Transforming REX Challenges Into Competitive Advantages
CPG manufacturers face numerous challenges when crafting retail execution strategies across channels, including navigating supply chain disruptions, integrating new technology into their organization, and using customer data effectively.
But overcoming these hurdles with the right approach and resources has become table stakes to better compete in an increasingly competitive and crowded market.
Balancing brick-and-mortar and e-commerce channels present the greatest obstacle to CPG manufacturers, Deepak Perumpidi, Ivy Mobility VP of technology, tells CGT, as they must continue to focus on driving sales through traditional planogram compliance while also managing inventory across outlets to avoid out-of-stocks.
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“To ensure seamless execution, these channels need to be well-integrated,” he says. “For example, an e-commerce order might be best fulfilled by a nearby retail outlet to reduce shipping costs. However, differences in processes, cycle times, order volumes, and delivery methods across these channels make integration challenging.”
Carefully designing supply chain systems is critical to effectively address such complexities. Supply chain disruptions that impact product availability can erode consumer loyalty, and shoppers become less engaged with marketing and promotions that aren’t personalized to meet their needs.
“The combination of these challenges presents a perfect storm for margin erosion across all fronts for consumer goods manufacturers, especially those still operating on outdated legacy systems where difficulty arises in trying to react to market changes in real time,” notes Aforza CEO Dominic Dinardo.
Adjusting the Spotlight
To stand out from the competition, brands need to both ensure their products are getting the spotlight in stores while closely monitoring their rivals.
“Tracking the prices and promotions of their products helps companies understand how pricing impacts sales,” Perumpidi says. “If they can track competitors as well, this further enhances the quality of such analysis and gives the company a competitive edge.”
Manik Bhatia, head of co-branded research for Coresight Research, warns that brands must set clear guidelines for managing their assortment, pricing, promotional efforts, and customer data across channels in order to avoid inconsistencies and provide a seamless shopping experience. While it can be resource intensive, he recommends investing in a robust data infrastructure like a SaaS package in order to turn data fragments into complete customer identities.
“Unlocking insights on the customer base enables better segmentation, targeting, and personalization,” he says. “The quality of customer insights gleaned naturally improves with the quality of the data.”
Data overload is in itself a problem. Many manufacturers are ill equipped to turn information from multiple sources into actionable insights, but new technology can offer solutions.
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Advanced analytics and artificial intelligence facilitates the quick processing and analysis of vast datasets for actionable insights, says Dinardo.
“Ensuring data quality and governance through established processes for accuracy, consistency, and security is also vital,” he adds. “Combining these two areas with real-time analytics enables companies to respond swiftly to market changes and consumer demands, maintaining agility and relevance in a dynamic environment.”
Perumpidi agrees that AI-based analysis and recommendations have the potential to transform the way CPGs develop promotional strategies, removing the cumbersome manual work needed to uncover trends hidden in months or even years worth of customer data.
“Mobile app-based data collection has been around for a while, and most CPGs use it, but many have yet to adopt advanced AI-based technologies like image recognition, which can speed up data collection and reduce manual errors,” he says. “CPGs might also consider working with retail partners to implement self-reporting of data using new technologies.”
Preemptive Collaboration
Ineffective collaboration between brands and retailers is a long-standing issue that can lead to inaccurate forecast demands, poor localization, and ineffective markdowns and promotions.
“Changing consumer preferences can have complex implications for the upstream supply chain and impact functions such as procurement, manufacturing and distribution,” Bhatia says. “Preemptively identifying consumer trends with the right data and technology tools is thus key in ensuring shopper centricity for margin dollar expansion.”
Bhatia notes that timely insights from centralized data-sharing platforms can allow CPG manufacturers to change their prices and promotions in real time, maximizing value and avoiding disruptions. He argues that companies should invest in advanced supply chain visibility and inventory management tools, establishing measurable objectives to ensure that their technology investments are paying off.
“Having a goal-based approach where the objectives can be quantified and are comparable with existing data is critical for strategic investing,” he says. “This approach enables CPGs to gauge the return on investment and make data-driven adjustments as needed.”
Companies also need to train employees on how to use these tools to boost their satisfaction, retention, and efficiency.
“Automating repetitive tasks can help the workforce execute their work faster, allowing them to focus on more value-added services that improve overall execution at the outlet,” Perumpidi says. “Incentivizing employees based on improvements in perfect store scores is another key strategy that has been widely observed.”
The right solutions can lead to big successes. Heineken Beverages in South Africa was struggling to target key customers with precisely tailored programs and also had a hard time communicating with its field sales teams, according to Aforza. They worked to digitize their retail execution, trade promotion management and marketing capabilities, which significantly increased the value of their customers’ baskets by tailoring the product mix to local markets.
Ivy Mobility similarly works with a major CPG manufacturer that has been using a retail execution solution in Asian and Europe for several years to help ensure on-shelf availability of their most important SKUs, while also monitoring their share of shelves to ensure they’re periodically enjoying boosted visibility through promotional displays.
“They continually upgrade their technology to ensure they have the best-in-class execution and incentivize merchandisers based on the execution scores they achieve monthly,” says Perumpidi.
