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For the US Consumer Non-Durable Goods industry, provide the top 10 challenges which this industry is facing now and/or in the future. What challenges are mentioned most with reference to this industry? Include a one-line summary for each challenge along with a fully-cited overview of it.
Hello, thanks for asking Wonder about the top 10 challenges the US consumer non-durable goods industry is facing now and/or in the future, particularly those challenges that are mentioned most with reference to this industry. In brief, here are Kindly note that these challenges have been arranged based on how they are related to each other in the flow of my research rather than in a chronological order. That being said, please find a deep dive of my findings below.
METHODOLOGY
In conducting my research, I focused on searching and reviewing relevant information on the top (and most mentioned) challenges the US consumer non-durable goods industry—mostly referred to as consumer packed goods (CPG) industry in most reports—is facing now and/or in the future. To find the most accurate details, I paid special attention on information from related consulting firms that had dedicated pages to industry trends, government reports on any trends in the industry, pre-compiled analyst reports that noted the top challenges in the industry, and other supporting materials from authoritative websites, trusted media sites, user forums and review sites that met your question’s requirements.
TOP CHALLENGES THE US CONSUMER NON-DURABLE GOODS INDUSTRY
1. MOVING INTO NEW EMERGING MARKETS
When the US consumer non-durable goods companies move into new emerging markets, they are usually forced to open their doors to a new group of competitors. And with these new competitors, these companies often have to put more effort and resources (both time and money) in order to fend off competition from these new rivals. New markets also mean that the CPG companies must learn new ways of surviving challenges in the new territories. A good example here is how most companies in this industry have had to deal with a plethora of challenges in the bid to expand into new geographical territories beyond the US.
2. ADAPTING TO SHIFT TOWARD ECOMMERCE
The CPG industry, particularly the food and beverage manufacturers, has been predominantly a brick-and-mortar industry. Fortunately or unfortunately, the ecommerce wave has taken the world by storm, and CPG retailers have been forced to join the movement or else miss out on the immense benefits that come with selling products to the ever-growing online community. With ecommerce sales in the CPG industry reported in 2017 to be growing at a mind-boggling rate of 42% per year (and marketing research group iRI predicting "that the Internet will account for approximately 50% of industry growth in the next five years"); joining ecommerce is becoming more of a necessity than a luxury, especially with big US CPG corporations like General Mills, PepiCo and Amazon making strong inroads into the arena. As a new emerging market, joining ecommerce is bound to be affected by the challenges we mentioned in the earlier point. But more than that, instant consumable companies that rely heavily on impulse purchases will also suffer because the online community rarely shops for CPGs on impulse buys. Not to forget, manufacturers here get to face the challenge of enhancing their product chains to accommodate for shipping capabilities; a problem that brings with it several cost and risk ramifications.
3. PRODUCT DEVELOPMENT AND INNOVATION CHALLENGES
In order to meet changing consumer demands, the US consumer non-durable goods industry has had no option but to develop and launch new products. Unfortunately for these brands, consumer needs—particularly in the modern age—are very fickle, meaning you could develop a product and launch it, only to find that the customers no longer like or want it. Also, not all companies are able to stomach the pressure that comes with rapidly developing and innovating new products, so some of the innovations may end up failing. This is made worse by the fact that developing a product through the whole chain—innovation, creation, research and development, testing, and then marketing—is often plagued with hiccups, thus taking (or rather wasting) a lot of time for many CPG companies.
4. SUPPLY CHAIN PROBLEMS
Just like in product development and innovation, the supply chain in CPGs is often affected by the need to process goods as quickly as possible in the bid to stand out or combat a flood of competition from other rivaling markets. Apart from the race against time and other competitors, the CPG industry is often challenged on how to "educate senior management on the differences of supply chain as a cost center vs. a business innovation enabler.” This lack of proper education and/or expertise in the skills required to institute a good supply chain systems often results in less-than-stellar management of the supply chains, which leads to unnecessary challenges and inefficiencies in the process. If this problem is not solved, CPG experts allude that “industry supply chains will pay the inevitable price in needs for further cost and headcount reductions along with blocked efforts to instill added product, process, and resilience to overall business support capabilities.”
5. HEALTHY PRODUCTS CHALLENGE
Several articles published over the past three years have strongly purported the idea of consumers focusing more on healthy food and beverage products, particularly with regards to avoiding of CPGs with excess sugar and fat content. As a result, “this has given rise to cleaner labels and an increase of products in the non-GMO and organic segments,” a move that is putting a lot of pressure on major food and beverage companies to equally adapt to such trends. And with organizations like the WHO and FDA joining into this movement, many CPG companies (both big and small) are worried about the survival of their businesses, considering that many manufacturers often add sugar, some fat or some sweeteners to make their products tastier. If proper legal and industry measures are not taken to address this issue, it could pose serious challenges to the future of the industry, adding to the ripples it is already causing.
6. PACKAGED VS. FRESH/NATURAL PRODUCTS MISCONCEPTIONS
According to a recent report, “the top 25 U.S. food and beverage companies have lost $18 billion in market share over the past five years” due to the increasingly popular consumer trend of people buying (and preferring) fresh and natural products while deserting packaged products. This trend is tied to earlier-mentioned challenge on healthy products, where most consumers perceive packaged products as being unhealthy, as opposed to the fresh and natural products. While there may be some truth to this popular notion, the manner in which it is harming manufacturers of packaged products is unfair—to say the least—and the relevant authorities in the industry need to come out strongly and clear the misconceptions surrounding packaged and non-packaged CPGs.
7. DECLINING BRAND LOYALTY
Yes, McDonald's and Starbucks are still a big deal in the US on the account of their strong brand names, but it is common knowledge that their reputation isn’t as big as it was a couple of years ago. A key reason behind this is the increasingly worrying trend of declining brand loyalty across the consumer product industry where shoppers look for more than a brand name when making a purchase. This reduced customer loyalty to brand names is pegged on the fact that today’s consumers look into other attributes such as taste, price, performance, safety, health and wellness, and even mundane issues like corporate citizenship when shopping. While this challenge somehow favors new market entrants and competitors that can tailor their products to accommodate these needs; it is a big problem to certain brand names (especially big ones) that have made a name for themselves by fashioning their products in a particular type of way and cannot change their production chains that easily.
8. SHIFTING CONSUMER NEEDS AND SPENDING HABITS
From preferring online stores over brick-and-mortar stores to going for perceived healthy foods over the fatty and sugary stuff that were loved by shoppers a decade ago; consumer needs are certainly changing. And as a result, these preferences are making life a living hell for manufacturers and brand owners who are finding it difficult to accommodate all these diverse wants. The same story goes with the irregular spending habits by the modern generation of shoppers, a good number of whom belong to the stubborn group known as the millennials (born between 1980 and 2000). These shifts--coupled with other preferences based on aspects such as cultural, political, religious and geographical affiliations--mean that the challenges that comes with diverse needs are here to stay, unless relevant measures are taken by CPG companies to solve or accommodate all these needs.
9. ISSUES WITH VALUE ADDED PRODUCTS
As CPG consumers look for more than just price and flavors when making purchases, the US consumer non-durable goods industry is continually pushed into finding ways of adding value to its products. Some of the most common value-addition tactics that have been used here include optimizing pack size and prices, and blending food and beverages to include more vitamins, minerals and proteins as opposed to “unhealthy” ingredients like more sugar and fats. To a good extent, this strategy has worked in terms of attracting a certain class of consumers. The problem, however, is that such measures often mean extra costs during production of the goods. And based on the perceived added value that comes with these ‘”superior” products, the manufacturers are forced to sell them at a higher price compared to the “normal” products; a price raise that not many shoppers are ready to go for. So rather than driving incremental sales, these value-added products bring the risk of cannibalizing the company’s profits and confusing shoppers who are used to buying the normal products.
10. FLOODED MARKETING MESSAGES ON CONSUMERS
In the bid to target and get more customers, most US consumer non-durable goods companies have been pummeling the target public with a bombardment of mobile, video, and programmatic marketing messages at virtually every turn, swipe, and click. And rather than informing the audience, these messages have ended up being disregarded or worse yet left the targeted public confused. This, in effect, has led to a waste of useful resources—in 2016 alone, nearly $6 billion was used by CPG and consumer products manufacturers in digital advertising. If the industry cannot focus more on quality rather than quantity marketing messages, the losses are projected to rocket highe in 2017 and beyond.
CONCLUSION
In summary, the top 10 challenges the US consumer non-durable goods industry is facing now and/or in the future, as per this research, are: moving into new emerging markets, adapting to shift toward ecommerce, product development and innovation challenges, supply chain problems, healthy products challenge, packaged vs. fresh/natural products misconceptions, declining brand loyalty, shifting consumer needs and spending habits, issues with value added products, and flooded marketing messages on consumers. Different industry experts tackled these challenges differently, but there has been a general consensus on the presence of most of the above-mentioned challenges, along with the important need to solve them with great expediency.
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