Emerging Trends That Will Revolutionize the Consumer Goods Industry
How FMCG Companies Can Win Customer Trust and Wallets in the Next Few Years
How FMCG Companies Can Win Customer Trust and Wallets in the Next Few Years
High costs of raw materials, packaging, and shipping are threatening profits for many businesses around the world. Globalization and dwindling natural resources are already creating volatile markets. Surveys show that customers are worried about inflation and skyrocketing prices, and as much as 72% of consumers in the US have switched to lower-cost brands, or simply cut down on their shopping altogether. The rising digital penetration will shake the very foundations on which traditional businesses have been built. Companies, now more than ever, are under tremendous pressure to take a hard look at their objectives and practices, become ESG-aware, develop agility and transparency, and focus on creating value for their customers. We believe that a deep understanding of real-time data on macroeconomics and changing consumer preferences should help businesses win consumers' hearts. So, in this article, we discuss the latest trends in the market for consumer goods which businesses can take notice of. We believe that the actionable insights from the article will help you gain profit and establish your business of consumer goods successfully despite the challenges.
Here are some trends businesses can make the most of-
According to a study, more than 60% of customers agreed that they liked it when businesses launched exciting new products. Innovation in business boosts growth and profitability and attracts a large loyal customer base. Consumer goods such as packaged foods, cosmetics, electronics, and apparel, are purchased by people or families for their use and entertainment. These products can be anything from ordinary items to works of art, and they can be manufactured using a wide variety of raw materials. These goods are highly essential for daily living and the market for them is anticipated to grow at a CAGR of 8% in the next few years.
To reinvent business models, offer excellent customer service, and outperform the competition, a majority of companies have already begun integrating AI in retail. According to data, more than 70% of retailers and manufacturers of consumer goods have already deployed AI or contemplating its adoption. One of the global retailers that is investing heavily in artificial intelligence as well as robotics is Walmart. By utilizing these advanced tools, the organization is trying to ease the pressure on its supply chains. The company has acquired Alert Innovation to use robots for their online grocery orders. Using AI algorithms, companies can learn about prior searches and purchases of customers and suggest new products accordingly.
Automated search is another significant way that artificial intelligence will alter consumer markets. The most advanced chatbots are referred to as "virtual assistants" as they can access large knowledge libraries and support users in complicated online tasks. For instance, Estée Lauder uses a patented artificial intelligence (AI)-based facial recognition algorithm to create a chatbot that aids online shoppers in the selection and purchase of find the perfect shades of lipsticks.
Just as brands research to understand consumer preferences and demands, today’s consumers are also curious to learn more about the brands, their material sourcing, manufacturing processes, and their ESG compliances through social media and other channels before making a purchase. It is estimated that close to 50% of consumers find a product they want after going through a targeted ad while using social media. Companies can be rest assured of customers’ loyalty if they find alignment with a brand’s vision.
Easing the transition of consumers from one device to another creates an uninterrupted shopping experience, which is highly sought after by today’s customers. Brands that provide an omnichannel experience gain instant customer loyalty and an increased reputation in return. With e-commerce being a mainstay of shopping experiences the world over, companies have to focus on offering on-time deliveries and hassle-free returns. Parallelly, companies will have to continue delivering wholesome customer services at their physical stores, broadening customer retention.
The awakened consumer is aware of the impact the smallest act of buying a product or service can have on the environment. They want to make conscious choices and shop with an eye on sustainability. Currently, close to 69% of consumers have been observed to have adopted shopping habits focusing on sustainability. Brazil has the most consumers who have made significant changes towards a sustainable lifestyle (See: Figure 2). With increasing environmental concerns, numerous brands have overhauled their business models and undertaken careful steps to incorporate ESG measures across every aspect of their value chains. For example, companies are adopting circular economy measures and reducing waste, reusing materials, and in many cases, replacing raw materials and traditional packaging with eco-friendly materials. By simply switching to sustainable packaging, companies can drastically reduce GHG emissions. In a recent study, around 63% of participants claimed to have appealed to companies to reduce packaging, and nearly 44% wanted the brands to specify the sourcing of the raw materials. Many stressed that they stopped buying certain products when they found that they were inadvertently responsible for environmental damage.
Over 91% of companies surveyed agree that automation will improve customer experience. Access to digital tools helps customers to gain awareness of the plethora of products and services available, shop at the click of a button, make online payments easily, and track shipments from the comfort of their homes.
More than 75% of customers that participated in a survey assured that they were ready to buy from brands that took the time and care to deliver tailored customer experiences. Identifying customer trends and extracting hidden insights using predictive analytics and A/B testing methods can increase sales by ~6% and build a more engaged and emotionally connected customer base.
Home automation is a rapidly developing area of technology that makes homes safer and more comfortable to live in. It has been observed that in the U.S. alone, there has been a growth of over 2% in the number of households using smart electronic devices, as the number rose from ~57 million in 2022 to more than 60 million in 2023. The potential for consumer goods in home automation will grow as technological advancements continue. Consumers who want to track and monitor their expenditures, be more environmentally conscious, or keep tabs on household routines are more and more interested in buying energy-saving smart home technologies.
An increasing number of consumer goods are connected by the Internet of Things (IoT). Over 4 billion consumer products in China in 2030 were observed to be Internet of Things products. Discovering and buying consumer packaged goods is made simpler by IoT connectivity, which also helps to channel data for the development of novel commodities and business models. Consumer firms are already utilizing IoT technologies to strengthen and expand their connections with current and prospective customers. IoT technology has the potential to enhance inventory management across the store environment. RFID chips, which store product data and transmit it through radio signals to a scanner, have been used by global fashion retailer Zara for a long time. These chips are installed within the garment's already-existing plastic security tags and every time an item is sold, information from its RFID chip triggers an immediate request to the stockroom for a replacement.
From interactive games to AR-enabled packaging, VR/AR has made it possible for FMCG businesses to interact and communicate with consumers in new and creative ways. The fast-moving consumer goods industry has a significant opportunity to profit from the combination of augmented reality (AR) and virtual reality (VR). AR may be used to virtually try on things like clothing and cosmetics in smart fitting rooms or through smart mirrors to ensure that they fit properly. Through virtual tours, businesses are enabling consumers to digitally explore more in-depth facets of a brand's identity. For instance, to better convey their production processes and increase customer trust, alcoholic beverage firms are adopting VR to offer virtual tours of their breweries.
By recording each stage of the product lifecycle on an immutable distributed ledger, blockchain technology provides a solution to the challenges of product tracking. With the right permissions in place, real-time visibility and track-and-trace become less complicated. For instance, Walmart uses blockchain technology to automate the handling of invoices and payments to its third-party cargo companies.
Consumers are looking for value-based products and personalized shopping experiences without going to a brick-and-mortar store or going broke. Many retailers and manufacturers are already revamping their businesses to fill these gaps in the market. Moving forward, there will be more emphasis on AI integration and sustainable manufacturing practices and products that contribute to the health and wellness of the consumers as well as our planet.
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