How Technology will Empower the FMCG Industry to Retain & Continue Growth
Today, the COVID-19 outbreak has changed the grand scheme of things. To give you a glimpse of the reality, a recent IBEF report highlights that the sales of the Indian online grocery market will cross Rs.22,500 crores (or $3.19 billion) in 2020. This is more than 76 percent growth over the previous year. Now, as the COVID-19 vaccine is not expected before the mid-2021, this level of growth is far from dying down.
The change is good for the FMCG sector. It has connected the demand with the supply while eliminating or at least minimizing the physical interface. This development has simultaneously enabled big and small players to understand their customers better and cater to them well. Technology backed informed decisions have become the secret sauce of all operations.
An important question to ask yourself here is, “Are you prepared for this digital battleground?” Because if you aren’t, you’re most likely to lose.
Well, they leverage disparate data including consumer’s past shopping behavior, search data, other demand predictors, as well as emerging preferences
The ‘Novel’ FMCG Market and The Role of Technology
Today, the FMCG industry is on the verge of a major disruption. With increasing digital adoption, changing consumer profiles, increasing competition, and the evolution of new distribution channels, FMCG companies expect technologies such as Big Data and AI to guide them into the New Normal. After all, decision making based on financial books and business acumen is neither enough today nor relevant to survive the cut throat competition. You have to either go intuitive or go home altogether.
Marico, one of India’s leading FMCG players, has started using AI-driven predictive and prescriptive analytics for such use cases. For instance, any distributor drop-off has a direct impact on the brand’s business. Marico can preemptively detect such challenges leveraging technology including financially distressed distributors. It can then timely address them and take prescriptive measures to prevent bottlenecks in the supply chain.
The emerging technologies can help them manage supply chains smartly, engage digitally with consumers, and offer a customized experience - a factor decisive of success in the future.
Let’s have a look at some of these approaches:
Improved Demand and Inventory Planning
AI and Machine Learning can help FMCG companies become more agile with respect to their production, market planning, and forecasting. An FMCG player was able to improve the forecasting results by 41 percent using an integrated AI framework within six months. Such technologies allow businesses to optimize supply chain and dynamic inventory management. How? Well, they leverage disparate data including consumer’s past shopping behavior, search data, other demand predictors, as well as emerging preferences. They can also consider potential issues that may prop up in logistics due to any ongoing crisis and maintain an optimum stock on physical and digital shelves.
Drive eCommerce Growth With Data-Based Hyper-Segmented Marketing
Every customer needs special attention. Businesses cannot survive without catering to their requirements. In order to do that, it is very important to understand what goes on in their mind. We can only yield influence by engaging the client. Here, data becomes paramount.
A good example, in this case, is 1-800 Flowers’ AI Chatbot ‘Gifts When You Need’(Gwyn). Tapping Natural Language Processing, Gwyn extends personalized offers and gifts, responds to customer queries, and assists customers while shopping. 80 percent of its users said they’d love to use Gwyn again while 1-800 Flowers 6.3 percent YoY growth in sales.
Data-driven marketing helps in multiple ways. First, it allows you to identify a new audience based on its distinctive needs. Second, it lets you make a huge impact on consumers via highly personalized, or say, segmented messaging. And third, it enables a more dynamic placement and measurement for maximum visibility, thereby optimizing spending across the channels. The right message delivered through a customer’s preferred channels in the correct tone, language, and the brand promise will be crucial for success in the times ahead.
New Portfolio and Innovation Strategy
With COVID-19 in the background, FMCGs need to reinvent their product portfolios and innovation platforms for adjusting to the evolving customer preferences. AI can assess and extract relevant insights from the historic consumer demand, purchase, and product data which will gain even more value as we move ahead. Using precise information, companies can reassess their current product portfolios and speed up innovation conduit to suit user proclivities around price-sensitivity, health, hygiene, and packaging.
Enhanced eCommerce Experiences
The digital growth trajectory has catalyzed in recent months and it has already started dominating the retail landscape. Today, rather than risking themselves by visiting the next door outlet, customers are letting their fingers shop online from the comfort of their homes. It’s high time to deploy technologies such as AI, AR, and VR for enhancing the shopping interactions. eBags was able to increase its revenue per visit by 87 percent with 3D and AR capabilities while also driving its mobile conversion rates to 112 percent.
FMCGs are learning quickly when it comes to e-Commerce. Online channels operate differently from brick and mortar grocery stores. It needs a unified approach for demand sensing, demand shaping, and demand fulfillment, all of which can be achieved with the help of algorithms. We are not far from a new era as grocers begin to use AR technology to tag ingredients and personalize choices for shoppers, while voice commerce sets new benchmarks for merchandising.
Advanced and Automated Production
TrendForce projects that the global smart manufacturing solutions market will clock more than $320 billion this year. The Industry 4.0 framework (or the fourth industrial revolution) has stressed on the need for nimbleness in product manufacturing today. Manufacturers should also enable flexibility across manufacturing sites to suffice for a temporary glitch or shut down in one location. Connecting production facilities through IoT and a digital model of the complete production network gives real-time information on all units to make rapid production allocation decisions. This can be an attractive strategy as product development cycles shrink and variation grows.
Digitizing the Supply Chain
As FMCG companies prepare for the future, one can expect to see the focus shift to building a smarter, more flexible supply chain.New technologies are emerging that dramatically improve predictability, visibility, and coordination across the value chain. For instance, intelligent control towers leverage Artificial Intelligence, IoT, robotics, and ‘digital twins’ to monitor, manage, and control execution across various functions and help optimize operations. Such solutions can enable businesses to execute various models such as Just in Time (JIT) inventory with considerable finesse.
Not too long ago, digital transformation was a necessary journey that companies were taking at their pace. Today, it has become an immediate need, especially for the FastMoving Consumer Goods segment. So mastering digital technology can be the difference between staying ahead and getting left behind. The digital battleground does not spare slow movers after all!