Trends in Retail

of two

New Retail Experiences - Consumer Packaged Goods trends in Go To Market Approaches.

Consumer Packaged Goods (CPG) consumers are more health conscious and socially aware today than they ever were. Breakfast cereal brands like Kellogg are being replaced with healthier breakfast options like yogurt. Brands are promoting their sustainability initiatives on social media to foster transparency and trust. A shift in consumer purchase habits is happening as more and more consumers are now opting to make CPG purchases online as against physical stores. The consumer is smarter and better informed than before and is fifty percent likely to make a purchase decision even before entering a brick-and-mortar store. Brands are using data from various channels to tailor their promotions and offerings to consumers.



Consumers have become increasingly conscious about eating healthy. A recent survey found that 63% of Americans are trying to eat healthier and consume foods with ingredients that have a higher nutritional value.

Other findings that indicate this trend: volume growth of organic products in 2016 was 13%; volume growth of probiotic supplements have increased by 26%; 22% Americans are restricting their sugar intake, while 52% try to avoid artificial sweeteners; over 56% of Americans are willing to pay more for healthier foods.
Kellogg's flagship Morning Foods business is seeing a decline in sales. Kellogg cereals are being perceived as an unhealthy food option, especially the sugar category. The company has received a lot of flack for marketing sugar to children—a smaller than ever population of consumers. Kashi, a Kellogg brand, which is positioned as a healthy cereal brand, has seen a decline in sales ever since it was discovered that it has GMO ingredients.

There is a decline in diary consumption and a shift from carbohydrate consumption to protein consumption. The Breakfast Cereal category faces a significant threat from healthier and more convenient alternatives like yogurt, snack bars and breakfast serving fast foods. For example, yogurt is growing rapidly and has captured 40% of the ready-to-eat breakfast market share.


Consumers are demanding transparency about the ingredients in their food and the techniques employed in producing them. Sustainability and corporate social responsibility of the brand have become relevant to the consumer. Two out of three consumers (67%) think that it is the brand’s responsibility to provide such information. The US FDA recently announced that companies will need to provide product labels that give detailed information on the sugar content.
Additional facts that substantiate the trend in need for transparency: 94% of consumers surveyed in 2016 said it is important for them to know what is in their food and how it has been made; 83% said a more detailed product label would be more valuable; more than a third (37%) of consumers said they would switch to another brand that provides them with more detailed information.
This trend goes beyond food items to other CPG items like toiletries, household supplies, etc. For example, while Method talks about the natural ingredients it uses in its products it also mentions all the “dirty” ingredients it doesn’t put in it.


The online share of the CPG market revenue is on the rise, while retail store sales for CPG products have been on a decline. The total CPG revenue rose from $7.6 billion in 2015 to $10.4 billion in 2016. Online CPG sales have grown twice as fast as total e-commerce sales.
The barriers to entry in the online space are lower than the brick-and-mortar format, which has enables many private label brands to reach consumers.
Eight percent of the total CPG sales now comes from e-commerce and is expected to increase substantially with time. Fast shipping, a variety of product offerings and low prices will only keep this channel growing.


Three out of four of all shopping trips begin online. Shoppers use online information to do product research, compare prices and pre-plan their purchases even before they visit brick-and-mortar stores—what is now known as webrooming.
It is estimated that half the consumers have made purchase decisions even before they have entered a store. CPG products are seeing a higher degree of purchase involvement than they were previously.



Nearly 70% of North American consumers are on Facebook. Becoming more accessible through social media enhances a brand’s transparency. It is also a great platform to drive sustainability initiatives as it is possible to tell consumers about your environmentally-friendly initiatives.
Social media makes it possible for brands to connect with consumers over various social issues and priorities. Ben & Jerry’s is one such company that highlights its social initiatives via social media campaigns. For example, it once ran a promotion on Twitter to create messages that raise awareness for World Fair Trade Day using unused Twitter characters “donated” by their followers.


Consumer generated content humanizes a brand and also helps the brand strengthen its connection with consumers. Having a consumer communicate back to you about their own efforts on improving the environment can help start a meaningful conversation about sustainability.


Shopping apps allow companies to create greater visibility of their brand. Consumers use shopping apps to obtain product information either before or while shopping in brick and mortar stores. Making a product available for purchase on a shopping app not only gives your consumers the option to purchase it online, but also increases the chance of them making a purchase offline.


Customers are now better informed and smarter than they previously were. It is more effective to use an influencer marketing strategy than market directly to savvy consumers. For example, a consumer is more likely to buy a food product based on recommendations from a creator of a recipe (on YouTube) than a TV personality.


New innovations like Augmented Technology can be used to provide consumers nutritional information, ingredients, customized recipes, etc. in a more engaging way and thereby develop an immediate connection with the consumer.


Companies are gathering data from multi-channel sources--loyalty programs, social media, online search--to tailor their products and promotions.

For example, maker of Mucinex, Reckitt Benckiser used search data from WebMD to anticipate where flu outbreaks would occur next and tailored its ads to those geographies. This resulted in an increase of 22% in sales in a four-week period, when compared year-on-year.

Brands like Unilever are using insights from digitally obtained data to support their marketing campaigns. Just knowing that the social media conversations around Ben and Jerry’s ice cream peak on Thursday and Friday, and sales of Ben & Jerry’s ice creams increased on Saturdays, enabled Unilever to optimize their marketing spends by running ads only from Wednesday to Saturday.


Consumers today look for healthy and eco-friendly options in the CPG category. They are smarter and better informed than ever before. Brands are communicating more interactively via social media and using influencer marketing strategies to build trust among consumers. More purchases are being made online and a majority of consumers are using online information to make purchase decisions even when they shop offline.

of two

New Retail Experiences - Omni-Channel Approaches

One of the biggest changes in modern retail that both manufacturers and retailers are continuing to adjust to and take advantage of is the rise of online shopping and consumer research. Omni-channel approaches to sales aim to fully integrate online and in-store shopping experiences, and their importance is increasingly being recognized. From the customer standpoint, 32% of consumers feel that the biggest improvement retailers need to make is better integrating online, mobile, and in-store shopping, and 20% of consumers have increased their use of services such as in-store pickup of products bought online over the last year. Retailers are taking note—74% report that omni-channel is their top or a high priority, and 80% consider it to be a key strategic priority, with many making significant investments (16% of sales or more) in their omni-channel strategy. In turn, consumer packaged goods (CPG) companies which sell through these retailers are making adjustments to maximize omni-channel sales as well.

Omni-channel is a top or high priority for 64% of US CPG firms, and about half report they are investing 16% or more of sales in omni-channel. Therefore, we can clearly see the import omni-channel has across this space. Now let's look at the innovative ways retailers and CPG manufacturers are developing their omni-channel approaches. I will look first at CPG companies, and then at retailers, highlighting innovative firms in each sector and discussing what omni-channel strategies they have put in place, and the effectiveness of those strategies.

Cpg manufacturers

Much of the emphasis in omni-channel sales among CPG manufacturers has been on expanding their direct to consumer (D2C) sales capacity, either on their own or through other partners. Three companies that have been particularly innovative are Unilever, Proctor & Gamble, and Godiva.

Unilever has recently announced the opening of a project they call THE HUB, which they describe as a "Digital Disruption Center" aimed at developing new digital initiatives which will drive the future of Unilever's digital marketing and sales. However, even without whatever new innovations THE HUB is able to deliver, Unilever is already making major steps in omni-channel and direct to consumer sales. They have partnered with Instacart, a same-day grocery delivery service, and invested in Sun Basket, a meal delivery service which sends ingredients and recipes to its subscribers, both in an attempt not only to directly increase sales, but also to help the company understand, "how data drive growth in a more D2C type reality." Unilever has also acquired the Dollar Shave Club, a D2C shaving startup, also based on a subscription model, as well as launching Skinsei, a similarly subscription based D2C skincare service which sends its customers a customized box of skincare products each month based on a questionnaire they fill out about their skin type and lifestyle. As we can see, Unilever clearly sees the way forward for CPG manufacturers in direct to consumer online sales, particularly through subscription-based models.

Proctor & Gamble have been very successful in marketing through online retailers - they were among the first major brands to take advantage of Amazon Dash, a program that allows users to re-order their products through Amazon with the push of a button. Incredibly, research by Slice Intelligence found that with regard to laundry detergent, 98% of category sales went to P&G's product Tide among customers who had bought the button, a marked increase in customer loyalty. Similarly, P&G has attempted to increase consumer loyalty through programs like Pampers Rewards, a diaper loyalty program which also connects parents with childcare advice and tips, and a program called Olay Skin Adviser, which uses artificial intelligence to recommend specific products (naturally from P&G's Olay brand) which will be ideal for that particular customer's skin. Finally, though P&G hasn't taken quite the headlong dive into D2C subscription startups that Unilever has, they have at least dangled their feet in the water by acquiring the deodorant brand Native in 2017, citing its direct-to-consumer model as a major driver behind the decision to buy the brand.

Godiva is slightly different from most CPG manufacturers since they have long operated their own stores alongside selling through various other retailers. This has put them in a tremendous position to take advantage of the trend towards D2C sales that we have already seen in Unilever and P&G. Godiva has developed their omni-channel sales by blending the in-store experience with online channels via social media and in-store pickup offerings. They also revamped their website in 2016 to be continuous with the luxurious shopping experience they aim to provide in-store, using the platform ZMags Creator. This redevelopment led to a whopping 300% increase in purchasing speed on their website, along with an increase in creative output of 380% and a 50% increase in productivity.


On the retail side, omni-channel approaches tend to focus on expanding online shopping opportunities for consumers along with better integrating the in-store and online experience, as we'll see in the cases of Target and Walmart. It can also mean predominantly online retailers expanding their bricks and mortar offerings to create a truly comprehensive retail offering.

Target has launched a raft of improvements to their omni-channel sales capabilities aimed at improving customer experience. In particular, Target is working on expanding the usefulness of its mobile offering, in light of the fact that a remarkable 40% of their digital orders came through mobile, and even more tellingly for omni-channel, 10% of their iPhone app revenue on Black Friday came from customers who were physically in stores purchasing items on their phones. Target has now developed two apps - their flagship Target app, and an app called Cartwheel to go alongside it. The main app focuses on making the mobile online ordering experience as seamless as possible, while the second app is more focused on cross-channel sales. This second app, Cartwheel, allows users to find products in Target's brick and mortar locations, find coupons for those products, and create shopping lists for future purchases. It also allows users to re-order digital coupons with the push of a button. Cartwheel was a huge success, surpassing 7 million users, and has grown by 85% year on year.

Target has also revamped their in-store experience, by supplying sales associates with mobile devices so they can help in-store customers place online orders if the item their looking for is not available at that location, or has sold-out. They have also improved their buy online, pickup in store service (BOPIS), so that by 2019 they hope to have digital orders available for pickup in almost every store. This has all been reflected in their sales, as in 2016 Target's online sales rose 21.9% while their in-store sales fell 6.8%.

Walmart has pushed aggressively into the online retail space, acquiring, which offers mobile apps providing shipping and pricing deals on items such as groceries and consumer packaged goods. The acquisition is particularly notable because of's pricing scheme, which bases discounts on the amount shoppers are buying at once, encouraging consumers to spend more at once. Through this expansion of its online platform, Walmart is aiming to become the world's largest omni-platform retailer.

Walmart has also invested $1.2 billion into its own e-commerce program, focusing on omni-channel shoppers. Specifically, Walmart has worked on expanding online grocery shopping, with 140 stores in 25 metropolitan locations allowing store pickup of online grocery orders. This push has resulted from Walmart finding that online grocery pickup customers spend nearly 50% more than grocery customers who shop only in stores. Walmart has also developed a geo-fencing program which links with customer loyalty accounts and mobile apps to alert the store when a customer arrives in the parking lot to pickup an online order. This has been implemented across all Walmart stores in the US. Finally, Walmart has expanded their wish list feature in their mobile app so that it allows consumers to not only add desired items from home, but also by scanning them in-store.

Too frequently, omni-channel approaches are thought of as something only for brick and mortar retailers seeking to better integrate their physical and online presences. However, Amazon provides an excellent example of an online retailer who is developing innovative omni-channel strategies to break into the physical retail space.

Amazon has recently acquired Whole Foods, and is planning an extremely innovative omni-channel strategy to integrate their sales. Amazon is planning to integrate Amazon Prime, a loyalty program that allows customers to pay for a membership which provides them with free shipping and other benefits on the Amazon website, with the Whole Foods POS system, linking the online and in-store loyalty programs. Moreover, Amazon is planning to use the physical space offered by Whole Foods' 450 US locations as sites for Amazon lockers, where customers can pick up or return online orders without having to ever interact with a sales representative. Finally, Amazon is launching a new chain of brick and mortar locations under the name Amazon Go. These stores combine cameras, artificial intelligence, and high-tech shelving combined with an app to allow customers to walk in, choose their items, and walk out without ever visiting the cashier. It's not shoplifting—their purchases will automatically be charged to their online Amazon accounts.


As we've seen, omni-channel sales are incredibly important to consumers, retailers, and consumer packaged goods manufacturers, and as a result, there is a tremendous amount of innovation in this area. On the CPG side, there is an enormous trend towards increasing direct to consumer sales through omni-channel and online strategies, while on the retail side, there has been tremendous growth in linking online and in-store shopping experiences. Among the most innovative developments are Target's app specifically aimed at aiding in-store shopping, Walmart's geo-fencing program, and Amazon's integration of in-store purchasing with online payment.