The Global CPG environment scenario has changed quite a bit. Different countries are witnessing unique trends depending on a variety of factors. A trend of slow consumer spending is associated in developed markets such as in the US and Europe. The main reasons include the fall in birth rates and stagnant wages for a quite a long period now. On the other hand, the combination of low GDP rates along with diminished currency values is halting progress in potentially large and emerging markets like China, Russia, etc.
Apart from this, consumer habits and needs are also shifting. The rise of e-commerce has also made it tough for ‘Brick-and-mortar dependent CPG brands’ to compete in the market. Traditional CPG brands must learn to innovate and put more thought in their CPG marketing initiatives to enhance the levels of customer loyalty and ensure a glorified existence.
Let’s have a look at the prevailing CPG environment scenarios across the world.
Customer Loyalty evident in discount and high end stores in the US and the UK
In the developed markets of the US and the UK, the discount stores and the high-end stores seem to have attained high levels of customer loyalty. This is because the market can largely be classified into two categories. The survivalists and the Selectionists. Survivalists include mainly a vast number of old retirees. Millennials facing college debts also make up a significant portion of this group. This group mainly focuses on attaining value for money and set their budget limitations clearly and want to stay within the same. Therefore, their loyalties lie mainly with discount and value retailers like Lidl, Aldi, etc.
In contrast, the Selectionists lay a lot of emphasis on the quality of products and are ‘picky’ and ‘choosy’ about their eventual preferences. CPG brands offering items that are premium priced appeal to them. These high-end brands, through effective CPG marketing, communicate the qualities of the products to the Selectionists. Hence the loyalties of this group lie with the high-end stores.
The changing CPG Environment in Japan
In Japan, the domestic CPG companies have attained immense customer loyalty and enjoyed a high in-flow of revenue from the highly complex and fragmented retail environment. For quite some time, these companies have not received too much of a competition from rivals. For this purpose, these companies have not felt the urge to improve the overall consumer value. Also, they have not really altered or innovated their CPG marketing strategies. But, with the rise of e-commerce, rapid urbanization and ageing population, the old mechanisms are not exactly as effective today. CPG marketing needs be focused on multiple platforms today to satisfy the omnichannel customer. Here lies the opportunity for new entrants to break through and make a mark.
The Rural and Urban trends in India
In India, the market size of CPG is estimated to grow to US $ 74 billion in 2018 from US $ 30 billion in 2011. The major driver of growth is the rural areas of the country. Various studies indicate that the growth in CPG in rural areas is more than that in the urban areas. The main reason behind this is the Government of India empowering the rural regions by providing employment and better infrastructure to the people. Thus, the income levels in these areas are on the rise, leading to an increase in rural demand. Brands need to spread better awareness by resorting to customer segmentation and by targeting each segment with specific products and relevant CPG marketing.
On the other hand, the urban customers are slowly experiencing a rise in disposable incomes. Therefore, a slight shift in purchasing trend can be associated from value oriented / essential products to premium ones. This is good news for the premium brands and retailers as they look to make the most of their opportunities. Overall, the CPG sector in India can expect favorable times in the years ahead from both the rural and the urban regions.