Convenience and experiential retail can wreak havoc on Consumer Product Goods (CPG) industry

Advertising is based on one thing: happiness.

– Don Draper

In the halcyon days of the preeminence of network TV and Madison Avenue consumer product goods (CPG) brands could be creative or splurge to get customers’ attention and loyalty. Those days are not coming back in the face of multitude of distractions, interventions, and outright intrusions that come in the shape of Facebook, Amazon Echo, Siri, Google Home, Snapchat, Instagram and the likes.

And as if that is not enough, the Retail industry, which is the THE largest channel through which CPG companies sell to customers, is in extreme duress. With convenient and ubiquitous retail and experiential retail on the rise, wide swaths of traditional legacy Retail are Zombie zones. CPG companies that rely on these zombie retail chains are suddenly finding that large percentage of revenue is at risk when the zombies go under, which they will in the next few years. Eventually the Retail industry is likely to split into following 2 forms:

1 ) Convenient and Ubiquitous Retail  – Amazon, Walmart, Alibaba and many others

2) Experiential Retail – Trader Joes, Ulta, Best Buy and other category killers

In both of the above forms of Retail, the CPG brand plays a second fiddle to convenience and experience.

Today and tomorrow,  a combination of factors, including media fragmentation, short attention spans and convenience/experiential retail, put consumer brands at an extreme disadvantage. What can CPG companies do to ensure their relevance and in some cases survival? That will be the topic of next post.

 

Kris Gorrepati

My 2 cents on Supply Chain Management, Manufacturing, Design, New Product Development, Software Engineering, and related topics.

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