In the past, retail competition consisted of legacy brands battling it out for in-store visibility—Coke vs. Pepsi, Kraft vs. Heinz, Kellogg’s vs. General Mills. Later, small upstart craft brands, local mom-and-pop shops, and retail white label brands disrupted the scene, appealing to consumers who were looking for something different in terms of price, offerings, or brand image. Now, eCommerce, smartphone-enabled food delivery, home meal kits, and direct-to-consumer clubs add another layer of competition, particularly appealing to younger shoppers.
According to Bain & Company analysis, 85% of top CPG companies have seen a decline in revenues, profits, or both over the last few years. Times are certainly changing, leaving CPG brands wondering what must they do to stay on top when competing for in-store visibility.
CPG Competition Intensifies
Statistics show just how competitive the CPG landscape is:
- $17 billion in CPG spending has turned over from large companies to small since 2013.
- Sales among the fast-growing “extra small” CPG brands rose 4.9% in 2018.
- Brands generating sales under $1 billion gobble up 25.7% of the $686 billion CPG pie.
- Business for those making over $5.5 billion in sales inched up 0.6% last year.
- Mergers and acquisitions among top 50 CPG companies jumped 45% to 60 deals in 2017.
How CPG Brands Can Gain In-Store Visibility
All is not lost. Experts say there are tested, tried, and true methods for CPG brands to stay front and center on a crowded shelf.
To a large extent, success for CPG brands is hidden within their collected data. This data can help inform the optimal positioning of products in-store and help brands make decisions that set them apart from the pack.
According to one survey, the best brands are using data to:
- Identify pockets of growth and align resources: Winners are tapping full-basket and shopper-panel data from their retailers, as well as loyalty-card and coupon-redemption data, to better understand high-growth areas. CPG brands can use data to strategically branch out to different demographic groups, consumer segments, or channels.
- Find the best retailer collaborations: Winners are 2.6x more likely to dedicate resources to nurturing “power partnerships” with top-to-top meetings. Increasingly, retailers and CPG companies are exchanging data, sometimes in real-time.
- Make decisions affecting revenue growth: Winners use data to inform pricing, trade promotion, and assortment decisions. Those who excel in revenue growth management can see expansions up to five percentage points.
- Determine omnichannel retail commitments: Most CPG brands are investing in online retailers like Amazon, Walmart, and Kroger. Specialty channels like Diapers.com and Sephora.com are on the rise. Winners in the field allocate 2.4x more employees dedicated to obtaining and analyzing data from online retailers to better understand the activities of online shoppers.
- Develop an “insights factory”: Winning companies are twice as likely to view advanced analytics as critical to their core business strategy. They’re looking at analytical models, city-level and store-level insights, and refreshed consumer profiles each month to inform their decisions.
Better Customer Service
Understanding what customers want and why they’re shifting away from one brand to favor another is a crucial piece of the puzzle. Ultimately, the brands offering greater convenience and innovation stand to gain market share. It’s not always about jockeying for the best position on the shelf, but sometimes about getting in front of customers in a more direct way.
According to Marketing Daily Advisor, today’s shopper wants brands to:
- Be helpful: Clear communication of differentiating features, either displayed on packaging, in a company blog, or in a marketing video. Customers want to know what ingredients are used, how well the product works, and why they should choose it over another. Developing content is one central way of standing out in a crowded marketplace.
- Provide a convenient ordering experience: Most CPG brands still rely upon a variety of retail partners for distribution, but many are increasingly looking for ways to help customers directly—through direct-to-consumer subscription services, for example.
- Personalize products: Buyers love the idea of co-creating a product and choosing the styling details of their purchases. Introducing a customization kiosk is an eye-grabbing way to bring more business to a brand in-store.
- Provide a seamless omnichannel experience: Today’s shopper doesn’t want to JUST buy in-store. Some shoppers are buying online. Most shoppers are using a combination of mobile, PC, and in-store interaction when they purchase products. A successful CPG brand needs to ubiquitously be everywhere the consumer is.
The $10 billion success of pop-up shops reveals the extent to which experiential marketing can be profitable. Getting a product in front of consumers at an exciting in-store event is an optimal way to show that brands understand what appeals to consumers.
Here’s what other CPG brands have done in the past:
- To celebrate their 100th “Sweetennial,” Hostess wrapped an Airstream trailer to look like a giant rolling Twinkie and toured the country, inviting consumers to sample their products, take photos on a Twinkie throne, play yard games, and snag branded swag.
- Cinnamon Toast Crunch cereal invited people into “the Cinnaverse,” a five-room pop-up experience where they could scratch-and-sniff cinnamon wallpaper, walk along a crunchy floor, “surf” on a cinnamon stick with augmented reality, cozy up to a dessert bar inspired by the cereal’s flavors, and buy limited-time merch.
- M&Ms set up a “Glampground” at the Kentucky Speedway, offering guests their own tent with an inflatable bed, room service, and plush branded blankets, pillows, and robes. They had access to private bathroom and shower trailers, a hospitality area inside an airconditioned motor coach, and rooftop viewing. They received catered breakfast, lunch, and dinner, as well as VIP golf cart rides to the race track. Nascar stars visited to sign autographs and “Talladega Nights” played on a screen by night. Tickets sold out in hours and made a big impression.
- To promote the brand’s first collection of scented disposable razors, Skintimate invited women into a SoHo pop-up offering free professional leg shave treatments with a customizable menu of shave gels and razor handles, each paired with a mixologist cocktail. A DJ played retro-tropical beats as brand ambassadors stopped by to chat.
Third-Party Shopping Apps
Depending on the type, experiential marketing can be expensive to design and implement. Third-party shopping apps are part of the new era of retail marketing, offering a much more affordable way to excite shoppers and convert new prospects into customers.
Shoppers with smartphones and an app like Shopkick can receive brand messages in real-time, increasing purchase likelihood at-shelf. With Shopkick, these shoppers are incentivized to interact with participating CPG brands through a reward points system, which allows brands to encourage product purchases without dropping prices.
For instance, to promote the release of their new “Bakery Delights Crumb Cakes,” Kellogg’s used Shopkick to incentivize shoppers to seek out stores selling the new product, and then to integrate digital content and physical product engagement at-shelf to increase incremental, unplanned purchases. The end result was a 35% purchase conversion rate, a 55% boost in future purchase intent, and a 5:1 return on investment.
Along with greater brand awareness comes a greater market share.
Along with greater brand awareness comes a greater market share. By leveraging a strategic partnership with a popular mobile shopping app like Shopkick, CPG brands can reach an even larger user base and stand out in a saturated marketplace.
Shopkick offers a unique mobile shopping platform that improves competitiveness. Our partners communicate directly with shoppers at the moment that matters most. Contact us today to learn more about achieving better in-store visibility.
Image courtesy of hxdyl