NASHVILLE -- Will the world of Amazon, Apple and Tesla render today’s CPG (consumer packaged goods) companies and brick-and-mortar retailers into fossils from a bygone era? That was an overriding theme of the 2017 IRI Growth Summit, held April 3-5 in Nashville.
“The pace of the world is daunting,” said IRI CEO and President Andrew Appel as he set the stage for the event. “We live in a time and industry when all the assumptions we’ve made for years are changing.”
Appel expects a 43-fold increase in data over the next four years. As proof, from 2015 to 2016, data soared from 4.1 trillion megabytes to 9.6 trillion megabytes. “The next five years will be about mastering the art of information,” he said.
We are rapidly entering the sphere of artificial intelligence and machine learning, he said. Soon, we’ll have smart refrigerators that will inform us when we are out of milk and micro-marketing so refined it will target left-handed Hispanics between the age of 21 and 31 who drink pinot noir.
As Staples now faces a potential sale and Sears counts its final days, will traditional merchants endure the digital onslaught? Can CPG makers drive enough savings and make the necessary investments to create sustainable loyalty before an ever-fickle population?
Appel and other members of IRI raised several notable observations …
From Apple’s Siri to Amazon’s Alexa, consumers are getting used to hearing voices without body and form.
“Imagine,” said Appel, “a world where … those voices will be following you wherever you go.” And Alexa will likely be joined by other voices that represent the world of artificial intelligence (AI). It won’t be long before AI will allow users to place orders and seek product information and even recommendations without stepping foot out of their home.
Yes, we’re getting much closer to the 2013 hit movie “Her.”
The age of personalization
You know how you purchase an item on Amazon and then you see that item or a similar one appear as an ad on your Google page or Facebook? It’s no coincidence, of course.
It may not be long until advertising will be so personalized that CPG companies and retailers will be able—through addressable TVs, IP addresses, cookies, mobile loyalty and more—to craft increasingly customized promotions and pricing strategies to its base.
Do CPG companies have a profitable future?
With millennials and Gen Zers often embracing indie brands, questions have surfaced as to what kind of future established CPG companies will have.
Appel cites PepsiCo as a success story in this age of squeezed margins and hypercompetition, adding that Pepsi’s new products of the past three years have been responsible for more than 50% of total food and beverage sales uptick.
Appel credits a litany of wins for the beverage titan: expansion into healthier, more nutritional products; 17% sales from products hatched in the past three years; effective mining of consumer analytics; and a highly efficient DSD (direct-store delivery) platform.
Pricing in real time
From corporate headquarters, many fuel operators employ sophisticated pricing systems that allow an operator to effect intraday prices via automation across an entire retail network.
According to IRI’s Nagi Jonnalagadda and Joy Joseph, sophisticated technology will soon allow retailers to similarly change prices on other merchandise in real time. In addition, chains such as Kroger are testing beacon technology to track the amount of time customers spend in an aisle, which products they pick up and, ultimately, the conversion rates from handling into purchasing.
From the IRI Summit, it is evident that retailers are trying to more effectively streamline digital and in-store experiences, and better understand how to draw smart technology to create a more loyal, sustainable customer base.