The digital age has been a game changer for consumers, but are consumer goods businesses doing enough to stay ahead?

 Although many consumer goods companies see the need to digitize their businesses, they may not fully realise the implication strategically throughout the entire business. Many are seeing the digital revolution as simply reaching consumers via technology. But it is far more.

Digital technology is empowering consumers and giving them access to a wider range of products and services. From groceries to fashion, electrical goods and furniture, online sales are growing rapidly. The digital world enables engagement through numerous interconnections between the consumer or shopper, product, brand, retailer, digital and social networks. Consumers are researching and comparing prices online before buying, and seeking and sharing opinions digitally. Consumer reviews can make or break a product’s reputation.

Companies used to marketing to a mass market, will have to learn to focus on the individual consumer, influencer, and shopper – they are all digital and expect specific attention. This is a chance to build direct relationships with target consumers and find out their needs, which could be highly profitable – the more specific a product is to an individual, the more they are willing to pay for it.

Traditionally, companies have segmented their markets and organisational capability geographically. But in the digital era, a closer look at consumer and market characteristics may demand a complete rethink, potentially structuring companies around globally similar markets – whether in economic terms, customer behaviour and culture, or sectors that transcend geography (such as parents, children, retirees, etc). This puts the customer at the very centre of the business, and potentially needing companies to organize systems and processes, supply chains, distribution, sales, branding and marketing activities around these global market segments. 

Companies that have leveraged digital technology successfully have extended operations regionally, winning new consumer segments in countries adjacent to, or with similar characteristics to, their home market. Segmenting consumers by type as well as geography, allows for consolidated shared services, outsourcing, manufacturing and supply chains regionally, leading to reduced costs and improved margins. The next obvious step is to develop regional hubs into full global operations.

There are of course risks with taking a purely global approach, if customer segments are not given adequate attention. A combination of the local and global model allows for sophistication of consumer segmentation, driving product development and engagement as well as specific local products.

Consumers are enjoying and demanding a new shopping experience, valuing the intangible aspects of how goods are paid for, delivered, used, and disposed of as much as the item itself. This means that within the business these aspects of the value chain can’t be operated in silos – they must be seen from the perspective of the customer, and equally represent the brand. 

Consumer goods companies will need to have flawless processes in place at every stage of the shopper’s journey—from initial product discovery, to purchase, delivery, assembly and first usage.

Digitalisation of the entire value chain is becoming a reality. Digital solutions are taking lean operations to a new level, allowing integration and consolidation of previously separate systems (such as operating plans, CRMs, inventory management, financials, training manuals, etc). With company data and assets streamlined in a cloud-based digital hub, digital solutions provide integrated tools to support day-to-day lean operations. This allows management to access company-wide information on intuitive dashboards and heat maps, allowing them to detect performance gaps and compare metrics by product, site, and region.

As globalisation continues and consumer growth increases, margins and business growth will come under challenge unless companies radically reshape their existing business models to benefit from the digital world. Internal boundaries between functions need to come down, blurring the lines between sales, marketing, R&D, the supply chain and consumer service – enabling a holistic view of consumers, the capabilities to deliver customized messages and offers, and the agility to adjust quickly as consumer needs change.