Digital Transformation of Consumer Product Industry
Consumers over the globe have embraced the digital world as the pace of change has surpassed all prior shifts in the nature of an industry. Once a necessary journey is now an urgent priority for consumer product brands.
While Consumer Packaged Goods (CPG) companies are usually adept at exploiting new trends, and although some exciting innovations in the digital space are prominent, fundamentally the CPG industry has not yet grasped the scale of the change ahead.
Consumer packaged goods ranked 9th out of eleven in McKinsey’s ranking of digitally mature industries, ahead of just automotive and infrastructure.
Globalization has had a direct impact on the CPG industry. The dismantling of trade barriers brought in new customers from around the globe.
To sustain the business they have to capitalize on the opportunities for growth in this digital age. Consumer goods companies are taking opportunities as they come.
They have started to segment their customers on the basis of geographies. Most of them running the business in an indigenous manner.
However, many firms are likely to find that, as globalization continues and consumer growth increases, their margins and business growth will come under challenge. They need to reshape their existing strategies to benefit from the digital world.
The digital world is bound to affect the future of business and the path is challenging, but it also offers profitability to those who will successfully digitize their businesses.
Moving to a digital model will involve a rethink of corporate structures, consumer engagement, product development, supply chain, marketing and sales altogether.
Although domain transformation in the middle of an enterprise is very difficult, it is not completely impossible.
● Companies will need to structure their businesses in socially and economically coherent groups, such as types of consumer and route to market, to be successful.
● Enterprises should look into expanding into online sales through eRetailers or directly through e-commerce.
● Enterprises should also start focusing on building engaging, relevant and customised relationships with target consumers.
● They should also look into expanding product ranges as the constraints set by physical space decrease.
Right now, organizations are simply seeing the digital revolution as a technology issue: adding another channel to reach consumers. However, it is far more than just that.
It is a commercial revolution that must be addressed strategically across the enterprise, rather than being led tactically by the IT function. It’s time to disrupt with a digital operating model.
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