Retail and consumer products: Preparing for “the new normal”

The consumer goods and retail sectors are experiencing unprecedented disruption as stores close, people stay home and global supply chains become disconnected or overwhelmed. While every company must focus on meeting present challenges, it is also important to plan for the future. Here we consider what “the new normal” may look like for consumer goods and retail organizations.

Disruption creates new economic regimes

History has shown us that when people are faced with profound disruption, many will question long-standing personal behaviors, belief systems and societal structures. For example, when I visited the United States for the first time in the 1980s, I was impressed by giant supermarkets like Walmart or Kroger. Discussions with Americans made it clear that visiting large stores was not just the preferred way to shop, but the only way they considered doing it. To shop in a typical German discount chain was simply inconceivable.

Fast forward to global financial crisis of 2008. For many Americans, the economic downturn, coupled with digitization, fundamentally changed how and where they shop. Now we see much more variety in the grocery sector in the States. While discounters enjoy continuous growth on the lower end, high-priced retailers such as Wholefoods has put sustainability and health center stage. The giant supermarkets still exist, but the market is much more segmented—and the German discount chains Aldi and Lidl that once seemed so inconceivable are now major players.

Expect a period of flux

In the current crisis, many people are shifting to e-commerce channels purely out of necessity. While some are trying digital channels for the very first-time, others are realizing that they can do far more of their shopping online. Again, we witness how a once familiar behavior can be upset.

Retailers cannot expect that after the crisis, consumer behavior will be restored. While shoppers will still visit traditional brick-and-mortar stores, we expect that many consumers will stay online as a matter of convenience. In addition, many shoppers will remember and value which retailers and consumer goods companies met their needs and formed a personal relationship during these times, influencing long-term loyalty and affinity.

Continuous innovation

For brands operating in today’s environment, it is important to consider that customer needs will change over time. As such, the ability to meet today’s expectations is no guarantee for future loyalty. History is full of examples of companies that solved a problem but failed to adapt and advance over time. Typewriters and cameras, once the peak of innovation, are now novelty items.

In looking at the present retail landscape, it is clear that e-commerce channels will gain market share. Consumer goods and retail companies must become true data-driven enterprises as this capability is a prerequisite to establishing meaningful, personal relationships with consumers. Supply chains must become intelligent to provide the flexibility needed in times of flux and address an ever-accelerating speed of change in consumer behavior. Our recent Smart Retail Planner Overview and  Digital Supply Chain report provide more information about how organizations can use data to adjust their supply-side operations to address these issues.

Finally, for many organizations, this “new normal” will require a reimagining of the business model. It will be necessary to ask some fundamental questions about the future of the retail and consumer goods industries—and what it means for each organization, in terms of operations, supply chain and workforce. To help plan your organization’s future, we welcome you to connect with us in the comments or via direct message.

Achim Himmelreich

Expert in Digital Transformation

As a global leader in Consumer Engagement in our Consumer Products and Retail sector Achim focuses on solutions that help consumer goods companies and retailers mastering their digital journey. Due to the fact that consumers became more powerful than ever Achim helps his clients to put the consumer at the heart of the new strategy, establishing a high level of consumer engagement and meaningful conversations. Turning companies into true data-driven and consumer-centric enterprises is always his first priority. Being aware of the disruptive nature of digitization Achim is nothing but shy to ask provocative questions, challenging the existing business model and searching for new ones.
Lars leverages his broad industry knowledge, his broad international network of fellow experts and a wide range of insights from various engagements to provide thought-leadership to his clients to help them to develop cutting-edge solution to better service their clients, create new products and services and increase internal efficiency.
Recent work include:
Digital Value Proposition for leading fast food chain from digital vision to digital roadmap and governance model
Digital strategy for leading whole sale company with a focus on establishing new e-commerce solution
Developing cutting edge-solutions such as AI based proposals and personal recommendation solutions for leading sports fashion company
Designing and driving consumer engagement strategies for a leading fast moving consumer goods company
Design and roll-out of international digitalization strategy focusing on creating digital products and B2C offerings for a leading European consumer goods firm
Implementation of new business model and international target operating model for a leading European consumer electronics company
Prior to joining Capgemini in June 2016, Achim hold several positions at leading management consulting firms. Since 2014 he is the Vice President of the German Association for the Digital Economy (BVDW e.V.)
Achim has published a wide range of papers covering the topic of digital transformation, became a sought-after speaker at national and international conferences and gave many interviews for newspapers, magazines and television news programs – including prime time shows on national networks
He is fluent in English and German. In his spare time, he enjoys to play tennis. Furthermore he appreciates philosophical discussions, which led him to establish and lead the Digital Ethics initiative at the German Association for the Digital Economy