Boxed Wine — No, Wait, Tide
And the digital state of CPG industry.
19th Nov 2018
Boxed Wine — No, Wait, Tide
Who knew boxed detergent was going to get this much attention?
Tide’s new packaging is creating quite the stir. Does it look like a wine box? Absolutely. Is that why Tide is considered a digital leader in its peer set? To be honest, somewhat.
Let’s take a step back. The consumer packaged goods industry is shifting dramatically, showing consistent growth in revenue — even with 90 of the top 100 brands losing market share in the past year.
One of the major contributing factors for this dynamic change is the prominent presence of digital natives as primary household purchasers. Millennials are expected to account for 30% of all retail expenditures In just 14 months. The escalating trajectory of e-commerce is also a key contributor, but there’s still a long way to go as online grocery sales continue to see slow adoption.
To better contextualize these shifts, we evaluated 350+ brands and found that overall digital strength is a strong predictor of revenue growth, with digital leaders in CPG outperforming digital laggards by 8.7%. In other words, the companies with stronger digital performance are disproportionately capturing the value of growth. And, unsurprisingly, Tide is a leader in its peer group.
Procter & Gamble is a noteworthy example of a legacy brand that has acknowledged the need to evolve and is placing the right bets to succeed in a digital space. It is one of the few brands that showed revenue growth and digital strength this past quarter, all because it is following some critical keys for digital success.
Delivering relevant experiences to digital natives. P&G is continually evolving customer experiences to eliminate purchasing pain points and deliver on instant gratification expectations. This makes it convenient for customers to purchase and then allows them to remain loyal through personalized subscription opportunities. The Gillette Shave Club, for instance, contributed a significant 4% gain in organic sales for the company’s grooming business, while before it was losing market share to startups like Dollar Shave Club.
Supporting digital strength internally. Digital initiatives aren’t limited to external customers. P&G is making organizational changes and simplifying its structure to improve agility and responsiveness to compete better with more nimble competitors.
Creative problem-solving and collaboration. The new Tide packaging is not only going to make it easier for e-commerce distribution channels to ship logistically, but it is also more environmentally friendly. The new product uses less water and plastic than traditional packaging, while also contributing to energy savings by taking up less space on a delivery truck. It’s a win-win. Consumers save money while contributing to a reduction in waste, and e-commerce retailers save on space and delivery costs.
New technology, increasing data analytics capabilities and shifting distribution models are continuing to impact the CPG industry as we move into 2019. And, as more direct-to-consumer brands enter the market with a focus on delivering convenient and personalized experiences, we expect more large, legacy brands to follow P&G’s lead in establishing digital strength and using that power to grow revenue and create stronger customer connections.
This article was originally published in MediaPost.