Report made by Clarkston Consulting
Compiled by: Bizzi Vietnam
It is not surprising that price is always a top priority in the minds of consumers when making decisions about fast-moving consumer goods (FMCG). The increase in the total number of shopping carts and the number of empty shelves will cause consumers to reconsider and re-determine their shopping behavior, especially for frequently purchased products such as home appliances.
Price sensitivity also continues to shape buying behavior, as consumers now have the ability to pay for life's expenses. Furthermore, many consumer packaged goods (CPG) companies are pursuing innovations related to subscription models, automation, and digital trade promotion management (TPM) to further reach consumers. Consume anywhere.
Consumers are also becoming more informed about their product choices, as well as deciding whether the manufacturer's specifications are in line with their values. With all these complicating factors, the key to success remains surprisingly simple: ensuring an organization's resources and investments are rooted in meeting consumer needs.
Let's explore the 6 emerging trends in the fast moving consumer goods (FMCG) industry in 2023 below:
1. Price is still a prerequisite when consumers face inflation
Consumers are looking for innovation in the face of price sensitivity. They look for product value and quality to enhance their purchasing decisions, as well as to tailor and maximize their personal budgets. The home appliances category is where consumers care most, and they are confident they are making the best financial choices.
Of course inflation will affect both consumers and manufacturers, as high costs of goods will reduce profits. However, these tight margins cannot create additional concerns for consumers.
Due to rising prices among brands, consumers are gradually turning to private-brand products to get the most out of their money.
Strategic investments in supply chain systems can reduce this situation and provide more effective solutions. The right investments by manufacturers to achieve maximum efficiency can pass added value directly to the consumer.
“More than 80% consumers are choosing
private brand products”
Consumers often choose products based on observations and feelings, shelf life and effectiveness of use. Products advertised with diverse functions will have a higher value in the minds of consumers who need to make the most of their money. It is not necessary to redesign to “create” a versatile product. Manufacturers are often able to tap influencers and shape marketing messages to attract consumer awareness of new product usage.
2. Consumers look to direct business (DTC) models for convenience and cost savings
Direct-to-business (DTC) models are emerging for meeting both consumer demand and operational efficiency. Subscription models are typically reserved for food, clothing, and branded goods, but many consumers will be interested in receiving household products directly at home, in line with consumer buying habits. their other.
For consumers, business models offer convenience to those who don't want to shop in person. This also offers real value as you have the flexibility to receive household goods at home at the time that works best for you.
This business model can also further alleviate consumer concerns regarding price by saving costs when ordering household appliances in bulk. Especially for non-perishable products, bulk ordering and shipping relieves consumers of anxiety about empty shelves in their homes and stores.
These concerns stemmed from the lack of toilet paper and hand soap during the early stages of the COVID-19 pandemic, but it is still present amid supply chain disruptions. Therefore, providing DTC solutions to meet consumer needs and deliver added value will continue to be the key to success for FMCG manufacturers in 2023.
3. Automation to continue improving operational efficiency in the fast-moving consumer goods industry
Advances in technology will drive other areas that companies should be interested in in 2023. It is not surprising that technology is once again an essential element of consumer goods industry trends, especially Automation will be key for the coming year.
Automation requires intelligent integration between all devices in every stage of production, enabling better inventory management and eliminating unnecessary human errors. This can help save costs and provide control over a complex system. In addition, with automated data reports leveraging machine and artificial intelligence learning, companies can improve computerization based on real-world usage data from the production line. its output.
This also benefits when companies and manufacturers of consumer goods face labor shortages, so an automated, data-driven system can deliver operational efficiencies that aren't yet available. ever had.
“Automation improves customer experience up to 93%.”
An automated connected business also benefits the customer experience. The 93% company reports that automation can help customers track and interact with the products they are ordering. Automation is commonly found in self-service interfaces such as shipment tracking, but other use cases are also emerging in the FMCG industry. These include automating truck loading and unloading, seasonal product adjustments, and real-time inventory counts.
4. Digitization of trade promotion management will boost business bottom line
Trade promotion is an essential element for revenue growth, especially in an inflationary environment, but these promotions need to be managed well to maximize their potential. Most trade promotion programs are well designed but fail to achieve the expected results, and even lose money due to poor management.
In 2020, more than 70% consumer goods companies still use spreadsheets to manage their promotional activities and expenses. Therefore, digitalization of trade promotion management in the FMCG industry will be very important in 2023.
Digitization allows for better optimization and analytics, which can grow revenue by 4% and reduce 10% in promotional-related advertising costs. This happens through promotion synchronization and real-time analytics to determine which programs are profitable. In 2023, this will allow managers to identify the factors that can drive success for a particular promotion and capture that program's value at scale.
When trade promotion is effectively managed by digital, we can take further steps to strengthen the ongoing promotion management process.
The next step is to take advantage of multi-channel promotions, analyze and get an overview of the points of sale (POS) to determine which would be a good fit for different promotion methods. As companies increasingly focus on new technologies and solutions to reach customers in omnichannel, it will be important to study the effectiveness and leverage data to improve or adjust each channel.
The digitization of trade promotion management also allows for constant price changes and personalization. Promotions can be tailored to each customer, from which companies can rely on generated profile data of a customer's specific price tolerance to launch promotional activities. commercial. To optimize growth and increase revenue, companies need to leverage the digitization of promotion management in the coming year.
5. Door-to-door delivery brings unprecedented convenience to consumers
Continuing the consumer-centric trend, companies need to focus on exploiting consumer pricing criteria to make purchasing decisions. The key point of this criterion is convenience and innovation. When segmenting by income level, consumers also have different concerns regarding these criteria. The low- and middle-income segment focuses on comfort, while the high-income segment values innovation, passion and self-care.
"41% consumer indicate they are ready
pay for home delivery.”
In 2023, this trend will be interestingly expressed, through home delivery of household products from local stores or other personal delivery partners. Similar to business model trends, home delivery can hit consumer psychology and their purchasing criteria. This offer is aimed at individuals or households with moderate to high incomes, with large purchasing power, who can afford home delivery.
The price for this luxury is also at a certain threshold, when 41% consumers say they are willing to pay for the cost of home delivery.
To begin to exploit consumer buying criteria, it is extremely important to understand the values that are valued in their purchasing decisions. Next, companies need to synchronize products and services with corresponding values, especially convenience and innovation to be able to meet customer needs.
6. Consumer purchasing criteria will influence corporate social responsibility more than ever
Consumers are becoming smarter, they continue to consider whether their spending is worthy of the ethics of the companies they buy from. This means that manufacturers should be aware of how business processes, products and marketing strategies represent the brand. Criteria tailored to target customer groups can encourage and predict spending patterns.
Another important factor is the potential for increased brand loyalty. Correlation between a product and a consumer's value-based purchasing criteria can promote loyalty to a product. This will be extremely important at a time when consumers are rapidly switching to another brand at a lower price point.
An important element of business ethics is the constant focus on environmental sustainability and corporate social responsibility (CSR). Consumers will reduce their impact on the environment through shopping, as evidenced by the 85% global consumers who have changed their shopping behavior towards sustainable practices.
In 2023 and beyond, a focus on corporate social responsibility could create new business opportunities in the FMCG industry. Reducing product waste, using recycled packaging and finding new uses for existing products are ways companies can highlight sustainability.
Another emerging idea is born in the food industry, where “non-standard” products will be found, packaged and delivered to consumers who want to reduce food waste when buying. fresh products. This idea could be applied to household products, creating a potential market for items sold to consumers with wrong specifications or simple packaging flaws.
"85% consumer The world has changed shopping behavior
towards sustainable activities.”
Companies in the FMCG industry need to decide where to do business based on external pressures of inflation, developments in automation technology, and value-based consumer purchasing criteria. In this ever-changing and competitive industry, companies need to be consumer-focused and strategic in their efforts to provide innovative, affordable products.
>> See more Future payment trends of businesses
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