CPGs Shifting Into Innovation at High Gear
After spending the last two-plus years trying their best to simplify SKUs to keep production lines moving and products on shelves, many CPGs are now embracing new innovation strategies that meet today’s exceedingly heightened consumer expectations.
Read on to learn how consumer goods companies can prioritize their innovations to get the biggest bang for their buck with consumers.
As brands ready and refresh their new innovation portfolios, they’re ever mindful of the fact that today’s consumers are not only more demanding, but also unprecedentedly price sensitive. Tad Carmody, Americas consumer products leader/principal at EY, sat down with Lisa Johnston, senior editor of CGT, to break down some of the most significant trends occurring in CPG innovation today, as well as provide insight into what some of the most successful companies are getting right.
Carmody, who joined EY in 2003 and has nearly 30 years of consumer industry experience, pointed to some of the most significant consumer demand shifts; for example, not only are consumers clamoring for new items flowing through their retail channels, but there are also certain attributes that are extremely important to them.
For example, sustainability is playing an increasingly important role with consumers, with a “center of gravity” clearly developing around portfolio changes that incorporate attributes of sustainability, Carmody said. Manufacturers, in turn, are trying to meet these needs through such practices as minimizing plastic packaging and reducing the amount of water used in liquid formations.
Making such changes that deliver a sustainability benefit and can potentially provide a greater value proposition to the consumer are becoming extremely prevalent in CPG innovation portfolios, he said.
However, these demands are combining for a significant challenge for today’s consumer goods companies, as delivering innovation to consumers now requires a large number of stakeholders, including R&D, operations, engineering, and manufacturing — just to name a few.
As a result, CPGs are trying to avoid introducing SKU complexity by being more data-driven and managing with transparency, Carmody explained. Taking this tack can better ensure they’re meeting their retail commitments and ending up with a positive cost profile as initiatives evolve.
What further complicates things is the fact that many companies are unable to rely upon historical data given the disruptive environment. And as CPGs seek more data from their supply chains and operations — and as they leverage analytics to be more predictive about how portfolio and operational changes will perform — they’re, in turn, in need of a new set of talent to use and understand the data in a new way.
Watch the full video for more insight and best practices for innovating during today’s complex consumer goods environment.
