Driven by current consumer trends, consumer products (CP) companies are increasingly investing in innovative technologies and strategies, according to a recent consumer products outlook by Deloitte. Specifically, these investments are centered around “concepts that are driving food industry trends, such as supply chain technology and e-commerce.”
Keeping up with the trends
CP companies are focusing on consumer trends like neuro-nutrition, biohacking, and product transparency for customers who desire more information about health and wellness options, organic authenticity, and sustainable practices.
Neuro-nutrition, which examines how food impacts brain health, and biohacking, which focuses on individualizing diets to combat chronic health concerns or satisfy personal preferences, are becoming popular concepts among consumers. Claims for neuro-nutrition benefits on products has seen a 36% increase in the last five years. Some companies are researching and developing DNA kits for customers to determine their ideal nutrition plans.
Since “approximately two-thirds of Americans prioritize healthy or socially conscious food purchases,” companies are also moving toward greater transparency in the health benefits of their products. Even though organic products tend to be more expensive than non-organic, sales of such products are still on the rise. The report notes, “Some CP companies are using blockchain applications to better inform consumers about the origin of the product, method of cultivation, ingredient details, and presence of any allergens.” They’re also focused on implementing and advertising sustainable practices; products marketed as sustainable have grown by 6% in sales.
Pursuing direct-to-consumer sales
Direct-to-consumer (DTC) sales “increased by 34% and represented 13% of all e-commerce sales” in 2017. This has prompted CP companies to explore DTC opportunities, sell products from brick-and-mortar stores, and host pop-up store events. These ventures allow companies to collect more customer data, build brand loyalty, and spark excitement in the shopping experience. Even the giants of online retail, stores like Amazon and Alibaba, have announced plans for engaging with customers through in-store experiences. These companies are leveraging their existing powerhouse technologies that have already proven successful in fostering positive relationships.
Presence in physical stores has numerous benefits for online retailers, including reduction of marketing, delivery, and returns expenses; access to new types of customer data; and the ability to sell and deliver fresh food items. However, the competition for shelf space is likely to intensify as these e-retailers begin selling products offline. Large online stores also negotiate with CP companies to maintain price competitiveness, negatively affecting the companies’ profits.
Current industry challenges
The report highlights a few other industry matters that may slow progress:
- Economic growth has allowed CP companies more spending power to adopt trending technologies. But their consumers may have less purchasing power in the current climate.
- A shortage of truck drivers in the U.S. had led to higher shipping and logistics expenses.
- There’s ongoing uncertainty around the development of the United States-Mexico-Canada Agreement and what impact it will have on global companies.
Despite these challenges, CP companies remain customer-focused and dedicated to technological advancements. The report concludes, “What’s even more exciting are the unrealized technology applications that will likely result from the significant investments currently in progress and from companies continuing to more intimately engage with their consumers.”