If you need further evidence that the CPG industry is going through disruption, consider these stats: between 2009 and 2014, the 25 biggest U.S. food and beverage companies lost 4.3 percent in market share—from 49.4 percent to 45.1 percent. In the same period, smaller food and beverage brands gained 3.2 percent of the industry’s $418 billion sales.
Between 2009 and 2014, smaller food and beverage brands gained 3.2 percent of the industry's $418 billion sales. (CLICK TO TWEET)
In an era where smaller brands are rapidly gaining share and emerging marketing and distribution channels are providing unprecedented access to hard-to-reach consumer segments, large companies need to think and act more like a startup in order to capture the hearts and minds of tomorrow’s consumer. As this week’s articles show, large brands are indeed starting to fight back—and they’re doing so by going after one of the most elusive groups of customers today: millennials. Here’s how.
Providing personalized experiences.
At this year’s IRI Summit, an annual conference for CPG professionals, Cindy Davis, executive vice-president of global customer insights and analytics for Walmart, shared how personalization is helping the multinational win over millennial customers.
“They get that we have information about them,” Davis said about the company’s customers. “This is no surprise. They want us to use it to recognize them as individuals, improve their experience and make sure our communication with them is relevant to them.”
In the company’s website, for instance, customers see a different home page that reflects where they are located and their purchasing history. “We’ve been able to do it by bringing together in-store and online purchasing behavior,” revealed Davis, adding that convenience is critical in delivering a better customer experience.
Expanding their offering.
During its Q2 2015 earnings call, Whole Foods Market announced plans to launch a new line of stores that will specifically target price-conscious millennials. The yet-to-be-named franchise will have “streamlined design, innovative technology and a curated selection,” according to Walter Robb, co-CEO of Whole Foods. The company also promised that the new venture will offer “industry-leading standards at value prices” while offering “a convenient, transparent and values-oriented experience geared toward millennial shoppers.”
Speaking to USA Today, Neil Saunders, CEO of retail consultancy Conlumino, says the move should help Whole Foods broaden its appeal by pulling in younger customers “who are attracted to Whole Foods' social and ethical ethos but turned off by the price of the high-end food.”
“(Millennials) just don't have the disposable income to make that their destination of choice for grocery shopping,” says Saunders. “They're much more into piecemeal shopping and buying on the go."
Using customer feedback to drive innovation.
Talking to investors in March 2015, Brian Cornell, CEO of Target, said his company plans to test a new merchandising format, which the company believes will appeal more to millennials.
The new format will help the company transition “from grocery, which is transactional, to food, which is more personal and inspirational,” according to Cornell. The new format is driven by customer feedback. The company found that guests are looking for “more natural, organic and gluten-free, with more localization and personalization, and with cleaner, simpler labels, all merchandised in a more inspirational way,” shared Cornell.
"Guests have asked us to elevate the assortment of food, to elevate the in-store experience and to celebrate the joy of food,” Cornell added. “So we will test what we need to do over the next year to enhance the section because we believe food represents a significant opportunity for us."
With an annual spend of $600 billion, millennials represent a lucrative market for established CPGs to go after, and these examples show that big brands are rapidly experimenting with a variety of ways to do so. To ensure that these investments pay off, however, companies need to first engage millennials in organic two-way conversation to gain deep immersive insight on their values, perceptions, behaviors and expectations. Brands that skip this step run the risk of missing the mark to consumers who value transparency and authenticity. To win, companies must engage, learn and share back—all key aspects to building a relationship with a consumer cohort that has the potential to fuel growth for years to come.
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