Run, Don’t Walk: Why CPG Brands Must Leapfrog to Digital Transformation
Sean Rusinko | April 23, 2020
The ongoing COVID-19 crisis has wholly upended the channel mix strategy for consumer packaged goods (CPG) brands. Between empty grocery store shelves and shelter-in-place and social distancing orders, consumers are turning to the digital shelf to find and purchase essential products.
This sudden surge in demand, coupled with an inadequate ecommerce infrastructure, will likely prompt many CPG brands to scrap their existing digital strategies — or find a way to transform to meet these new digital demands.
Demand for Online Grocery Surges Amid COVID-19
Many CPG brands understood this purchasing behavior would eventually become the future norm, actively preparing with multiyear digital plans. But most weren’t ready for the current rate of change.
Online CPG spending has been growing at a 10% to 15% clip over the last three years, according to a 2018 study from strategy and consulting firm Accenture — about double the rate of growth for the overall retail market.
According to internal Salsify data, unique visits per week in grocery categories on Walmart Grocery have increased over 100% from March 5 to April 5, 2020. Demand for online grocery services has pushed channels like Amazon Fresh and Instacart into unprecedented territory. Amazon is hiring 75,000 new workers to support sales spikes, while demand for Instacart is up 300% year-over-year.
Online grocery was previously expected to reach a 6% share of the market by the end of 2020, according to September 2019 data from consulting firm Brick Meets Click. This percentage is a mere rounding error in the balance sheet for most CPG brands, despite the fact that online grocery has been the fastest-growing ecommerce category in recent years.
This figure is now expected to surpass 10% to 15% for 2020 — four years sooner than predicted just a few months ago.
The New Reality for CPG Brands
This growth doesn’t solely stem from existing online grocery customers who might be purchasing more products as they shelter in place. A recent survey by Gordon Haskett Research Advisors found that of the 33% of shoppers that had recently bought food online, a staggering 41% said it was their first online grocery purchase.
While shelter-in-place and social distancing orders are temporary, these changes in shopping behavior will be anything but. These trends highlight a tectonic shift in how shoppers think about purchasing CPGs.
“Success breeds complacency,” said Andrew Grove, former chairman and CEO of Intel, “Complacency breeds failure.”
The message is clear: Brand manufacturers cannot afford to be complacent. For the largest and most successful CPGs, this means the pre-COVID-19 roadmap to digital transformation must be reimagined.
How to Quickly Scale Digital Grocery Operations
Many Salsify customers have ramped up their programs amid this ongoing crisis, identifying accelerators within their roadmaps to deliver better product experiences. These brands have the agility to get to market quickly and appropriately scale their programs.
There are three key focus areas for successfully meeting these new demands:
- Activate content at scale across priority retail channels;
- Engage customers with compelling product experiences using enhanced content; and
- Scale ecommerce product information for omnichannel delivery.
We created the Salsify Grocery Growth Kit to help brands quickly scale up digital grocery operations. This offering will empower brands to manage and update product content across key grocery retail channels — such as Instacart, Walmart Grocery, and Amazon Fresh — helping them meet this new surge in demand right now.
The Salsify Grocery Growth Kit will help brands:
- Take greater control over brand experience across digital channels, ensuring consistent, accurate, and engaging product experiences;
- Reduce touchpoints and automate key steps in the syndication process get content live on key grocery channels faster and more reliably; and
- Create, update, and publish new product content to key grocery channels faster, allowing them to respond to consumer buying and search trends.
CPG brands must incorporate these rapid shifts in consumer behavior into their current digital strategies. Brands that are able to adapt their strategies, work faster, and engage consumers — everywhere they shop — will be the ones that find success in the post-COVID-19 world.
Learn more about the Salsify Grocery Growth Kit, and discover how it helps brands quickly scale their digital grocery operations to meet these new digital demands.