CPG sells more direct to consumers

More than half of consumers buy direct from manufacturers. Brands grow by developing what people tell them they want on social media.

CPG companies have long sought their own direct dialogue with consumers. It’s happening a lot more today—and it could soon become a certain growth path for brands because they hear directly from the public about the product innovations, solutions, experiences and value they seek.

Retailers would be mistaken to underestimate the power of this massive shift, says F3. We urge stores to leverage what brand manufacturers learn—collaborate with them to develop timelier, more relevant messages, merchandising and value offers to consumers that drive better performance for both parties. In particular, stores that partner in good faith with CPG could potentially develop more exciting sales floors filled with new items shoppers actually want.

Already, the growing closeness between food, beverage and household products companies and digitally connected consumers is paying off. Net sales growth for food manufacturers was 7.0% in 2012, for beverage makers 5.5%, and for household goods suppliers 3.2%—well above U.S. retail sales performance last year, according to the 2013 Financial Performance Report, Growth Strategies: Unlocking the Power of the Consumer, issued by the Grocery Manufacturers Association and PwC US.

“Fifty-two percent of U.S. consumers are already buying directly online from brands they trust, proving that CPG companies now have far greater opportunities to walk alongside their shoppers in real time while driving sales of existing and new products,” says Steven Barr, PwC’s US leader.

More than 40% of CPG companies expect to sell products directly to consumers (DTC) in 2013, a big jump from 24% in 2012, the report adds, noting, “DTC is a potent vehicle for testing new products and reaching out to new consumers faster and more effectively…making the retail store aisle no longer the last mile in the purchase journey. Dynamics such as shopping and paying by smartphone and tablet are rewriting the traditional rules of retailing and manufacturing. Since e-commerce isn’t the only way to enter into a DTC relationship…companies must remain attentive in seizing all opportunities to own the consumer.”

The comprehensive report covers many aspects of CPG financial performance. Its most forward-looking portions, we feel at F3, relate to the nature and growth of the direct-to-consumer relationship. Among the GMA-PwC conclusions:

  • Forty-five percent of consumers who follow brands on social media make an online purchase at least once a week, while 58% of that same group make one purchase in a physical store during the same time period.
  • Consumers expect brands to present a single truth—the essence of the brand—across every channel 24/7. Through social networks, they’re interacting for the first time with brand employees who had no prior customer-facing role. These interactions influence their brand experience more than the brand’s official marketing messages.
  • Blogs and social media make idea harvesting by CPG “seamless and natural,” possibly more so than surveys and focus groups.
  • “Consumers want more details and information, they want ratings and reviews, they want to know what other consumers who have used it think, they compare and contrast competitive products, they do pricing online…and shop for the best overall value,” says Clorox CMO Tom Britanik, quoted in the report.