Inflation is rising at its fastest pace in three decades, driving up the cost of food and fuel, and subsequently the prices of a range of consumer products – from clothing and footwear to furniture, household goods, electronics and more. To secure margin and stay afloat, many retailers are doing a major overhaul of their product ranges, rationalising their product portfolio to remove the long tail while simplifying promotion strategies.
The rising cost of living crisis has meant that the average consumer has no choice but to be more selective about how they spend their money, resulting in new and different purchasing habits. But with consumer confidence in the UK at its lowest ever score since records began in 1974, the question remains whether they will continue to spend at the same rate as they did pre-pandemic. With consumer spending behaviour becoming ever more difficult to predict, how can consumer packaged goods (CPG) companies address this while still positioning the customer front and centre?
To navigate the macro challenges facing them, CPG brands should channel their efforts into three key directions: providing unrivalled customer experience (CX), maintaining high sustainability credentials, and ensuring resilient value chains.
Create Winning Customer Experiences
Today’s consumers value experience when they shop or interact with a brand more than ever. They are much more selective about how and who they spend their money with. The modern consumer purchases with a great emphasis on responsible consumption and health and wellbeing while demanding more personalised outcomes from brands. The stakes of getting the experience wrong are high, as 71% of UK consumers haven’t gone back to a brand after vowing to never shop there again.
Successful CPG companies are those that can provide a personalised experience where and when customers want it. They can do this by leveraging AI and data analytics to create dynamic consumer profiles that enable them to personalise campaigns in real-time, adapt to consumer context and needs while also helping to ensure data security and consumer privacy. Using cloud-based, AI-powered analytics, brands can gain a richer understanding of each customer in the moment and bring valuable insights into product development.
Offer High Sustainability Credentials
Customers have become increasingly aware of how and where a product has been made. The use of raw materials, worker treatment, packaging and delivery have all become top of mind when choosing what products to buy, and this influences their buying decisions. In fact, according to Accenture, two-thirds (66%) of consumers will now make more ethical and sustainable choices when shopping. Responsible businesses not only attract more customers but drive financial success. This is because customers pay attention to the sustainability credentials of companies and will often boycott ones with negative values.