world, seeing examples of it with many of the traditional CPGs we are working with, is the use of, of smart technology, particularly biometric sensors, wearable devices, IoT, to help people achieve their aims around health and wellness, right? The ability to monitor our vital statistics, and mealtime, and to be able to seek advice on how we can live our lives in a healthier way. What we should eat? When we should sleep? What vitamins they would be deficient in, and we need to supplement?

I think, you know, ultimately, we all love technology. We all love innovation, but there’s not a lot of room for technology or solutions looking for problems. And I think when we start seeing technologies converge in ways that help people live their lives with greater purpose, help live their lives with greater health and wellness, particularly given the global pandemic and all the uncertainties we’ve experienced around that, I think that gets, it gets very exciting, and I think we feel very encouraged. And I think in the next couple of years, we’re going to start seeing some, some really interesting technology-enabled solutions emerge in and across the CPG vertical that will in fact help people live lives with greater health and wellness. And I think that’s something we all look forward to.

Reva: I love it. Scott. Thank you – couldn’t agree more. Kristen, your take?

Kristen: Yeah, so I will, I will also kind of playoff the CES dialogue. And what’s interesting, I listen to Brian Cooley commentate, just set up, you know, what we’re expecting at CES this year. And, you know, one of the things that he always talks about is the idea that technology should be transparent. And when I think about the smart home right now, I think that technology is not as transparent as it could be. You’re starting to see a lot of devices come into play. We’ve seen it for a number of years, Alexa and Google Home and the smart outlets and things like that, but I personally have yet to see them really make that leap to improve my life.

I can turn the light on if I walk across the floor, or if I yell at my Alexa three times until she understands what I’m saying. But is that really adding enough value? And, you know, I think the more time I’m personally spending at home, the more I want this space that I am in, you know, that is surrounding me, to be more in tune to me. And I, you know, I think there are some capabilities out there right now that, you know, the Nest thermometer and things like that, but I think if we can get to a point where those signals, similar to what Scott was talking about with the smart, you know, the wearables and those sorts of things, but how do we extend that into our homes.

I’ve been cooking a lot more this year than ever before. My spice cabinet is out of control. I have no idea what’s in there. And so, you know, are there better inventory managements for the things that we have in our home. If I’m freezing leftovers, are there devices that can help me remember, like don’t forget you put this soup in the freezer two months ago, you need to eat it? You know, just ways to really enable our home lives, through data and through technology, in a way that adds value to my life, more than me yelling at a voice device, which isn’t working very well for me right now.

Reva: Fun as it is to get out your frustration sometimes on…

Kristen: Exactly.

Reva: I feel ya. Excellent. Well, thank you, both. We are at time. Appreciate you both taking the time. We had a lot to unpack today and covered a lot of ground, so I appreciate your participation in this discussion.

Kristen: Yeah. Thank you, Reva.

Reva: Great.

Kristen: Great.

Scott: Thank you, Reva.

Reva: Awesome.

Kristen: Thanks, Scott.

Reva: Cheers, team.

Reva: Thanks for tuning into Next in Consumer Products. Be sure to subscribe so you don’t miss a beat on the future of digital in the CP industry.

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Elizabeth Papasakelariou
Elizabeth Papasakelariou
Consumer Products Lead, North America