Consumer Packaged Goods Executives See Growth Opportunities Through Digital Transformation, Accenture Study Shows
Companies committed to improving internal integration using digital technologies, but barriers may slow process
Consumer packaged goods (CPG) companies can realize significant gains in cross-channel growth through digital collaboration with retailers and distributors and better internal integration a new Accenture research study shows.
Although CPG executives are committed to increasing their use of digital technology to improve internal integration across marketing, sales, service, supply chain and research and development, many believe a number of real and perceived barriers – from emerging market restrictions and lagging customer analytics – may slow the process.
The study, CPG Sales Leaders Go Multichannel; A Guide To CPG Sales And Channel Management In A Digital World, conducted by Forrester Consulting on behalf of Accenture, is based on the responses from heads of sales and account directors. The majority surveyed (67 percent) cited moderate or significant potential for digital technologies to amplify sales through traditional channels by improving the allocation of marketing spend to drive mutually beneficial retail relationships and execution to improve sell-through.
Additionally, three-quarters (75 percent) of all account directors surveyed expect improved collaboration with retailers and distributors through digital transformation to drive the availability of their products and make the best use of shelf space and trade promotion funds. CPG heads of sales cited several additional potential benefits, including: reducing the cost of servicing customers, increasing the chances of consumers trading up and boosting sales through targeted email with personalized content and offers and with consumer care services (cited by 50 percent, 46 percent, 57 percent and 51 percent respectively).
“The vast number of opportunities being created by digital technologies continues to have a profound effect on the CPG sales and trade marketing processes, with the potential for improved sales performance,” said Koen Van Bockstaele, managing director, Consumer Goods and Services, Accenture. “However, to unlock the true potential of digital technologies that CPG executives have committed to, companies should ensure that their investments go beyond the efficiencies created by the digitization of processes and channels, and enable them to become fully digital organizations. To achieve their growth targets, CPG brands need to deliver and market a consistent, personalized consumer experience across multiple sales channels to reach target consumers around the world and appeal to their anytime, anywhere shopping expectations.”
CPG firms lack rigor in capitalizing on digital channels
The study shows that digital technology has the potential to help consumer brands pool actionable insights to increase consumer loyalty, share of wallet and the lifetime value of their products. However, a large majority (70 percent) of CPG heads of sales believe this potential may not be realized because there is a lack of consistent, shared consumer data to improve decision making. Six in ten (60 percent) of these same respondents find it too difficult to deliver relevant and personalized content to engage consumers effectively through digital channels.
Two-thirds (66 percent) of CPG companies can identify online the stores that normally stock their merchandise, and half (50 percent) can confirm current availability by store using digital channels, according to sales leaders. However, just 16 percent of companies currently use digital technologies to maintain the in-store and online relationship with the consumer to drive repeat purchases in the store. Furthermore, only 38 percent of all survey respondents say their companies use digital channels to drive planogram compliance, and just 30 percent say their companies use digital channels to drive perfect order and perfect delivery programs with retail partners.
“Although most CPG companies acknowledge that the primary value of analytics revolves around obtaining a better view of the shopper to optimize assortment, pricing and promotions, they continue to struggle with the quality and consistency of the data available,” said Van Bockstaele. “Investing in the right tools and the talent to extract analytic insights that allow companies to take action at the shelf and consistently applying analytics to sales and customer processes and decisions across the company – from the boardroom to sales force – represents the greatest opportunity for improving market performance.”
Perceived challenges in establishing modern trade in emerging markets
Data from the study showed that CPG heads of sales and CPG account directors are acutely aware of changes in the commercial environment that are creating both threats and opportunities to their sales approach. For example, the executives surveyed believe store infrastructure will evolve too slowly to adequately reach an expected one billion new new middle-class consumers in emerging markets. They identified cost (54 percent), development of suitable product offerings (54 percent), and fulfillment (51 percent) as the three main challenges.
Local market regulations and logistical barriers to digital transformation
While digital engagement and direct selling can offer CPG companies an easier path to consumers in new markets, 77 percent of heads of sales strongly agree, or agree, that restrictions for selling online in certain markets present a barrier to reaching consumers through digital channels. And, more than two-thirds (68 percent) strongly agree or agree that local privacy and promotion legislation makes it challenging to sell directly to consumers through digital channels.
“In this new digital era, the reality is there is no one-size-fits-all solution CPG companies can use to tackle issues in every type of market, nor is it economically viable for them to tailor their sales and marketing structures and IT systems for each one,” Van Bockstaele said. “By transcending geography, consumer companies can go to market according to the commercial models of each of the countries they sell into, to cost effectively deploy fit-for-purpose capabilities in emerging and developed markets and help drive profitable growth.”
For further insights on this study, please join the upcoming TweetChat @AccentureCPG, featuring Accenture business leaders and guest speaker, Forrester’s George Lawrie, on Jan. 15 at 11 a.m. EST/4 p.m. U.K. time.
Commissioned by Accenture, Forrester Consulting conducted a quantitative survey in May 2014 using a sample of 56 heads of sales at the chief sales officer or vice president of sales level, and 75 account directors with responsibility for sales strategy and execution. Survey respondents represented consumer packaged goods companies with headquarters in the United States, United Kingdom, Canada, China and Germany.
Accenture is a global management consulting, technology services and outsourcing company, with approximately 319,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.
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