CPG'S RETAIL REALITY CHECK: The Fundamental Truths About Urgent Change

Photo of Cliff Courtney
Date: 2021-02-03 21:12:06
By: Cliff Courtney
Date: 2021-02-03 21:12:06

CPG brands are feeling pretty good about now. COVID-created nesting becomes the new normal and suddenly Amazon’s US grocery sales pop 45%. People cook more, they clean more, they stock up more on everything from pasta to Play-Doh, and take it from someone who has worked with a sugar brand, they’re definitely baking a whole lot more.

2020 CPG trends suggest the importance of trust based brands, workout gear to satisfy the explosive population of virtual workers, and similarly all products that feather nests and nesters.

But as all brands are likely to do, CPGs are overly focused on riding the wave, dancing with the virus that brought ‘em, tweaking away, but in no way considering a fundamental shift in how they go to market that would sustain them through the droughts as well as set them up for even more exponential growth under any market circumstances. This is not about the goods themselves, but more about market attack, the need for a bolder posture, and what Malcom Gladwell refers to as “pulling the goalie” earlier than conventional wisdom would suggest. Yeah, not a lot of conventional legends around.

If it ain’t broke, break it and fix it anyway. And that means CPGs starting to move faster, lighter, more aggressively, even straight up retail and ecomm-minded, embracing a specific set of truths.

THERE’S THE QUICK, AND THERE’S THE DEAD. PERIOD.
The term moving at the speed of retail speaks to responsiveness. So when a competitor hits the market with a stronger offer eight days before Labor Day, the speed at which you can have an even stronger offer in market, or any type of counter, is what defines transactional success. With CPG, this type of agility either remains undervalued or minimally left only to the real-time activations of organic social from a deployment standpoint. Yet, McKinsey reports that agile business units are 1.5 times more likely to outperform on both financial and nonfinancial performance metrics. This then is a call for leaner and more efficient communications between deployment channels, not just barrier-breaking internal communications. If you cannot get your key marketing partners on the phone within ten minutes on a Saturday, you’ve either got too many of ‘em or the ones you have forgot that Amazon is open 24/7.

DON’T LEAVE THE SELECTION ON THE SHELF
Unless it says Ragu on a shopping list, then Newman’s, Classico and Prego are all poised to get picked based on independent variables. The fact is, Interbrand points out that 74% of all in-store decisions are made within 3 feet of the product. So yeah, when someone has “sauce” on their shopping list, a label’s stopping power and preferred placement drives the decision, not your marketing. But when you can activate promotions with teeth and realize the shortest line leads from marketing to the to-do/shopping list, then you’re driving intent, not indecision. Read on Sun Tzu: “Every battle is won or lost before it is ever fought.” Thinking like a retailer in this case means driving the differentiation that makes the sale before the shop. Which brings us to…

GO HAM ON DIFFERENTIATION
This is not new news, which might be the issue: There’s just not enough blood flow in differentiation for most CPGs, and instead marginal differences are driving marginal gains. Of course, there are three ways to differentiate. (1) Make it cheaper. But don’t go there (unless you’re selling Kirkland toilet paper). You can get beat on price on any given day no matter what you do, so you need to give the consumer a better reason to buy than price. Consider Kirkland as proxy for the continued rise of private labels that no longer exclusively lean on low price to win. Whole Foods 360º brand alone signals a new kind of competitive pressure. (2) Make it better. If you’ve got a proof point, real and quantitative that transcends brag and boast, sure. (3) Make it different. Does a CBD infused beverage constitute differentiation if 20 beverage brands are making the same claim? Today, there are multiple erasable pens, dozens of athletic shoes that weigh less than seven ounces and Walmart’s Onn 4K TVs delivers the same number of pixels as the LG. What’s the difference?

Data can lead you to what brand cues will pop, but mix a cocktail of paid, owned and earned media with the humility to understand that a 15 year-old on TikTok is capable of winning far more hearts and minds for the cost of exactly zero. It’s time to be thoroughly uncompromising, and that goes for you and your marketing partners.

BREAK FROM BONDAGE
Are Amazon, Walmart and Target, et al. necessary evils? Critical channel partners? Important commerce enablers? Co-Op dollar contributors? More powerful than Thanos? Yes 5X. But at the same time, they ultimately limit not just our potential for DTC (direct-to-consumer) sales, they undermine our data collection, ability to control our brand, and cost us margin for the privilege. Drop Amazon? No. Opt out of Walmart media? No. But if you’re not trying to figure out how to launch at least some sort of DTC vertical, then a migration plan must be front and center. (P&G’s new DTC unit just doubled their sales in a year). So break the chains, seize control, and start fronting with DTC with an uncompromising eye to long-term channel growth.

ABOVE ALL, INTEGRATION
Whether you’re benefiting from the cost and time efficiencies of a few/or one integrated marketing partner, or you’re managing a stable of specialty firms, less is more. When disparate entities are not seamlessly sharing metrics, misses and hits, you are leaving way too much market share on the table. A breakthrough influencer strategy might be able to be surgically applied to a POS application. A viral organic social post could be the key to turbo charging an Amazon media application. OLV may inform a better keyword strategy. It’s about putting content to work across all your distribution channels and turning integration from a watchword to a driving go-to-market strategy.

Urgency, putting the decision at the top of the funnel, differentiating like your stakeholders’ lives depended on it, taking control of DTC, and ensuring that winning content in one channel drives results in multiple channels. This must be the new CPG mentality: Immune to success-fueled complacence, leveraging the best cues not just from proven peer products, but by TikTok influencers, retailers, and all those who utilize less dollars to drive greater results with urgency.

Ultimately, not all market corrections go your way, and that’s the reality check and need for speed you simply can’t ignore.

Share

x