FMCG Manufacturing in an evolving consumer landscape: Potential disruptions to our client’s business model 

The last several decades have experienced an explosion in technology unparalleled in human history, which has unleashed an era of rapid change and development in all facets of life. Everything from our social interactions, news, culture, influences, politics, and purchases  are now mediated in some form through the internet.  Roughly half the world’s population has access to to online connectivity, and some estimates project 100% coverage within the next decade.

Traditional structures of commerce are being disrupted at every level in the supply chain, from manufacture (3D printing or direct-to-consumer startups,) the points of sale (cash register to digital wallet) delivery (from direct purchase to instant downloads and speedy courier services), to consumers themselves taking an active role in becoming knowledgeable products and engage companies in dialogues (as opposed to one-way communication from the company.)

Here we will examine several key trends in today’s consumer goods marketplace and consider possible consequences and opportunities for our client.

The Unclickable Shelf: Retailers and the rise of Online Shopping

Fast moving consumer goods are low cost products with very little profit margin; they rely on fast moving sales in high quantities.  Manufacturing corporations such as our client currently conduct the majority of sales to end users in grocery and convenience stores. As these customers migrate their shopping habits away from brick and mortar institutions, will their purchases of FMCG products follow?

As retailers are forced to compete with online shopping, a trend is emerging to evolve the in-store experience – unique opportunities to interact with goods and services draw consumers away from their laptops. This is an ideal place for our client’s end users to learn about and sample new technologies in olfactory experiences that should be explored.

Information is Power: The Conscientious Consumer

Much of internal corporate innovation until now has focused on boosting efficiency on the back end, using technologies such as digitization of records, automation of tasks and improved inventory tracking.  As consumers have more access to information than ever before, companies must also innovate in the forms in which they interact and dialogue with users.

Consumers want to to know not just what they’re purchasing, but who they’re purchasing it from. Trends towards greater transparency and “storytelling” about how the product is sourced, who makes it, and whether ethical and environmental concerns are addressed become part of the product itself. (Vend)  The viral nature of the internet can expose damaging information regarding a corporation or its  products and cause financially damaging backlash and activist demands for change.  One example of this is the outbreak of Mad Cow Disease in the 1990s, in which hundreds of people were sickened by a virus in beef, leading to mass slaughter of animals, national embargoes and new heightened regulations on farming practices. Through the debacle, consumers also learned about questionable sanitary and ethical practices of the industry, which had a damaging impact on the sales of beef.

As such, a trend very relevant to our client is a pivot towards healthy and “natural” solutions. The current market of air freshening products typically include a number of chemicals known to cause cancer, kidney and liver damage. Current regulations in Europe and the United States do not require labeling volatile organic compounds (VOCs) but it’s wise to be mindful that this could change one news cycle away.

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