According to Investopedia, consumer packaged goods (CPGs) are defined as products used on a daily basis by consumers and tend to be replaced frequently. The industry is large and valued at nearly $2 trillion. Products that fall into this category include food, beverages, clothing and household products. The CPG market tends to be highly competitive due to high market saturation and low consumer switching cost. Although growth has slowed in this industry, “companies that provide CPGs still benefit from margins and strong balance sheets” (Investopedia, n.d.).

Digital innovation has created new patterns of consumer expectations as it pertains to CPGs. They have begun to demand that the convenience and value they find in the digital aspects of their lives be true in grocery stores as well. This new mentality is putting pressure on retailers and suppliers alike to adapt and participate in new distribution models.

So far the industry has responded slowly. Although retailers benefit collectively from staying offline, they can’t afford to hold back forever. “In reality, traditional retailers are already facing a stampede. Pure-play online retailers, innovative brick-and-mortar stores, technology companies, and start-ups are all placing significant bets on e-commerce models that serve different shopping occasions. Collectively, they are driving the sector toward a tipping point from the supply side, and it is clear that manufacturers will need to participate in multiple models” (BCG Perspectives, n.d.).

Listed below are five ways that retailers can win in the new marketplace:

1. Develop an intregated strategy that defines the role of digital and e-commerce for the company.
2. Build brand equity online through investments that are tied to the purchasing pathway for each brand.
3. Revisit category management across channels to establish a clear picture of the roles that each channel plays for each brand in the portfolio.
4. Partner with retailers to rethink shelf placement, navigation through store, emotional connections with consumers along the path and communication mediums.
5. Rethink supply chain configuration to participate in and serve multiple distribution models.

“Despite the momentous growth of e-commerce in the U.S., only 30 percent of people shop for CPG digitally. And only half of these shoppers buy consumer products online. The rest use digital methods for information, research and price comparing. Ultimately, this group largely still makes its purchases offline. Understanding a shopper’s needs both on-and-offline is critical to strengthening a business across channels” (Nielsen, 2014).

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