Consumer goods companies (CPGs) have been challenged by multiple forces the past several years to redesign their products and their operations. COVID-19 exposed and increased their vulnerabilities: for example, most CPG value chains were unprepared for the extreme supply and demand volatility or the dramatic increase in online shopping.
A small group of companies had already begun to change: Accenture research shows these CPG leaders are fully leveraging what we call Industry X strategies. They are using advanced digital technologies to transform their core operations, products, consumer experiences and, ultimately, their business models to become truly consumer-centric.
more likely to report revenue growth of 30+%
more likely to report increased profits of 30+%
3 steps to help drive profitable growth
1. Consumer-centered operations
The increasing demand for tailored products is driving leading CPGs to transform their portfolios. Many are shifting more to mid-volume and low-volume products—customized products or promotions for different stores or channels. Our research shows that the blockbuster products segment shows virtually no growth, but more niche products grew at a CAGR up to 22%.
Leading CPGs have reconfigured their operations to align with this more fragmented consumer demand. They have moved from an obsolete linear manufacturing model into a flexible and localized ecosystem of partners. Built on a digital foundation, these operations are designed to flex with future market demands.
2. Intelligent products
Companies need to consider how to forge deeper, longer-term relationships with consumers. Concepts such as brand relevance, trust, security and community are part of understanding and aligning to consumers’ values. With digital and advanced analytics capabilities, CPGs can more frequently and intimately engage with consumers, gathering meaningful and granular consumer insights.
CPG leaders have delivered hyper-customized experiences, while many of their peers have only limited capabilities for tailoring their offering. Smart, connected products, packaging and services allow the creation of new value spaces that didn’t exist before.
Leaders pursuing Industry X strategies
more likely to have shifted to selling connected products and services than peers
expected revenue growth from connected products and services in the next 3 years
CPG companies must now take a different approach, revisiting existing and new product portfolios balancing innovation and cost-efficiency. Successful companies will integrate multiple capabilities—focusing on new market dynamics, innovation and business models, as well as product pricing and cost—to maximize margins of their new-product portfolios.
How to get started
Companies that can successfully combine the mindsets of consumer centricity, product innovation and profitability-centered design can realize tremendous benefits.
Higher growth potential
Companies need to broaden their focus from products to connected services. They need data-led insights to understand changing demand across existing and new channels. With re-engineered, segmented manufacturing and operations, CPGs can accelerate introduction of new products and services.
Fit-for-purpose operations help CPGs meet consumers’ current needs as well as more quickly adapt to future demand and to supply volatility. Take an integrated approach to growth, price and cost optimization to protect and expand margins—then reinvest funds into future growth.
Leaders leverage the new adaptable operations ecosystems to accelerate the shift towards a more sustainable offerings portfolio. Highly integrated and connected value chains provide CPGs the visibility needed to minimize waste and provide more transparency to consumers.