COLORADO SPRINGS — When it comes to winning the “battle at the shelf,” CPG companies that manage and optimize assortments using advanced analytics fare better than those that don’t, according to a study released last week at the Grocery Manufacturers Association Executive Conference here.
As consumers make more product and brand purchase decisions at the store level, shelf performance has become an area where CPG companies can gain market share, the study pointed out. However, many companies reported struggling to find the right balance in their assortment optimization efforts, it pointed out.
According to the study, companies that used advanced analytics to drive pricing, promotion and shelf-management strategies enjoyed top-line growth and share-price improvements, while those that did not grappled with a flat to declining market.
The study is the annual customer and management channel survey, which was conducted for GMA by Nielsen and McKinsey & Co. from interviews with nearly 220 executives from more than 50 CPG companies. It indicated the increasing importance of sales technology, encompassing traditional disciplines such as internal systems, plus the growing importance of data sharing with retail partners and shopper micro-targeting using smartphone applications, mobile couponing and other interactive marketing strategies.
Though slightly less than 25% of survey respondents said they were actively utilizing those technologies, almost 80% of respondents said they plan to adopt hose capabilities within the next two years.
The study said the use of analytics to fine-tune pricing and promotions was one of four keys that enabled some companies to outperform their peers. The other three keys were bold investment in growth areas; prioritizing retailer relationships; and commitment to developing talent and investing in strategic planning efforts.
“Best practice sales strategy continues to include heavy investment in emerging channels, an emphasis on customer collaboration and a focus on investing in next-generation capabilities,” Brian Lynch, senior director of business and industry development for GMA, pointed out.
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“Specifically, focus on dollar, club and online channels — along with joint retailer-manufacturer initiatives and time spent nurturing high-potential sales talent — all received high marks as being particularly effective.”
Among the report’s other findings:
• The growing importance of the Hispanic market, whose buying power is expected to increase 50% over the next three years. CPG companies that are already winning with Hispanics focused on tailoring products and marketing to that group, creating better in-store experiences with retailers and increasing Hispanic-focused resources and capabilities, the study noted.
• Investing in high-growth channels. The more successful companies are getting a significant payoff by investing in clubs, dollar stores and discount stores, plus e-commerce. “These emerging areas contributed more than 25% of total growth, with winning companies achieving as much as 16% more channel growth than their category peers,” according to Kari Alldredge, senior expert, consumer practices, for McKinsey & Co.
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