Retailers and manufacturers that focus on consumer packaged goods (CPG) often operate with thin margins, which brings extra scrutiny to any major technology investment. But these players may find that they can’t afford not to keep up with the latest developments in AI, machine learning and other modern tech trends. Adopting such solutions provides a number of measurable benefits, according to Deloitte’s 2020 Consumer Products Industry Outlook. For instance, the firm found that 62% of CPG players that invested in customer analytics observed a clear ROI, which directly translated into increased revenue among 52%.
However, even though 75% of CPG retail and manufacturing leaders cited digital and analytics capabilities as their top priority, there is still much room for improvement. For example, Deloitte found that only 38% of these companies have partially or fully implemented AI-based warehouse management to monitor fresh food stocks — a solution that could simultaneously streamline the supply chain and improve social responsibility by reducing waste. It’s the type of technology investment that can cut costs, improve public perception of the brand and even help with recruiting talent.
Social Benefits And Bottom Line Improvements Go Hand-In-Hand
From a social angle, waste reduction is part of improving sustainability, a common concern among today’s shoppers, and keeping food fresh plays into maintaining a healthy lifestyle. Deploying these solutions also can reduce over- or understocking shelves, which has a more direct impact on a retailer’s performance.
“If you can do something that that uses less food or improves demand planning, so that you don’t have the food locked in the system, there’s a positive outcome for both CPG companies and their retailers,” said Barb Renner, Vice Chairman and the U.S. Consumer Products Leader at Deloitte in an interview with Retail TouchPoints. “If you only have to buy X pounds per week of a certain type of produce, because maybe you’re able to use technology in supply chain and take certain steps to keep it at the right temperature so that it has a longer shelf life, you’re going to be able to keep that food longer and keep the nutritional value intact. There’s actually a business reason to do it in addition to the social impact.”
Using these types of analytics shouldn’t be limited to the warehouse. The same practices can be applied to studying shopping habits to determine how customer behavior is evolving, which helps CPG retailers fine-tune strategies that boost day-to-day sales.
“The question for CPG companies will be ‘How do they engage with the consumer as the consumer continues to change?’” said Renner. “Do they want to buy something from the perimeter of the grocery store, or do they want something that is in a more ready state, like cooked vegetables? Do they want something that is paired with a grab-and-go type meal, so that they can just walk into the store and walk out of the store instead of actually trying to think about what they want to serve for dinner?”
Attracting Tech-Savvy Employees Is A Challenge, But The Social Angle Helps
A major barrier preventing CPG retailers from improving their analytics capabilities is the problem of finding the right employees: 82% of executives in the industry cite internal expertise as their top talent challenge. However, CPG companies are taking note, and nearly 61% plan to increase hiring of personnel with deep experience in functional and technical topics.
This is another area where establishing a strong relationship to today’s social issues can prove beneficial — by showing potential new hires that these jobs can make a positive difference in the world. Many highly talented people look toward working at a tech giant as their primary career goal, but a strong social message can be just as effective in attracting employees as it is for drawing in and retaining customers.
“One thing I’ve actually talked to a lot of CPGs about is where these graduates of the future, whether they’re high school, college or trade school graduates, want to go,” said Renner. “If you look at CPG companies and the positive social impact they have, whether its mission is to feed the world or some other altruistic statement, you see that you can actually be a finance person, attorney or engineer and work for a CPG, and have a fulfilling career. “