Generation Z and millennials continue to dominate the market triggering a direct impact on purchasing trends. The spreading of e-commerce, socially conscious consumer behavior and rising environmental awareness which has encouraged demand for veganism and vegetarianism are the new factors FMCG companies need to address to retain existing customers and attract new ones.
The days when people would first read about a product in newspapers have long been gone. The predominance of social media and mobile phones has completely changed the way customers shop today. To millennial and generation Z customers, peers' recommendations prove much more important than direct advertising.
According to a survey by the Empathica Consumer Insights Panel of more than 6,500 customers, today's shoppers, highly dependent on peer reviews, are using social networking sites both online and in-store to make shopping decisions.
Affordability, however, is still crucial for consumers. So, how can FMCG companies increase product value through ethically focused production, sustainable supply chains and better quality products while maintaining profit margins without increasing retail price?
Trust the (big) data
Data analytics is the key. A McKinsey research report, conducted prior to the pandemic, revealed a 85% growth in sales and more than 25% in gross margin for the businesses using consumer behavior data in comparison with their competitors.
Another survey conducted by data science firm Alteryx and the online retail forum RetailWire with 350 brand manufacturers and retailers participating, found that 81% of respondents use big data analytics to gain shopper insights.
The changing business dynamics of the FMCG industry is rapidly shifting the focus from ‘product’ towards ‘consumers’.
Traditional advertising efforts and generalized marketing concepts of the past are fading into the background as consumer behavior outgrows traditional means of market engagement.
Do it like Starbucks
Perhaps the most popular success story of a company investing in big data analytics in the FMCG industry is Starbucks, one of the most popular coffee brands in the world. Key of Starbucks' success is considered its trust and constant investment in cutting-edge technologies and data analytics.
The coffee brand uses Big Data to:
Predict the success and future performance of its new stores in different parts of the world. Starbucks analyzes data such as demographics, location, buying behavior and popular trends. In this way, the brand mitigates the risk of opening a store in a location that probably won’t work.
Make loyal customers. The brand uses customer insights to design marketing incentives and aftersales services aiming at continuously engaging with the customers. This enables offering personalized products and services and achieving higher customer satisfaction.
Huge need of data analytics experts
FMCG companies are increasingly investing on big data and analytics to achieve value creation, scalability of business operations and higher profits in a dynamic marketplace.
The problem is that while the majority of companies understand the value of data analytics, many do not know how to make use of the data they aggregate. The Alteryx and RetailWire survey we mentioned above found that only 16% of the respondents considered themselves to be experts in data analytics.
There is a huge need οf professionals who can understand and analyze data aiming in driving business decisions.
Workearly Business is filling the large gap in the provision of personalized training and guidance to upskill the employees in the FMCG industry so that they deploy big data to reach higher customer satisfaction and drive profitability further.