Valued at over $10,000 billion in 2017, the global FMCG market is projected to grow by 5.4% annually until 2025. The personal care segment in particular is anticipated to witness substantial growth due to an increase in the disposable income of consumers, enabling them to spend more on luxury personal care products.

But the traditionally successful industry which has in the past produced 23 of the world’s top 100 brands, is facing great pressure as consumer behaviours shift and the channel landscape changes. To maintain success in the coming decades, FMCGs are increasingly looking to reduce their reliance on offline mass channels, and increase their omni channel presence by focusing on understanding and responding to customer behaviours rather than just cost reductions.

Emerging technologies are at the heart of the industry disruption, allowing FMCGs to adapt and deliver at pace in an increasingly competitive landscape, while simultaneously bringing them closer to customers and improving employee engagement.  Organisations who understand the market behaviours and challenges they face and are able to turn technological advances to their favour, are in a strong position to drive competitive advantage and thereby succeed.  To achieve this, organisations need to develop appropriate IT strategies to address the challenges they face.

Challenges

Continued rise of e-commerce

For the majority of FMCGs, an investment in growing their online business is crucial, if not mandatory: while supermarkets are still a major destination, e-commerce is re-inventing the grocery shopping experience, with smaller specialists offering a more personalised approach to consumers.

Big data management leading to personalised recommendations, geo-targeting to address consumers on-the-go, targeted and instantly redeemable rewards, messaging apps and voice ordering, are all set to open up new opportunities for future growth.  To leverage and adopt these capabilities, IT leaders require an overall data strategy, which includes their approach to big data management, data governance, analytics and implementation in order to support business insights and key decision making to deliver targeted customer propositions.

Convenient shipping, and the emergence of autonomous delivery

Consumers are becoming less willing to compromise on the convenience and speed of delivery, so reducing shipping time is vital for any retailer looking to stay competitive.

Much of the expectation for quality and convenience has arisen from emerging culture of delivery apps. Further disruption is expected in this space, with the emergence of autonomous vehicles – helping to bring down the high cost associated with last-mile delivery. IT departments need to think about delivering a secure and holistic experience to the customer: integrating the consumerisation of technology at the front end, with autonomous vehicles at the back end – a simplified and resilient process, seamless from start to finish.

Experiential retail

Virtual reality, augmented reality, and improved mobile technology, are continuing to push brands to add new experiential layers to their traditional retail models. A trend driven largely by millennials seeking ‘experiences over things’, the experiential model makes for more immersive and meaningful shopping.

Despite reports of the demise of the high street, experiential retail is also seen as an opportunity to re-think old store concepts and engage customers who still appreciate tangible in-store experiences. IT has a role to play in this, thinking of ways to work more collaboratively with businesses to drive this innovation in the buyer experience. Part of the collaboration will rely on the adoption of modern technologies such as cloud-based solutions, IoT, and collaboration solutions and consumer products, all of which support faster time to market with new customer propositions.

Agile operations

Agile delivery methodologies have extended beyond software because they successfully address many inefficiencies of modern organisations, including FMCGs. Instead of an old command-and-control structure, where direction cascades from leadership to middle management, to the front line, most work in agile organisations happens in cross-functional teams. The focus here is on iterative work plans and release cadence. Supported by data and advanced analytics capabilities, Agile reintroduces speed and nimbleness to organisations slowed by layers of decision-making, bringing FMCGs closer to the customer again.

At Mason Advisory, we understand the challenges facing the retail/FMCG sector and have the expertise to help our clients navigate through the disruptions and complexities facing this important sector.