Over the past few decades, we are witnessing a significant shift in market trends that have reshaped the fast-moving consumer goods (FMCG) sector. Prior to digitalization, accessing consumers across the vast expanse of our country relied heavily on robust infrastructure, including roads and connectivity. Infrastructure was the bedrock upon which any industry’s growth depended. Now, as we look to the present, the proliferation of digital technologies, widespread internet access, and the rise of smartphones have revolutionized consumer behavior, and the way businesses operate. These advancements have paved the way for brands to engage with consumers on a whole new level.
So today, we delve into these transformative trends, exploring how they impact businesses and emphasizing the pivotal role of data in navigating this dynamic environment.
Major Trends in FMCG Industry
One significant transformation has been the diversification of distribution channels. The traditional or general trade, along with a thriving wholesale ecosystem, dominated the retail landscape. However, in the early 2000s, we witnessed the emergence of organized retail chains, marking the era of modern trade. Today, e-commerce platforms stormed onto the scene, offering consumers the convenience of online shopping. But the story doesn’t end there.
The COVID-19 pandemic disrupted the norm, significantly impacting out-of-home consumption. Organized efforts and a newfound focus on understanding consumers’ demands have given rise to more structured approaches in catering to this channel. Moreover, the pandemic accelerated the growth of direct-to-consumer (D2C) brands. Startups and established players alike embraced this channel, offering targeted products and personalized experiences to consumers.
Digitization has been another game-changer. Real-time data access has replaced the days of waiting for monthly reports to gauge market trends. Consumers have rapidly adopted digital formats, seeking information, discerning truth, and demanding products more quickly. Quick commerce platforms have gained prominence, promising near-instant deliveries, reshaping how consumers shop. Furthermore, the pandemic heightened health and wellness consciousness, driving consumers toward cleaner, sustainable products with fewer ingredients.
This changing landscape presents both opportunities and challenges for brands and retailers. There’s an explosion of brands vying for limited shelf space, driving a fierce competition across channels. Social commerce and live commerce are emerging trends, connecting brands directly with consumers on social media platforms. Sustainability has become a central theme, with consumers favoring eco-friendly choices.
As we journey through this blog, we’ll explore these trends in more detail, providing insights into how brands can adapt and thrive in this ever-evolving supply chain industry. But one thing is clear: data will be the guiding force, helping businesses unlock the power to propel sales and distribution growth.
How FMCG brands are achieving complete visibility?
To stay aligned with the evolving landscape of the FMCG industry in India, brands must focus on several key strategies and priorities. Let’s delve into these critical aspects:
Precision Distribution Strategies
Given the disaggregated nature of the Indian retail ecosystem, FMCG executives must craft precise distribution strategies. This entails a deep understanding of regional demand variations, supply chain efficiencies, and the dynamics of General Trade. Implementing technology-driven solutions, such as route optimization and demand forecasting, can significantly enhance distribution efficiency. Moreover, collaborating with local distributors who possess insights into specific regions can be invaluable.
SKU Rationalization
With the proliferation of Brands and SKUs, it’s crucial for executives to undertake rigorous SKU rationalization. Brands should regularly assess the performance of their product portfolio, eliminating underperforming SKUs and focusing on high-demand items. This not only streamlines production and supply chain management but also ensures that consumers have access to the most relevant products. Data analytics can aid in identifying SKU performance trends and guiding rationalization efforts.
Tailored Marketing and Product Offerings
Acknowledging income disparity and cultural diversity, FMCG brands are adopting a tailored approach to marketing and product development. Executives should invest in consumer research to understand the unique preferences and needs of different demographics and regions. Crafting localized marketing campaigns and product variants can help capture diverse market segments effectively. Building a portfolio that caters to both premium and budget-conscious consumers is a strategic move.
Technology Integration
To ensure product availability and meet consumer expectations, executives must embrace technology integration across the supply chain. Real-time data analytics, inventory management systems, and order fulfillment solutions are essential. Leveraging e-commerce platforms to complement offline distribution can bridge the gap between demand and supply. Moreover, adopting emerging technologies like blockchain for supply chain transparency can enhance consumer trust.
Generating Actionable Insights from Channel Data
In the ever-evolving landscape of FMCG brands operating in a multi-channel environment, ensuring consumers receive the right product at the right time stands as a pivotal challenge. Thus, it becomes imperative for industry leaders to harness the power of actionable insights.
Real-time Data Acquisition and Integration
FMCG brands must invest in cutting-edge technology and systems that facilitate real-time data acquisition from a spectrum of channels, encompassing General Trade, Modern Trade, and E-commerce. This data should encompass a comprehensive range, including sales figures, inventory levels, and consumer behavior. The integration of this multifaceted data holds paramount importance. The ability to have a unified, holistic view of the supply chain and sales data across all channels empowers brands to make swift, well-informed decisions.
Demand Forecasting and Inventory Management
Leveraging advanced analytics and machine learning algorithms, brands can elevate their demand forecasting capabilities to unprecedented levels of accuracy. This entails a meticulous examination of historical sales data, seasonal trends, and external influencers. For agile inventory management, systems must possess the flexibility to adapt stock levels in response to the ebb and flow of demand patterns. This dynamic approach ensures that products are consistently available in alignment with consumer preferences.
Collaboration with Channel Partners
Fostering robust relationships with distributors, retailers, and e-commerce collaborators emerges as a cornerstone of success. Brands should actively encourage their partners to partake in data sharing, encompassing sales data, inventory status, and invaluable consumer feedback. This collaborative synergy with channel partners paves the way for optimizing product availability and mitigating the risks of stockouts or overstocking.
Agile Supply Chain
The foundation of an agile supply chain lies in the brand’s ability to respond nimbly to shifts in demand. This necessitates the development of adaptable production capabilities and streamlined logistics systems. Data-driven decision-making assumes a pivotal role in ensuring that the supply chain can promptly adapt to evolving consumer preferences.
Personalization and Product Customization
Recognizing the prevailing trend toward personalization, brands should explore innovative avenues for offering tailor-made products or customized packaging. This approach caters precisely to individual consumer needs and preferences. Advanced analytics can prove instrumental in identifying distinct consumer segments with unique requirements, allowing brands to tailor their offerings accordingly.
Technology and Analytics
The adoption of technology solutions like IoT (Internet of Things) for real-time inventory tracking and the monitoring of consumer behavior in physical stores represents a strategic move. Advanced analytics, encompassing predictive and prescriptive models, offer insights into evolving consumer preferences and emerging market trends, thereby empowering brands to make data-driven decisions.
Consumer Engagement and Feedback
Active engagement with consumers across a multitude of channels, spanning social media platforms, surveys, and feedback mechanisms, constitutes a vital strategy. These direct interactions yield valuable insights into the ever-shifting landscape of consumer attitudes and preferences.
Continuous Improvement
FMCG brands should treat this entire process as an unceasing cycle of improvement. Regular review and refinement of strategies, guided by data and feedback, are essential to remaining aligned with the ever-evolving needs and expectations of consumers.
Metrics to consider while driving growth
Revenue Growth and Customer Satisfaction: At its core, the success of any business, including Consumer Packaged Goods (CPG) companies, relies on increasing revenue. This growth is closely tied to consumers purchasing and using products. To achieve this, brands must ensure their products are readily available and easily accessible to consumers, a crucial aspect of satisfying customers.
Salesforce Efficiency and Digital Tools: Enhancing Salesforce Efficiency (SFE) is crucial for revenue growth. Digital tools, such as Sales Force Automation (SFA) systems, play a pivotal role. They assist sales teams in planning efficient routes, covering outlets effectively, and promoting relevant product SKUs. Additionally, emerging tools like artificial intelligence (AI) and gamification motivate and empower salespeople.
On-Time In-Fulfill Rate (OTIF): OTIF can serve as a key performance indicator (KPI) for monitoring product availability. It measures the percentage of orders fulfilled on time and in full. A high OTIF rate indicates a high level of product availability, positively influencing sales.
Justifying Costs: To determine ROI, it’s essential to assess whether the revenue generated justifies the incurred costs. This involves analyzing whether enablement, such as deploying cloud-based systems or other digital solutions, leads to an increase in top-line sales and profitability.
Cost-Benefit Analysis: Brands should conduct a thorough cost-benefit analysis, considering various deployment aspects. The goal is to ensure that benefits, such as increased sales and cost savings, outweigh the initial investment.
TradeEdge enabling companies to navigate their next
Focusing on data, encompassing data infrastructure, harmonization, insight generation, and the transition from insights to tangible benefits. This journey into the world of data-driven decision-making aligns with our extensive experience in the CPG sector, particularly in the realm of secondary sales visibility.
TradeEdge leads to what it termed as the “Mighty Enterprise Network,” a dynamic framework that interconnects various components within the CPG value chain. In this network, brands or companies serve as the central orchestrators, bringing together retailers, distributors, financial institutions, third-party manufacturers, wholesalers, and logistics partners.
The key advocacy here revolves around establishing a fully connected ecosystem, fostering seamless data sharing among all stakeholders. This interconnectedness ultimately leads to the ability to sense demand in real time, a crucial capability in today’s rapidly evolving market.
Companies are now gaining the capacity to monitor sales almost instantaneously, using this data to forecast demand accurately and streamline replenishment and fulfillment processes, striving to achieve the goal of 24/7 product availability across multiple channels.
Forecasting has historically presented a significant challenge for CPG companies due to the vast array of SKUs and the impact of both known and unforeseen events on demand. To enhance forecast accuracy, the focus lies on implementing effective forecasting mechanisms while ensuring that high-quality, comprehensive data feeds these mechanisms.
Furthermore, addressing the demand based on forecasts necessitates automated tools like suggested ordering systems. These tools consider factors such as the customer base’s diversity and the extensive SKU portfolio, enabling efficient routing and automated replenishment, both critical elements for successful operations.
In addition, we’ve considered the vital role of empowering field sales representatives. These professionals are driven to succeed, striving to maximize sales and compete effectively in the marketplace. Today, they have access to powerful tools like Salesforce and automation solutions that provide actionable insights at the store level. This includes access to historical order data, insights into similar stores’ ordering patterns, and optimized route planning, all aimed at enhancing their effectiveness.
In conclusion, our journey through the world of data and technology underscores the importance of a connected ecosystem and data-driven decision-making in the CPG sector. Achieving real-time demand sensing, accurate forecasting, and streamlined operations is crucial for meeting consumer expectations and ensuring product availability across diverse channels. Contact us to learn more about how TradeEdge can help your enterprise.
