The speed of change within the consumer packaged goods industry is putting increasing pressure on both manufacturers and retailers.
Internationally, the retail trade is becoming more concentrated with global retailers increasing in importance. In many countries, strong private labels are putting pressure on proprietary brands - an extreme example is the UK, where private label accounts for 55% of packaged grocery expenditure.
In most developed countries, low population growth means that expansion is a significant issue in the grocery industry. Many manufacturers and retailers are focussing on business process improvements such as Efficient Consumer Response to improve bottom line profits.
Many of the changes within the CPG industry have been consumer-led. People are working longer hours than before, and many married women with children are working.
Today’s shoppers want the convenience of longer trading hours and Sunday opening and, where possible, retailers have responded.
The implication for retailers is that they must work harder to maintain customer loyalty as more shopping trips mean shoppers have more opportunity to be disloyal.
In terms of what people are buying, the emphasis is on value, convenience and variety.
Brand marketing is becoming tougher. There are more products and brands than ever and supermarket shelf space is at a premium. Product lifecycles are becoming shorter as consumers demand innovation and variety. At the same time, the fragmentation of the media has made them more difficult to reach and influence.
Business practice in the Asia Pacific consumer packaged goods industry has also changed significantly in recent years. The entrenchment of category management has fundamentally changed the manufacturer/retailer dynamic. Today’s retailers are demanding more information and more market insights from their suppliers.
Understanding the changing needs of consumers is critical to stay ahead. For both manufacturers and retailers, success or failure often comes down to utilising market information effectively to meet consumer needs and hence drive sales and profit.
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