CPG Industry Trends That Should Shape Your Approach to IT

The consumer packaged goods (CPG) industry is rapidly expanding due to changes in customer demand. Recognized as the largest manufacturing employer in the United States, it supports one in ten jobs across the country. It also contributes $2 trillion to the nation’s gross domestic product (GDP).

As consumer interests continue to shift, it’s important for leaders in this space to stay on top of CPG industry trends. If you’re in this industry, you’ll find that many of these trends point to the importance of investing in modern tools and technologies.

Today, we’re looking at some of the most prolific trends that are shaping this sector. By understanding the challenges and opportunities, you can strategize a competitive and profitable approach to IT modernization. 

6 CPG Industry Trends

1. A Focus on Product Sustainability​

According to one report, two-thirds of Americans prefer eco-friendly brands. In addition, nearly 70% are willing to pay a premium for recycled products, and more than half are prepared to change their shopping habits to lower their impact on the environment. 

Companies that can demonstrate a dedicated focus on sustainability are quickly rising in the ranks.

This commitment must run deeper than lip service. In addition to changing their advertising message and adjusting their packaging materials, brands must revolutionize their product offerings.

Leading companies are taking advantage of this shift in consumer consciousness, delivering products that contain:

• No plastic or less plastic
• Less added sugar
• Organic ingredients

How can you follow suit? Conduct an audience analysis to understand what your buyers prioritize in terms of environmental friendliness. Then, focus on transforming your digital strategy.

For example, you can look for a manufacturing ERP system that provides deep visibility into your operations, so you can continually recognize and improve wasteful practices. 

2. Increasing Labor Shortage

We’re in the middle of an ongoing labor crisis that’s affecting industries across the globe. Interestingly, these workers aren’t just leaving their current places of employment. They’re seeking jobs elsewhere. In fact, hiring rates have outpaced quit rates since November 2020. 

For CPG companies, this has significant implications when it comes to the customer experience (CX).

How so? Well, buyers want to interact with the brands they’re purchasing from, rather than just making a transaction, but it can be especially challenging for companies to deliver personalized service when staff numbers are down. 

What should you do? Consider the benefits of enterprise systems, like CRM and ERP software. The right solution can facilitate easier employee collaboration and customer management. 

These systems store all customer account data in one place, allowing representatives to personalize each interaction. Teams can use this data to cater to different consumer segments, offering targeted services at strategic checkpoints. 

In addition, these digital tools enhance the customer experience. They allow users to track their orders, process returns, and find answers to their questions. This creates a more compelling and engaging CX that can boost sales and customer loyalty. 

3. The Rise of Smaller CPG Enterprises

Traditionally, a few power players have dominated the CPG market. While these monoliths might still have authority, newer and smaller companies are quickly becoming more popular.

Many of these are digital-native brands that operate on a direct-to-consumer business model. Their products are innovative and sleek, and they’re devoted to shaking up the status quo.

As these competitors enter the market and the CPG industry as a whole continues to grapple with material shortages, bigger brands are even more pressed to innovate.

In response, these brands are undergoing digital transformation. They’re automating manual processes and digitizing their offerings, so they can appeal to a tech-savvy customer base.

4. Accelerated Adoption of Immersive Technologies

Another way that CPG brands are leveraging technology to reinvent the retail experience? They’re investing in immersive technologies, like artificial intelligence (AI) and virtual reality (VR).

When combined with services like 5G connectivity, these technologies expand and enhance CX initiatives. They also make the shopping process more enjoyable by enabling services, like magic mirrors. 

These technologies and services require deep investments in cloud technology. According to one study, 71% of CPG brands are either mature cloud users or they’re quickly advancing their cloud investments. 

5. Increasing Need to Secure Customer Trust

As CPG brands consider implementing new technologies, one issue remains top of mind: How can they grow confidently in this new direction without exposing their firms to data security breaches?

Moving business operations to the cloud can be risky, and consumers know this. Sixty-three percent of buyers believe that a company is always responsible for protecting their data. In addition, 81% say they would stop engaging with a brand online after a data breach.

To this end, CPG brands must make their data privacy policies transparent and easy to access. These policies should include well-planned measures to reduce cybersecurity attacks and keep information secure.

Another way to increase security is to ensure careful software selection. When evaluating CRM or ERP vendors, companies should only consider cloud-based solutions that offer enhanced data security. 

6. A Focus on Supply Chain Resiliency

Over the past two years, CPG companies have experienced major supply chain setbacks. As such, they’re adopting lean business models to eliminate excess inventory. They’re also implementing technology like manufacturing ERP software to enable a connected supply chain network that runs on real-time, buyer-specific data.

Your company should consider optimizing its supply chain in a similar manner if you want to be agile enough to quickly respond to obstacles like rising shipping costs and supplier delays.

What’s Your IT Strategy?

These are only a few of the CPG industry trends shaping the industry. CPG manufacturers should take note of these developments so they can continue to cater to customer demands. The key differentiator will be knowing how to leverage technology to outpace competitors and deliver a smarter, more immersive shopping experience. 

Our enterprise software consulting team can help your CPG businesses streamline operations and modernize your technology. Contact us below for a free consultation