Deloitte Study: CPG Brands Playing Catch-Up In Digital

Consumer-packaged goods companies are underestimating the potential of e-commerce for growing their business, according to a new study by Deloitte.

The report, “Digital Commerce in the Supermarket Aisle,” analyzed responses from a survey of 2,040 online shoppers who are responsible for shopping and food preparation in the household, 43 executives and senior managers engaged in activities related to digital commerce at CPG companies, and in-depth interviews with selected executives.

Three of the study’s findings, in particular, stand out. The first is about a sizeable set of “indifferent consumers” (41 percent), who neither like nor dislike shopping at supermarkets for CPG products. These shoppers, combined with those who dislike supermarket shopping, are most likely to consider e-commerce for CPG products because they have no particular attachment to the physical shopping experience, according to Deloitte.

The study also reveals a huge disconnect between what consumers want and what CPG brands think they want–i.e., how willing consumers are to buy groceries. Consumers are more optimistic about how much of their grocery shopping they would do online. According to the report, executives expect 35 percent growth in the next year and 76 percent growth in three years. In contrast, consumers expect their online purchases to increase by 67 percent in the next year and 158 percent in three years.

At the end of the study, Deloitte presented its findings to marketing executives and asked them whether they thought these findings matter. A whopping 92 percent said they have huge implications, but only 43 percent said they have a strategy in place or an approach to deal with it.

“We believe this is because, in large part, the day-to-day is really hard to manage for CPG brands,” said Rich Nanda, principal at Deloitte Consulting, in an interview with CMO.com. “There are already so many channels and so CPG companies are playing catch-up in digital.”

To gain competitive advantage, CPG brands need to change the way they look at the path to purchase. The good news is CPG executives understand that. In fact, the study found that executives see digital commerce improving brand awareness (90 percent) and driving product trial/initial purchase (86 percent), but it also has an important role in driving repeat purchases (93 percent) and reconnecting with lapsed consumers (88 percent).

Also, executives noted that the importance of digital commerce will be amplified by the rapid pace of technological change. Most CPG executives plan to increase investment in in-store shopper engagement (74 percent), social referral (70 percent), mobile consumer engagement (68 percent), mobile market research (67 percent), and mobile e-commerce (67 percent).

“The study’s implications for CPG brands is that they can create incremental growth online,” Nanda said. “One example is that because retailers don’t have enough space in-store, it can be a challenge to have a big assortment of products. Online can help provide more variety for consumers. Digital can also help drive new product trial, getting the message out based on consumer preferences. Online you get insight into how often consumers buy and how they buy. And the insights are so much larger. The other implication this research has for CPG brands is you can’t run a digital business like you do with the mass chains and grocers. It’s very different from every angle–merchandising, supply chain, etc.  It can’t be a side project. “