Providing a great digital experience and an even better price point are top on the list for consumers.
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The consumer goods industry has historically been very fickle. Consumer tastes can turn on a dime and fads come and go on a regular basis. It’s essential for companies, regardless of the specific industry in which they operate, to stay on top of the market trends and make the adjustments necessary to keep their products front and center in the minds of consumers.
2020 has been a very dramatic year in several ways, and its peculiarities have had an impact on the consumer goods industry as well. Whether you’re an investor or entrepreneur, here are three trends to watch out for as you shape your business strategy going forward.
1. Price sensitivity
A recent Deloitte report indicates that although governments all around the world have made efforts to stimulate their companies with everything from tax cuts to checks in the mail, the economic situation remains dire for most people — and the recovery has not been as swift as we might have hoped. As a result, people are now more price-conscious, meaning that businesses have to prove the value of their products beyond a reasonable doubt to get people to buy. The negative impact on luxury goods is also being enhanced by travel restrictions around the world. According to this report by McKinsey, 20 to 30 percent of industry revenues are generated by consumers making luxury purchases outside their home countries. Sales are down up to 70 percent for luxury goods this year, compared with 2019.
There are various strategies open to companies that sell luxury goods, but discounting prices aggressively to increase sales might be counter-productive in the long term, according to Yassine Lamari, CEO of Gentleman’s Guru. “Prices, once taken down significantly, may be difficult to bring back up. The better approach is to retool the marketing efforts to showcase the value of the products and ensure that customers understand that although the goods may cost more, their quality makes them worth the price.”
2. Shift to digital
The shift to digital is not a recent phenomenon, but it has accelerated at an unprecedented rate this year as physical visits to stores became less practical or even impossible due to movement restrictions. In the United States, ecommerce now represents a $155 billion market, an estimated 6 percent of total retail sales. In the United Kingdom, as many as one-third of adults say they now regularly shop for food online; the same is true in Germany for apparel. In China, the online retail market has more than doubled in each of the last three years.
Related: 5 Digital Strategies Every Company Should Implement Right Now
As restrictions have been lifted gradually, people are still reluctant to congregate like before so it will likely be a long time, if ever, before in-store traffic returns to the level it once was. The implications for businesses in the consumer products sector is that in order to survive, they will need to focus on the digital aspect of customer acquisition and engagement by optimizing their marketing for social media and making the ordering and delivery process as seamless as possible.
3. Sustainability and health consciousness
Again, while people have always been concerned about their health and the environment, the degree of attention paid to those issues has skyrocketed recently. More and more, consumers are now focused on purchasing items that are produced sustainably. Health and fitness have become primary considerations for consumers. Companies have started to comply with the demands of consumers to be more responsible in their production, marketing and other business aspects/ This Deloitte survey reports that 98 percent of companies reported reformulating at least some part of their product portfolio to align with new health and wellness policies. Also, 79 percent of companies declared that 81 to 100 percent of their food and beverage products display key nutrient information on packaging.
“People are much more conscious about what they put in their bodies these days,” says Rashad Hossain, CEO of RYZE Superfoods, a company that produces mushroom-based coffee as a healthier alternative to regular coffee. “This year’s events have brought the need for health and sustainable living into focus for more people.” Rashad, a 2016 Harvard grad, happened to launch his company right as the pandemic began and says that “consumers are more health-conscious than ever right now, and we’re seeing that in the demand for healthier alternatives to staples we’ve been used to for so long.”
Related: These Are the Core Elements Needed to Successfully Pivot Your Business
It’s clear that the consumer goods industry will be very different a few years from now. The difference between the companies that will succeed and those that will fail will boil down to the ability to offer a smooth, intuitive digital experience that allows customers to purchase the goods that fulfill their needs but also align with their ideals, and at price points that satisfy their needs to get value for their money.