Winning Omnichannel in the Next Normal

Winning Omnichannel in the Next Normal

Does your organization have a strategy to gain share in an omnichannel environment turned upside-down by COVID-19?

A significant shift occurred in the consumer packaged goods industry over the past few years as leading organizations adopted an omnichannel approach to consumer demand generation and selling. These companies moved away from a siloed, ‘push’ approach to mass marketing and acknowledged the realities of a complex consumer / shopper journey along with the need to make brand connections in a more relevant, meaningful way. Those that made the shift realized significant growth as the majority of industry growth shifted to sources outside the traditional brick and mortar world.

COVID-19 heightened the importance of taking an omnichannel view as consumer points of influence and purchase rapidly shift. It also revealed the need to re-visit what we mean by the term omnichannel, given three new realities:

1. Omnichannel is bigger than we thought
2. Consumer / shopper journeys are dynamic and rapidly changing
3. Last year’s playbook no longer applies

Omnichannel is bigger than we thought

Do you know where your core consumer personas are making brand decisions and shopping? That question is increasingly difficult to answer, as the majority of CPG spending now falls outside of ‘traditional’ sources tracked by syndicated data.

Both brands and retailers now compete against a broader set of options that threaten to supplant their offerings with more compelling value propositions. A broader framing also makes it increasingly difficult to influence consumers as they move along the purchase journey.

Example: Functional Water

Brands and retailers must recognize that consumers do not think in terms of ‘channels.’ The imperative is to conduct regular, far-reaching assessments of where and how consumer personas are fulfilling their needs—or risk losing market share to unseen or untracked competitors.

Consumer/shopper journeys are dynamic and rapidly changing

Consumers are changing more quickly than ever. Gone are the days when brand owners and retailers could comfortably develop annual plans followed by a period focused on execution. The disruption and changes ushered in by COVID provide an important lesson on the need to adapt quickly.

While COVID is clearly disruptive, brands and retailers need to be vigilant and agile at all times. For example, the Pet category experienced tremendous change when Chewy.com and Amazon provided a much more compelling total value equation for pet parents that caught many brands and retailers flat-footed.

Brand owners and retailers need to efficiently focus resources on consumers that represent a disproportionate share of business. But rapidly changing consumer behaviors reinforce the need to also deploy forward-looking insights to identify future sources of growth or disruption, and proactively nurture these spaces before competition arises. This requires brands to develop rapid “test and learn” capabilities to create conviction and action new learning. Otherwise, business owners find themselves chasing new sources of demand and struggling to close a widening gap.

Last year’s playbook no longer applies

In this fluid landscape, it is increasingly challenging for brands and retailers to stay visible and trigger connections at the right time. In the Next Normal, brands can no longer be passive influencers of the experience at the shelf or rely on basic ecommerce search.

Example: Impulse triggers have shifted

The need to connect with consumers at the right time, in the right way, with the right message is even more important given that only 8% of today’s consumers consider themselves brand loyalists, and are highly willing to switch brands or retailers when they see a better offer.

It is critical to understand the relationship between your brand offer and your consumer’s lifestyle. Leading brand owners and retailers are using forward-looking journey insights to map where and how to best sway consumers through brand messages and value added experiences.

How to drive change

Brand owners and retailers need to take action now to ensure they are equipped to win in the Next Normal and beyond. As we’ve seen, the only constant is change: the CPG industry has changed as much over the past three months as in the prior ten years. Four key steps are recommended to configure for an omnichannel Next Normal. Each step is illustrated based on a case example from a leading personal care company that successfully unlocked new pathways to omnichannel growth.

Seurat Group is an insights-driven consumer packaged goods consulting and private equity firm whose mission is to delight consumers. We create for our clients the clarity to act & invest in a better future.

Reach out at info@seuratgroup.com for additional thoughts on building a consumer/shopper insight foundation and omnichannel growth strategy for the Next Normal and beyond.

Moving from Respond to Reimagine: Leading Customer Engagement in the Next Normal

Moving from Respond to Reimagine: Leading Customer Engagement in the Next Normal

Radical Change in Retail

 

 

The pace of change among incumbent retailers in the consumer goods industry has historically been painfully slow. Despite many aisle reinvention projects, ‘stores of the future,’ in-store theatre, and shopper marketing programs, executional change has been measured in small increments: one additional facing, one incremental display, one shelf added to a category, or one more household adopting click and collect.

COVID-19 has clearly changed this dynamic. Retailers had to quickly respond to shopper behavior disruption and manufacturer supply realities with significant changes in-store, online and in fulfillment. Whole departments, such as Deli, were upended to address health and safety concerns with prepared foods, while store layouts were shifted to manage shopper flow and distancing requirements. Space and inventory holding power were quickly re-wired to meet radical shifts in demand overall and for specific products (e.g., paper and cleaning products), as well as ramp up for different fulfilment models such as click and collect.

Many manufacturers and retailers benefitted from these rapid changes, particularly shifts in consumption back to the home, consolidation of shopping trips, and re-prioritization of consumer needs that spiked demand for safe, convenient, and high-value brands and products.

We are quickly moving past the respond phase and do not believe the recent past provides a complete picture of the future.

The COVID-19 accelerant is now ushering in an unprecedented reimagine phase across the retail landscape, bringing changes within the next six to twelve months that historically would take five to ten years to develop. This presents both massive opportunity and risk for manufacturers. Shifts in consumption and shopping behaviors will drive continued change at retail and elevate the importance of influencing shopping behavior across an evolving, complex purchase journey.

More than ever, manufacturers need to be proactive to create customer planning engagement or risk having outcomes determined for them. Winners will influence customer planning conversations by using new insights to reimagine the category vision, growth drivers and brand roles. Our ongoing dialogue with consumers, shoppers, and retailers reveals four key areas of focus to reimagine the growth vision for each category:

 

Implication: In the face of renewed foodservice consumption, trading partners must identify ways to bolster the retail/at-home offer. Each category and brand must continually evolve their offer and value equation to maintain share-of-stomach gains from the respond stage.

For example, Deli is critical to meet demand for fresh, convenient, and great-tasting foods, but must shift from open, self-serve bars to a safer packaged assortment to compete with away-from-home options.

 

Implication: Re-orient category growth drivers and brand roles to address evolving consumer and shopper needs. Manufacturers need deep insight into why consumers are changing behaviors to identify what will ‘stick’ during the reimagine phase and how to deliver value to different tiers within a category.

Brands that played premium roles will need to demonstrate how they address a broader demand landscape and meet the needs of consumers making changes due to financial impacts of COVID shutdowns.

 

Implication: As shoppers make more planned trips, brands must be top-of-mind, prioritizing physical availability and visibility both in-store and online. Manufacturers need to build omni-channel shelving guidelines and partner with retailers to influence category strategy at shelf (share of space, brand blocks, shelf position) and online to both influence and deliver on demand. This requires factoring in holding power and optimal mix to meet the needs of a range of fulfillment options and incorporating strategies to influence shoppers at the point of purchase.

For example, as online sales in the Vitamins, Minerals, and Supplements category grew 15% vs. last year, manufacturers like Olly are helping retailers like Target use their .com business to compete for sales against a proliferation of direct-to-consumer players. In parallel, manufacturers are leveraging their growth online to ensure right availability, holding power, and brand blocks in-store to support other fulfillment models.

 

Implication: Provide a seamless omnichannel shopping experience for those who are interacting with retailers and brands across more touchpoints. Retailers need to provide operating models that delight and deliver on shopper demands before expanding service offerings. Manufacturers need to apply new insight through the various paths to purchase and identify implications for driving demand at the point of purchase to plan with retailers.

Follow the lead of manufacturers who are already providing visibility to total omni behavior to develop optimal online programs and physical retail recommendations that reflect online needs and in-store fulfillment.

Reimagining the Next Normal of Customer Planning

Winning manufacturers have a vision for creating category value grounded in a new insight foundation, using a forward-looking lens to understand where shopper behavior and decision criteria are headed.

Value comes from translating this insight into a category vision program that reimagines solutions for the four aspects outlined above and is communicated through a persuasive selling narrative that can be adapted to key customers and channels.

Seurat recommends the framework below to create the vision, narrative, and program to increase customer engagement during this pivotal window of shopper and retailer change.

 

 

 

Reach out to the Seurat Group at info@seuratgroup.com for additional thoughts on building an insight foundation and category vision to capture long-term growth through the reimagine phase and beyond.

Future of Omni-Channel Planning

Future of Omni-Channel Planning

The End of Channel Management

Grouping similar retail customers into “channels” to organize go-to market efforts has been a hallmark of the CPG industry. This organizing construct exists because it has enabled more scalable, efficient and effective routes to reach consumer markets. The channel model was built on the premise that shoppers exhibited similar trip behavior within a retail format, thereby enabling manufacturers to use that medium to capture shopper value. This gave rise to organizations with teams and planning cycles structured around Grocery, Mass, Club, Drug, Dollar and more recently, Ecommerce.

While shoppers still think about outlets to fulfill trips, the availability of offers has blurred and people are shopping across more outlets than ever. Evidence that shoppers think less in terms of outlet is present everywhere you turn. Take, for example, Google Express, an online

platform that aggregates products available to be delivered based on your location. A search for “pea crisps” in our neighborhood returned above-the-fold results from Target, Walmart, Costco, Boxed.com, Fairway and Whole Foods Market – each featuring a product image, price, rating and convenient “Add to Cart” button. With 98% of US adults with internet access going online at least daily, and three-quarters using a smartphone, opportunities abound for shoppers to pick up their device the instant a need arises and receive instant gratification, whether through a nearby store, an online merchant or a third-party delivery service. With the rise of voice-activated search, social shopping solutions and text shopping enablement, this trend will only accelerate. The channel construct no longer reflects how shoppers fulfill CPG needs, creating an unsustainable tension between how shoppers behave and how companies go to market.

Traditional CPG go-to market model

Traditional CPG go-to market model elevates channel as an organizing construct

Media Transformation Highlights the Path Forward

Consider the transformation the media industry has seen in the last half century. Long gone are the days when brand managers could build a media plan by placing percentages of their budget across TV, print and radio mediums. Today, the integrated communications planning process (ICP) starts with a robust understanding and targeting of the end user, telescopes out to map the total consumer journey, and finally identifies where in the fragmented media landscape to invest to reach those end users.

In line with the media transformation, customer channel as an organizing construct must also transform for manufacturers to win with consumers in today’s environment. Rather than start the go-to market

process through established channel management and customer segmentation schemes, manufacturers must reorient their total demand planning to build relationships directly with shoppers who shop anywhere and anytime on their own terms.

Consider this in light of how most manufacturers go to market today. Despite their best efforts to implement omni-channel planning, most organizations are still woefully siloed, filtering staffing, budgeting, planning and marketing activation decisions through the lens of customer segmentation models that are misaligned with where consumers are fulfilling their CPG needs.

Being Consumer-First

What’s a company to do? In short, follow the consumer through the full consumer-shopper journey. This is not to say the future is all about direct to consumer. Rather, the imperative is be consumer first – then determine how to build and segment capabilities to reach target consumers, working effectively with customer partners (or DTC) across the demand landscape. Through our research and experience, we’ve identified three distinct behaviors to help organizations transform.

Map insights across the consumer journey.

The best products today are doomed to fail without a strong understanding of the end-to-end consumer journey and ability to insert the right messages at the ideal touchpoints. Consider a successful challenger brand that in addition to identifying a white space in a category, is able to use it’s understanding of the consumer’s journey and the “job to be done” at each inflection point (e.g., finding recipe inspiration, planning a social gathering, stocking the pantry) to build go-to market plans without struggling to force fit its planning into a legacy customer session. The most successful brands are ones that not only uncover powerful consumer insights but also map the end-to-end journey and invest at the right inflection points. This enables go-to-market decisions to be made through the lens of the consumer, rather than a default channel structure.

Omnichannel Consumer Journey: Illuminates triggers & barriers across the shopper journey, which is no longer linear

Integrate total demand planning.

Integrated Communications Planning and traditional “customer planning” must evolve from being compartmentalized and department-driven to a cohesive, coordinated, cross-functional capability. The goal is to apply a common view of the consumer journey that connects all relevant mediums and packages decisions about how to reach, educate and influence purchase into a truly integrated demand plan.

By being hyper-focused on demand moments and mediums in concert, manufacturers can develop more effective tactics. Proctor & Gamble recently launched a highly compact, concentrated Tide liquid detergent to meet the underserved needs of urban shoppers living in tight spaces. Priced the same as its ubiquitous 96-load jug, the so-called “Eco-Box” is about the size of a shoebox and weighs less than eight pounds. Most notably, the product is sold exclusively through online retailers like Amazon, Walmart.com and Target.com , where its carless city-dwelling shoppers are already turning to stock up on groceries and household goods. This type of innovation is more easily facilitated when go-to-market strategy is dictated not by an antiquated customer segmentation but by a rich understanding of the consumer and her journey.

Rethink your customer segmentation.

A large manufacturer recently conducted a study on where, how and why shoppers fulfill CPG needs online. What’s striking about the research is not what it uncovered about barriers to buying perishable items or openness to impulse purchases – valuable content in its own right – but rather the implications for the company’s customer segmentation.

As part of the study, the team looked at how shoppers engage with various fulfillment models (e.g., 2-day shipping, same-day delivery, buy online and pick up in-store). At first the team found a messy and fragmented landscape, with different groups of shoppers making different types of trips across a broad set of online and offline retailers. However, looking at shoppers based on how they fulfill unlocked a whole new way to think about customer as an organizing construct. Through the lens of fulfillment, the team conceived a new shopper segmentation that could be overlaid with customer segmentation. For example, the study found that high-value shoppers frequently used “click & collect” to bridge online and offline behavior. With that insight, the company could prioritize customers offering an omni-channel experience and rethink how it organized resources to service those customers.

The pathway to rethinking customer segmentation can lead to being able to prioritize differently. An example is RXBAR’s first sales call wasn’t to Whole Foods or the nearest health store but rather to the founder’s own CrossFit community – which became the company’s exclusive channel. Only after four years did they open the doors to mainstream channels, starting with Trader Joe’s, based on their understanding of the target consumer’s journey.

New go-to market model starts with the consumer journey for integrated demand planning with customers

Conclusion: Future of Omni-channel Planning

While upending the way companies have organized and created go-to-market strategies for decades can feel like a daunting task, fortune favors the bold. Tomorrow’s successful CPG firms will be those that are truly consumer first. As a starting point, here is what we recommend:

  1. Map a strong insight foundation across your consumer shopper journey
  2. Build an integrated approach to total demand planning that integrates consumer touchpoints with customer needs, strengths, and strategies
  3. Adapt customer segmentation to facilitate integrated communication planning and ultimately yield stronger, more cohesive business plans

To discuss how we can help you rethink your consumer journey, demand planning or customer segmentation, contact us at info@seuratgroup.com.

 

 

1 “The Rise of the Empowered Customer.” Forrester, 2017

2 “P&G introduces new concentrated Tide box for e-commerce only.” Cincinnati Enquirer. Nov 2018

Embracing Private Label To Drive Own Brand Growth

Embracing Private Label To Drive Own Brand Growth

Overview

As private label investment and share climbs, manufacturer brands will need to adapt new strategies for success and challenge the conventional approach of fighting against private label. Yesterday’s toolbox of managing price gaps and pursuing assortment and shelving optimization is no longer

the playbook for success. Manufacturers that are able to embrace private label’s role in the category, while clearly defining the incremental value that their brands bring to the category, will position themselves for true success in a growing private label world.

From Search

Private Label is an attainable, proven, profitable growth strategy across all retail channels. In an environment that is increasingly difficult to take price and grow share, retailers have chosen to aggressively pursue profit and sales growth through more sophisticated store brand strategies.

They are turning to private label to capture 25-30% higher margins, meet their consumers’ needs and provide unique offers that can create a compelling differentiation to drive traffic and loyalty.

Store Brands Have Momentum

Retailers have made significant strides in the effectiveness of their store brand portfolios, contemporizing the branding, innovating the assortment, and offering more services.

No longer is private label known as a generic or the ‘off brand.’ Today, retailers are fast to innovate and exploit new trends, in many cases leading innovation in categories.

Private Label is capturing share across channels, from Grocery and Natural channels to E-Commerce to Mass Merchandisers. Momentum continues to build.

The Case for Private Label Focus:

Retailers Face Declining Profits: 
In an environment that is difficult to take price, retailers must take margin.

Economy Remains Unfavorable:
Aproximately 1 in 7 people in the US received SNAP (Supplemental Nutrition Assistance Program) benefits1.

More Consumers are Open to Store Brand:
Millennials are more likely to purchase private label as they grew up with store brands being more than cheap alternatives.

Aging generations, triggered by a poor economy, have tested and enjoyed private label. They have lived through National Brand Equivalents and Generics and are now at a point in time that they cite the highest propensity to buy private label products.

Select Examples of Private Label Momentum:

Whole Foods:
Creating a new store format focused on value, and own brands to lower the cost of natural living

Meijer :
Meijer launching ‘True Goodness’ brand which offers products that are free from artificial flavors, colors and preservatives at an affordable price

Kroger:
Developed 3 new private labels to better meet a broader range of shopper needs: ‘p$$t’, ‘Heritage Farm’ and ‘Check This Out…’ – Simple Truth reached $1.2B in sales during 20142

Walmart:
Partnered with Ree Drummond – blogger, cookbook author and host of her own Food Network TV show – to create ‘The Pioneer Woman Collection,’ a line of modern country housewares exclusively sold at Walmart

Today’s Principles to Successfully Win Alongside Private Label

The following five principles represent the new ways to manage your branded business with the growing momentum of private brands in your categories.

They require Manufacturers to think differently to better partner with retailers through their private label, and to drive sustainable growth for the category and your brand.

Every retailer wants to know where the category is heading. Having a vision on where the category is going, the incremental value available, and the roadmap to get there, enables manufacturers to provide significant value beyond the category manager’s capability.

Communicating a clear understanding of the category dynamics and a vision for where it is going tomorrow is critical to lead planning and guide the role of private and leading Manufacturer brands.

Become the go-to partner for identifying whitespaces and innovation pipelines, educating shoppers, improving the in-store experience, and curating targeted messages that help your brands, private label, and the category grow.

While retailers are refining their ability to market to consumers outside of the store, the strength of national brands is their marketing capability. Bring demand beyond what a retailer can create.

Staying top of mind and relevant with today’s consumers is critical. Authentically reach out to your retail partners’ marketplace to develop a strong personal connection that continually motivates purchase.

Create Category Demand In-Store with Disruptive Merchandising beyond PL Capabilities:

In-store remains a critical battleground for your products. Although shoppers are rushing around on their usual route through the store, shopper’s are continually interrupted by new items, displays, sales, education at shelf, etc.

Seize the opportunity by grabbing the shoppers attention. Create demand for the category through various in-store levers beyond a retailer’s programs.

One in five shoppers say they impulsively buy categories that they had no intention of purchasing prior to entering the store, while 28% claimed to make their brand decision in-store.

Use Retailer Momentum to Optimize Brands as Part of the Category Strategy:

Be the Partner that helps retailers build private label share and capture more of the market. As private label reaches more shoppers, leverage its success to rationalize competitive brands, and focus on efficient assortment strategies (i.e. 2 or 3 brand strategies).

Working together, private label can capture ‘quality at a value,’ and the leading national player can provide incremental sales through ‘value added’ items.

Build a Price Value Benefit to Help Retailers Capture Lower Tier Shoppers:

How value is defined varies from shopper to shopper, and willingness to pay rapidly changes as new benefits are introduced to the market.

For manufacturers, it’s not about low cost, but meeting a need at a lower price point. While private label can stand for ‘quality at a value,’ national brands need to embrace the value tier by having a competitive offer that is appropriately supported – driving branded sales, but also helping retailers gain a bigger share of the growing value segment.

Conclusion

The above five principles require a holistic approach to the category, your consumer, and your customer. To play better alongside private label, national brands must have a view on where the category is going, provide incremental value both out of store and in store, and embrace the value tier to win share for themselves and the retailer. The retail landscape has changed, and to be successful national brands need to re-establish their position, including how to best fit with the retailer’s assortment and their consumers’ needs, while continuing to leverage their greatest asset – flexing their marketing muscles to generate demand for the category.

Bridging the Omnichannel Divide

Bridging the Omnichannel Divide

While ecommerce is recognized as one of the most exciting opportunities in the Consumer Packaged Goods industry, poised to make up 5% of industry sales by 2018,1 it is also a source of enormous anxiety for both manufacturers and retailers. Most industry players know that they need to establish a brand presence online quickly or be left behind by savvier digital competitors. Nevertheless, a lack of understanding of how to best appeal to shoppers online has stalled the development of ecommerce strategies.
Fewer than half of CPG executives feel they have a clear ecommerce strategy,2 which should come as no surprise. With only a third of ecommerce research to date addressing CPG, retailers and manufacturers are still woefully uneducated and unprepared to develop a path forward. The few players who have devoted significant resources to defining their ecommerce strategy still lack a way to think about omnichannel cohesively.
The time has come for CPG companies to get omnichannel strategy right. The time for a debate about whether ecommerce will compete with brick & mortar stores for everyday purchases has passed.

Today, the question at hand is how big online retail will become and how to best leverage its growth.

Instead of spending time speculating, manufacturers and retailers must focus not just on ecommerce, but also more broadly on providing shoppers with better omnichannel offers.

Thanks to technology, new retailer and fulfillment models are emerging every day. The winners in the industry will be those who can look ahead, place smart bets, and proactively lead with omnichannel solutions.

For these reasons, we set out to address the knowledge gap around CPG ecommerce as well as to understand how ecommerce compares to brick & mortar in the eyes of CPG shoppers. We took as our goal unlocking new learning around shifting shopping behaviors, decision drivers, and key influencers along the CPG omnichannel path to purchase.
Through multiple phases of research, our team developed a comprehensive understanding of the CPG omnichannel landscape. Our work also uncovered three omnichannel decision drivers among CPG shoppers which inform their choice of brick & mortar versus ecommerce retail. These three omnichannel decision drivers determine the winner, be it brick & mortar or online, for shoppers’ trips, wallets, and loyalty.
The key to success within this landscape is to develop a cohesive, shopper-first solution to bridge the omnichannel divide. We will explore the omnichannel landscape, focusing on each omnichannel decision driver, and share best practices that today’s CPG manufacturers can adopt to help brick & mortar and ecommerce retailer partners alike win with today’s shoppers.
The Omnichannel Divide
Fresh seafood, local microgreens, ice cream, and beer are just a few of the items previously exclusive to brick & mortar that today’s CPG shoppers can buy online. Today’s ecommerce shelf, amazingly, has evolved to offer nearly the same range of products and categories as its brick & mortar counterpart. Perishable items and temperature states no longer present a challenge for ecommerce players. Online automation and subscription service make it easy to make routine replenishment trips online, and newer retail models such as Good Eggs, make even previously niche products, like farmers’ market goods, easily accessible without shoppers leaving their couch.
While brick & mortar and ecommerce shelves now offer many of the same products, the shopping experience they offer and shopper needs to which they cater are very different. The ecommerce world remains incredibly fragmented and constantly evolving, in terms of retailer models. Ecommerce players are better able to meet shoppers’ needs across some—but not all—omnichannel decision drivers. At the same time, brick & mortar players are winning against different needs along the path to purchase. We explore the omnichannel decision drivers below.
Trip Mission
The first omnichannel decision driver concerns trip mission—for example, the extent to which shoppers are searching for new products versus replenishing products they’ve bought before. Interestingly, ecommerce wins at both ends of the spectrum.
Both shoppers who are trying something new—building their consideration set—as well as those making a routine replenishment purchase are more likely to choose an online retailer. Brick & mortar, conversely, best satisfies shoppers who are choosing from an existing consideration set.
On the left in the figure below, we see that three in ten online CPG buyers are driven by the desire to try something new — twice as many as shoppers in brick & mortar. The ecommerce shelf better meets the need for education through the broader range of information, inspiration, and reviews it can provide compared to a brick & mortar retail set.
As a result, shoppers who are trying something new spend three minutes longer on ecommerce sites, likely engaging with product information and reviews. These novelty-seekers choose a website based on its ability to inspire confidence around a new item. They are more likely to seek ratings and reviews, guidance on product use including live chat, and inspiration such as recipes or before-and-after features. Sephora.com, for example, features robust product details and images, advice and inspiration around how to use each item, brand background for each product, ratings, reviews, and the opportunity to post questions and receive answers in the reviews section. Sephora sets the bar for online personal care by being exceedingly easy to shop and confidence-inspiring.
At the same time, the rise of auto-replenishment models, such as Amazon’s Subscribe & Save, has led shoppers on routine replenishment missions to choose ecommerce as well. Knowing exactly what they want, these shoppers would rather order in advance versus take the time to make a trip to a nearby store. Two of the most important attributes in selecting a website to these shoppers are that, firstly, the site that saves personal information from prior purchases and, secondly, that the site saves prior orders. Over half of these shoppers spend fewer than five minutes making a purchase online, keeping with their desire for time-saving ecommerce automation.
While online wins at both ends of the spectrum above, brick & mortar retailers have an edge in browsing within a shopper’s pre-defined consideration set. Not only is the experience of in-store browsing enjoyable, but it also gives shoppers the opportunity to compare items package-to-package and peruse all options up close. In addition, less than a quarter of brick & mortar CPG buyers are seeking a specific flavor or variety. As a result, these buyers value the opportunity to choose the specific items to purchase from their consideration during their shopping trip.

“I do enjoy grocery shopping. I just like the selections of all the different foods you can buy and all the produce you can find. I like being able to pick up fun things off the shelf and try new types of items.”

– Shopper

“Offline, I get to browse a physical store; online is quick and specific.”

– Shopper

Urgency
On the left in the figure below, we see that three in ten online CPG buyers are driven by the desire to try something new — twice as many as shoppers in brick & mortar. The ecommerce shelf better meets the need for education through the broader range of information, inspiration, and reviews it can provide compared to a brick & mortar retail set.
Our study found that four in ten brick & mortar CPG shoppers purchased their desired item within an hour of recognizing they needed it, seeing brick & mortar as “instant gratification” for their spending. On the other hand, over half of online CPG purchasers waited a day or more to pick up or receive the item they had ordered via ecommerce. Shoppers generally see online purchases as most appropriate for items they don’t need right away.

“I use online shopping for items I know very well and can wait for, offline for everything else.”of items.”

– Shopper

Given the rapid acceleration in fulfillment times, this omnichannel decision driver will no doubt continue to shift.
Same-day ecommerce fulfillment services, such as Google Express, are putting pressure on traditional ecommerce and brick & mortar players alike by offering delivery within an hour. So far, however, penetration for these quick fulfillment services is relatively low. Time has yet to tell whether buyers will stop going to physical stores to get the items they need immediately.
Product Selection
The last major omnichannel decision driver informing the choice between brick & mortar from ecommerce CPG purchases is the divide between shoppers who want to evaluate products themselves and those who trust others to select them. Nearly six in ten shoppers value the ability to pick out an item in person in order to have more control over the purchase and to verify its quality.
This preference is especially commonplace when shoppers are buying goods such as produce, fresh meat or seafood, which they need to experience in person to see, touch, or smell. Conversely, shoppers are much more likely to forego evaluation and opt for ecommerce when buying more standardized packaged items, such as HBA, household goods, pet products, or even highly commoditized packaged perishables such as dairy.

“With online shopping you have to trust the quality of the goods you’re buying based on the merchants’ reviews versus offline shopping where you can actually see the quality of the goods you’re buying.”

– Shopper

“Going to a physical store lets me choose the items I want myself.”

– Shopper

Strategies to Succeed
Understanding the decision drivers that determine the choice between brick & mortar or ecommerce retail channels is crucial to developing an omnichannel strategy. It is clear that the way to win in today’s CPG industry is by meeting shoppers’ needs across all three: Urgency, Product Exploration, and Product Selection.
In order to arm manufacturers to better lead their retailer partners to mutual growth, we have identified three strategies to win with CPG shoppers at both the brick & mortar and ecommerce shelf:
Identify what matters to your brands’ buyers & your key retailers’ shoppers
In order to succeed in the future omnichannel landscape, manufacturers must invest in shopper and consumer insight now. The gaps in learning today are vast and slowing CPG players’ progress.
Brands need to quickly identify what is unique about their buyers, how they select channel and retailer, most important attributes, and trade-offs made at shelf. Manufacturers who can invest in uncovering these insights today have an opportunity to outpace their competition.
Define ecommerce and brick & mortar strategies and integrate to build omni-channel
Omnichannel cannot be simply an extension of the brick & mortar shelf. Rather, strategies for ecommerce and brick & mortar retail, as well as for the channels within, must be shopper-led and distinct, based on the unique experiences they offer. Manufacturers must then coordinate and integrate all strategies to create a cohesive omnichannel approach. At the moment ecommerce strategy and experience is less developed than its brick & mortar counterpart. As such, manufacturers have an opportunity to update their current offer to better meet the needs of the ecommerce shopper.
Brand landing pages, organization by segment or type, as well as customized product-finding tools are key. Manufacturers can also better satisfy their ecommerce buyers by creating a ‘browsing’ feel on their pages. Optimize site content via product images, helpful descriptions, and videos to allow shoppers to feel like they can touch and feel products through the screen. Finally, make sure products offered are the sizes (bulk or sample) and varieties that shoppers are buying online versus in-store, knowing that purchases are likely to be driven by new item discovery or quick replenishment.
Choose The Right Omnichannel Partners & Structure To Collaborate
Depending on a brand’s buyers, certain retailers will be able to fulfill needs and satisfy preferences better than others. Amazon, for example, will deliver a drastically different purchase experience than Google Express or a trip to a brick & mortar Walmart, even if a shopper is buying the same item from each retailer. Brands need to determine how retailers can win with their brand buyers, choose partners who can deliver, and guide these partners via insight-fueled thought leadership.
Furthermore, brands should structure their omnichannel team to be able to most efficiently collaborate with retailer partners. Too often, ecommerce or digital teams are disconnected from brick & mortar managers despite the fact that few shoppers buy a brand only online or only offline. Manufacturers should ensure organizational structure facilitates collaboration internally and with customers, so the right people are in the right rooms connecting.
Conclusion
CPG firms need to develop a successful omnichannel strategy today. In the coming years, ecommerce, which has already developed a unique positioning versus brick & mortar, will capture a significant share of industry sales.

The omnichannel landscape will continue to evolve as brick & mortar and ecommerce retailers adjust their strategies to best meet shoppers’ needs for urgency, product exploration, and product selection.

The winning players will be those nimble enough to adapt quickly and meet shoppers’ preferences for purchasing their category. It is our hope that these learnings will offer today’s CPG manufacturers valuable insight and that the strategies suggested here will arm them to best guide their retailer partners to incremental growth and shopper satisfaction.
Study Methodology

Our work consisted of two phases of in-depth research:

Qualitative
We conducted fieldwork interviews to develop a basic understanding of the shopper mindset as well as top questions and hypotheses among CPG players. • Manufacturer Interviews addressed existing knowledge around ecommerce, strategies to date, and knowledge gaps.
• Retailers Interviews helped us to identify omnichannel path-to-purchase hypotheses, challenges around ecommerce, and best in class ecommerce manufacturers to date. • Consumer Interviews allowed us to evaluate differences in brick & mortar versus ecommerce purchases, strengths and weaknesses of each channel, and unmet needs.
Quantitative
We fielded an online study among 1,000 shoppers who had made an online CPG purchase in the prior month to develop a quantitative knowledge base and to reveal
differences across several key spectrums (e.g., online versus brick & mortar, across different categories, across different trip missions).