In the fast-evolving FMCG world, small and medium businesses (SMBs) must remain agile and data-driven to succeed. As consumer behavior shifts and competition intensifies, particularly with private label brands, SMBs face numerous challenges, from inflation to changing retail dynamics. Now more than ever, ongoing optimization of strategies is essential for SMBs to thrive.
Understanding the Shifting Market Landscape
The Rise of Private Labels
The FMCG industry has seen significant disruption with the rise of private labels, which have quickly gained market share. This trend, which began in 2022, has continued to grow, creating strong competition for SMBs. In response, SMBs must adapt by understanding consumer needs and finding ways to differentiate their offerings.
Inflation and Economic Challenges
Inflation is another persistent issue impacting the FMCG industry. For SMBs, this challenge requires adaptable pricing and product strategies to balance costs without losing market appeal. In 2023, 46.5% of businesses removed low-performing items from their product lines as a strategic response to inflation. For 2025, SMBs should continue assessing product performance and market needs to adjust pricing and offerings effectively.
Strategic Optimizations: The Path to Success
Dynamic Pricing and Understanding Elasticity
Effective pricing strategies are essential for SMBs navigating inflation and economic shifts. Understanding price elasticity—how price changes affect demand—is a critical part of this. For brands with high elasticity, a price increase may drive customers to competitors. But brands with loyal customers may retain them by shifting purchases within the brand, a scenario known as “own elasticity.”
Working with a data partner like NIQ can help SMBs determine their brand’s elasticity and refine pricing strategies to attract and retain customers.
Leveraging Omnichannel Approaches
With consumer behavior moving between online and offline channels, SMBs need a seamless omnichannel strategy to maximize reach. In 2024, 42% of small businesses and 67% of medium businesses already employ this approach. Omnichannel integration can help SMBs enhance customer experience and tap into both digital and traditional trade spaces.
Data-Driven Decision-Making: The Key to Smarter Choices
Data as a Tool for Competitive Edge
Relying on data rather than intuition allows SMBs to minimize risk and make informed choices. By analyzing historical data, SMBs can make competitive pricing decisions, understand consumer behavior trends, and make strategic adjustments.
Optimizing Retail Negotiations
Strong retailer partnerships are crucial for SMBs. To achieve a win-win relationship, SMBs should have a thorough understanding of their product’s performance, category, and competitor landscape. Data can provide insights that support compelling pitches to retailers, strengthening brand visibility on shelves.
Mastering Consumer Behavior in Strategy Design
Consumer behavior is often influenced by cognitive biases like immediacy, possession, and popularity. To engage consumers effectively, SMBs need to understand these biases and consider how psychological factors impact purchasing decisions. Aligning product offerings and promotions with these insights can help drive engagement and build loyalty.
Take Action: Optimize Your SMB Strategy Today
To stay competitive, SMBs must embrace agility, leverage data, and continuously refine their strategies. Download the NIQ SMB Checklist for Strategy Optimization for actionable steps to help your business navigate the challenges of the FMCG market.
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