“An imperative for digital innovation and engagement has emerged.” Ernst and Young
The report from which the quote above was taken was produced in 2011, so if anything, that imperative has become even greater. Businesses who want to remain relevant need to engage via digital channels and look to support the means by which their customers prefer to engage with them.
Traditional consumer goods providers are no exception. The old mercantile has often become more of a tourist stop than a regular destination for locals wanting their goods, so those goods suppliers are looking for new, innovative ways to get their wares out.
Let’s look at what’s happening in the wider consumer goods industry and at some of the traditional consumer goods providers who are doing well with digital:
Shifts in traditional strategies
Packaged-goods marketers now spend more on digital than all forms of traditional advertising combined, according to a new study by Cadent Consulting Group. – Adage
The shift to digital was well and truly under way five years ago and most consumer goods companies were relatively quick to jump onboard. As recently as three years ago though, most were at what Bain described as an early stage. They were learning about and exploring the digital world, but they certainly didn’t have seasoned expertise. Strategy was largely based around social media and e-commerce, but the big challenge was finding people with the appropriate expertise to do it well.
Now, they argue that despite digital agendas having grown, for many, top-line growth is still elusive. One of the factors coming into this is a certain “digital complexity”, whereby there are so many possible digital channels for opportunities that it’s a struggle to allocate enough resources.
Traditional consumer goods companies are facing intense competition from those who have begun life with a “digital-first” strategy (you only have to look at companies such as The Honest Company). These new competitors don’t need to rely on store networks and tend to be well-funded – traditional consumer goods providers need to step up or be left behind.
Some new priorities for consumer goods providers include:
- Investing in new digital capabilities.
- Using data and predictive analytics well to gain new insights.
- Experimenting with different digital commerce channels.
- Creating better in-store digital experiences.
- Shifting to a digital-ready culture.
For many companies, these are large, challenging shifts. How will they ensure that they’re maximizing digital opportunities? It’s not that they need to take an “all or nothing” approach either. Research shows that consumers still prefer to discover new products in-store, through word-of-mouth and via some traditional offline methods. Discovery by search engine ranked third, but those other methods rate too highly to ignore.
With consumer preference trending toward digital, this means it’s up to consumer goods providers to work digital strategy into those traditional channels.
Source: Marketing Sherpa
Let’s look at a few traditional consumer goods providers who are doing well with digital:
Coca-Cola is, of course, an iconic brand with much deeper pockets than many others, so they’ve been able to base their digital strategies on widespread research throughout their global markets.
One of their key objectives has been to redefine their digital presence and to better appeal to their key target groups of teens and young adults. Within their European markets, Coke undertook to hold discussions with 200 teens and 200 parents over four weeks. This generated thousands of stories and perspectives on “going digital” which they’ve been able to use to devise digital strategy.
It’s a good example of how brands can use “data-driven marketing” to deliver better-targeted digital content. The stories generated help Coke with segmentation of their market and communication strategy going forward.
Coke has a history of innovating digitally – they were among the first big brands to develop a blog site with more of the appearance of “news over marketing” a few years ago. However, as recently as last year their CMO had announced a stronger focus on TV advertising again. More recently, that CMO has gone and digital roles now have a direct line to the C-suite. This is highlighting the important role that digital now plays, and is intended to take in the future of the company.
Anthropologie has worked to link their in-store and online experiences and to provide an excellent customer experience throughout. Rather than closing down bricks and mortar stores like many other brands, they worked on creating a unique ambiance within their stores which keeps the customers coming in (remember, people still do prefer to discover products in-store!).
Customer’s experiences with digital are a key in Anthropologie’s strategy, but they don’t make it seem as though digital and physical are separate. Each store manages their own Instagram account allowing them to be relevant to their locale and to really make that personal connection between digital and the in-store experience. Customers can even shop the Instagram feed via app Like2buy.
Anthropologie’s mobile app is another valuable link between the physical and digital worlds. Customers are able to check availability in their local store, order online and pick up locally and scan items in-store to add to their basket, put on a gift registry or check item details. They’re a great example of a traditional consumer goods provider who has integrated digital into their in-store experience.
Generally speaking, you can’t get much more traditional than a large grocery chain, but Kroger has made several moves in the last few years which position it well to take advantage of the digital world.
First of all, take a look at their improvements in the use of predictive analytics. They rolled out QueVision in 2012, installing sensors in stores so that managers are fed real-time data on customer activity. Since this technology was introduced, they’ve been able to better anticipate staffing needs and have drastically shortened queues. Of course, this has lead to positive feedback from customers who aren’t waiting as long as they were previously.
Secondly, Kroger has made several investments in online platforms, including acquiring other CPG retailers. This has given them access to digital technology so that they can tap into the demand for online shopping options. For example, their merger with grocery chain Harris Teeter gave them access to online ordering platform, Express Lane.
At the same time, Kroger developed their own, similar offering, Click List. This allows customers to order online, then pay for and collect their goods at a set time from a pickup window. The customer doesn’t have to leave their car in the whole transaction.
Kroger has shown that even grocery stores can get in on the multi-channel experience, offering digital experiences to a customer base who have expressed some preference for digital. As Neilson point out in their report, “The Future of Grocery,” customers show interest in digital, but still prefer in-store experiences overall. This is something which may change over time, rather than experiencing any sudden shift.
“In the consumer packaged goods (CPG) industry, change has been more evolutionary than revolutionary, but digital is redefining what it means to “go” shopping. Lines between the physical and digital worlds are blurring. Shoppers are growing accustomed to the benefits of digital in other retail settings and are beginning to expect them in grocery as well.”
Own the customer experience…
Brands now have more tools at their disposal than ever, allowing them to own the customer experience and take proactive steps to meet customer preferences.
Digital tools and channels are allowing traditional consumer goods providers to broaden their reach, their understanding of customers and their penetration into new ways of doing business.
For those businesses doing well, it’s not a matter of “either, or” between digital and in-store, but a symbiosis of the two, creating more seamless experiences for the customer. This is really what “going digital” is about in those more traditional businesses.
Koombea helps brands to create seamless digital experiences for customers. Talk to us today about how we can help you.