How Personalization Is Transforming Consumer Packaged Goods
And as more businesses harness the power of AI, the consumer goods industry will continue to transform, delivering better products, faster and more efficiently, to consumers around the world. To address this, retailers and CPG companies can use AI to help consumers make better buying choices and deliver a better shopping experience. Some companies also accept bracketing within defined limits, and offer faster or free returns to customers who meet a minimum actual spend or who are members of their loyalty programs.
How Does a Recession Affect Consumer Packaged Goods Sales?
If an issue arises, AI can alert supply chain managers and offer solutions before small problems escalate into major disruptions. For instance, food and beverage companies can now better anticipate spikes in demand for seasonal items or limited-time offerings. Instead of relying on guesswork, they can use AI to predict how much product will be needed to meet demand, reducing waste and ensuring shelves stay stocked with consumer favorites. However, their roles have overlapped, leading to tension and increased competition for attention as the traditional model no longer remains linear. CPG companies make products, but they now also deliver and sell them directly to consumers, while retailers sell and deliver products to consumers while also making them. Consumers buy products, but they often personalize and co-create them with CPG companies.
Consumer Packaged Goods (CPG)
And yet, this isn’t as easy as going grocery shopping or picking out a new pair of shoes. Additionally, the growing digital population in South Africa – up 75% from 2013 to 2023 – provides further momentum for expanding commerce in the region. On the other hand, the informal market is the next frontier, largely untapped and boasting an estimated potential value of R178bn, with few players effectively serving this segment.
The future of AI in the consumer goods industry
For example, a multinational CPG company uses an AI model that integrates forecasts and actual sales data between the company and its customers, linking consumer purchases directly to the source of materials. This approach eliminates traditional supply chain barriers and enhances data visibility, creating a cohesive ecosystem that connects different supply chains and optimizes inventory at distribution centers and stores. As AI becomes an essential part of the CPG and retail relationship, companies must align their strategies to maximize its potential. An industry leader, Mohan Valluri, working with a leading food production company, has spearheaded projects that incorporate AI and automation in manufacturing, packaging, and distribution of foods to the consumers. AI and automation are already affecting almost all aspects of how food is produced, and the possibilities are increasing rapidly.
Numerous companies across the consumer goods sector are already leveraging AI to transform their supply chains. The global food giant has integrated AI into its supply chain to improve demand forecasting, optimize production, and enhance distribution. By using AI, Nestlé can now predict consumer preferences with greater accuracy, reducing excess stock and waste. By automating processes, improving visibility, and enabling data-driven decision-making, AI is setting the stage for a new era in supply chain management.
- This article explores how retailers and CPG companies can strengthen their partnership to overcome disruption, better serve consumers, and thrive in a rapidly evolving market.
- This helps companies reduce delivery times and minimize transportation costs, all while ensuring that products arrive at their destination on schedule.
- Consumers are more likely to delay major purchases in times of economic uncertainty.
- Some companies also accept bracketing within defined limits, and offer faster or free returns to customers who meet a minimum actual spend or who are members of their loyalty programs.
FoodNavigator-USA
Even at that point, you need to find multiple quotes and gauge how long product development will take with each manufacturer. The tech giant is renowned for strategically entering high-growth markets, excelling at offering convenience, an extensive selection, and one-day delivery, while identifying its target and outpacing competitors with superior execution. There are so many examples of brands who are getting this right, learn from them and then tweak it to suit your consumers.
- According to the EY Future Consumer Index, consumers are turning away from once-favored brands as their priorities and options change.
- By sharing insights and working together, they can gain a stronger understanding of consumer purchasing behaviors and create better-targeted campaigns.
- This evolution presents CPG companies with a unique opportunity to redefine their roles in the market.
- BALANCING VALUE AND VOLUMEAs consumers become more price-sensitive, retailers focus on delivering value, while CPG companies aim to drive volume.
- Due to being online more often, they are more informed about product ingredients, company practices, and the environmental impact of the companies they shop from.
Such advancements will lead to the production process being more flexible, minimized wastes, and products tailored to the consumer’s needs as much as possible. By embracing these technologies responsibly, the food industry can create a more resilient, efficient, and sustainable future. To address this, he adopted the concept of modularity of upgrades that makes it easier to transition to smart manufacturing systems without interrupting production.
By leveraging each other’s strengths and innovations, retailers and CPG companies can approach the future from a position of strength. According to the EY Future Consumer Index, consumers are turning away from once-favored brands as their priorities and options change. As much as 74% have mentioned awareness of shrinkflation in the form of branded products now coming in smaller pack sizes, while 50% would make the switch to a new product if it provided better quality. Consumers are also more willing to try private labels, with 41% having switched already. Brands were not considered an important factor in 48% of purchase decisions, putting CPG companies at a disadvantage. The CPG platform uses advanced algorithms to match brands with the manufacturers that are best equipped to meet their specific needs.
“The US steel industry does not produce tin mill steel in the quality or quantities needed by US can makers, leaving it only able to supply up to 30% of can makers’ demand. The current 50% tariff on steel could increase prices for consumers by as much as 15% and impact an estimated 20,000 good paying jobs,” the trade group explained. The relationship between consumer packaged goods (CPG) companies, retailers, and consumers has undergone significant changes over the past five years. Disruption and innovation have forced CPG and retail companies to rethink their businesses, while consumers have reevaluated how they shop and what they need. The evolving relationship between CPG companies and retailers presents an opportunity for a more radical rethink of how they both go to market and measure success. By harnessing the power of automation and AI, Keychain has taken pre-existing data in a well-established industry and turned it into a powerfully innovative technological tool.
Retailers and CPG companies must prioritize operating without friction across multiple channels to meet consumer demands. For example, some companies offer a “Buy Online, Pick Up In Store” (BOPIS) model and use mobile apps that allow customers to shop seamlessly across channels. By investing in marketing and innovation, they can create compelling offers for consumers wherever they are. Collaboration between retailers and CPG companies can help address common challenges and leverage each other’s strengths for mutual benefit. Another example is Coca-Cola, which has adopted AI to automate its production and distribution processes. AI-powered robots handle packaging and sorting, while machine learning algorithms analyze data to predict sales trends and optimize delivery routes.
