Speed is a problem for many consumer packaged goods (CPG) manufacturers in today’s fiercely competitive retail market. While consumers are quick to change tastes and brands, operational silos can slow down the agility of manufacturers and their partners and block their adaptability to adapt. These dual challenges were the focus of two Nielsen-led panel discussions at the recent Category Management Association (CMA) annual conference, both of which offered real-world examples and proven strategies to overcome them.
In the “From Silos to Aligned Revenue Success” panel, Paul Morgan, Nielsen’s VP of sales effectiveness, moderated a discussion about how manufacturers can break down internal and external silos with the help of the right data, analytics, and planning tools. Each panelist shared their experiences in overcoming silos that adversely affect joint account planning and shared accountability, which a majority (64%) of CPG manufacturers and retailers consider “inefficient.”*
In “The Always-On Shopper Dynamic” panel, Sue Temple, Nielsen’s VP of global consumer insights product leadership, described the ever-changing shopper dynamic she has observed working with consumers across 87 countries in the past 20 years. Today, the typical U.S. shopper visits at least two different physical stores and makes 56 trips to stores in one month.
Here are the highlights of those discussions:
Breaking down operational silos: Four takeaways
Operational silos are often deeply ingrained and hard to break down. The panel discussion confirmed that manufacturers and retailers would benefit immensely from a silo-free environment. The panelists agreed that a significant advantage of breaking down silos is improved financial performance, which is achieved through shared objectives between internal teams and external retail partners.
#1 All stakeholders (internal and external) need one version of truth.
Expert panelists agreed that all stakeholders want a successful outcome. As Phil DeConto, VP Category Management and Shopper Insights at Ferrero, explained, “You have to assume a positive intent to establish shared objectives and ultimately arrive at one version of truth.” Having this perspective will help align your goals, even if they seem to be different. Misunderstandings drive most silos, so take advantage of any resources, tools, and capabilities that would improve communication among various teams. Using different data sets can also breed distrust because teams are not on the same page. The panelists emphasized the importance of sharing common data and analytics. Having one analytics platform drives greater understanding and unity within an organization, not to mention efficiency.
#2 Foster continuous improvement to reduce the risk of making different decisions.
Silos can stem from a desire to maintain the status quo in account planning and to repeat the same plan year after year because it’s safer that way. That approach hinders real collaboration and advancement because it’s a formula that doesn’t welcome new ideas. Tyler Thompson, category manager at Huhtamaki, recommended creating an environment of continuous improvement by testing, iterating, and learning from new decisions made by stakeholders. To help foster such an environment, you need to build a culture of constant learning that conveys, “it’s okay to make mistakes because you’ll learn and do better next time.”
#3 Quantify the value of your account plan to win over the management team and retail partners.
Stakeholders are usually afraid to change their account plans without a road map to guide them toward their objectives. That fear builds silos, too. To convince management teams, and retail partners, you should quantify and demonstrate the value of your plan, including optimization points. It’s easier to sell your plan to product management and brand teams and other stakeholders if you can show the ROI against any tool you’re using.
#4 In your technology investments, focus on a few key areas where you can excel and play to your strengths.
A significant segment of CPG manufacturers (46%) plan to invest in assortment, pricing, or promotions. Still, most of them are not sure in what tools, technology, or data they’ll be investing. Such uncertainty is not surprising in an industry where companies typically invest in data and tools in a cyclical pattern. For example, a company may invest in assortment this year and pricing next year, with a plan of making a similar investment for those areas every three to five years, until the company covers all operational areas. It’s a reflection of stakeholders’ desire to cover all functions of their operations. Tyler Thompson instead recommended focusing only on a few key areas (e.g., assortment, pricing, and promotions), and reinvest in those areas year-over-year to be consistent.
Understanding changing consumer behaviors: Three takeaways
When it comes to shoppers, there’s one thing Sue Temple wants CPG manufacturers and retailers to remember –consumer behaviors change all the time. Evolving consumer tastes require agility now more than ever.
#1 Shoppers throughout the world are driven by two key factors: logic and emotions – which should be front and center for manufacturers and retailers.
Temple called the two factors “sense and sensibility” in reference to Jane Austen’s classic novel. Shoppers care about pricing (sense/logic), but they’re also greatly influenced by convenience, speed, and other things that affect their moods and emotions while shopping. The emotional factor is especially critical for physical stores, which should strive for enhanced in-store experiences, in addition to excellent customer service.
#2 Shoppers throughout the world are driven by novelty, which should encourage manufacturers and retailers to innovate.
Consumers are naturally attracted to new things and innovation. Shoppers like to try a new store, whether they are in Bulgaria (46%) or the United States (62%). Consumers are similarly attracted to new brands and products. CPG manufacturers and retailers should always assess how they can deliver something new or make enhancements throughout a product’s lifecycle and whether they need to relaunch or replace certain products over time.
#3 While there are common drivers for consumer behaviors globally, CPG manufacturers and retailers should take note of variables in every market.
The aisle and shelf placement of products are critical since 67% of consumers make brand decisions in-store. Manufacturers and retailers need a deep understanding of the “sense and sensibility” factors that influence purchasing patterns, and all the other variables that affect specific markets. These could include the presence (or absence) of self-service checkout in a store, or whether a store offers ready meals. In food brands, labelling can also motivate shoppers to buy an item because it tells them if the food is healthy or if it contains an ingredient to which they are allergic. These subtle variables mean timely and reliable market intelligence, down to the right store locations and their geo-economics, are crucial for making informed decisions on assortment, pricing, and promotions.
Take the next step
In both sessions, experts agreed that adaptability is imperative in today’s continually evolving retail landscape. Breaking down silos and increasing your agility can seem daunting, but it’s truly necessary for your business to not only survive but thrive.