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GMA study: CPG companies need to unlock digital opportunities

BY Michael Johnsen

WASHINGTON — Consumer packaged goods companies need to plan for a “1-5-10” market in the United States during the next five years, in which digital’s current 1% penetration will likely expand to 5% and could accelerate to as much as 10% in short order, according to a new report, "The Digital Future: A Game Plan for Consumer Packaged Goods," prepared for the Grocery Manufacturers Association by The Boston Consulting Group, Google and IRI. 
 
The report highlights how CPG companies can best position themselves for growth and unlock digital and e-commerce opportunities.
 
Digital penetration of 5% represents nearly one-half of total CPG growth during the next five years, meaning that companies without an effective digital capability risk stagnation, loss of share and even shrinking sales. Early movers, on the other hand, have the opportunity to establish leading positions that will be difficult for others to infiltrate. Digital penetration rates will vary in different locations and categories. Some categories could see digital penetration of 30% or more by 2018.
 
“Like most other industries, the CPG industry is experiencing the signs of digital disruption,” said Elise Fennig, VP industry affairs at GMA. “That’s why it was vitally important for GMA to examine how CPG companies can holistically adapt their digital and e-commerce agendas to plan for the future effectively. We intend for the work completed by the BCG, IRI and Google team to be a go-to resource for GMA members — regardless of where they fall on the digital maturity continuum today.”
 
“The CPG industry is fast approaching a tipping point, driven by a confluence of trends,” said Patrick Hadlock, a partner at The Boston Consulting Group and a co-author of the report. “Consumers are embracing technologies, devices and services that make everyday tasks such as shopping, cooking and even commuting quicker, easier, more fun and more efficient. This is fragmenting the purchasing pathway as consumers regularly switch back and forth between digital and physical channels, and they interact digitally both in and outside of stores.”
 
The Digital Future shows that the impact of digital is felt most acutely at the early stages of the purchasing pathway. Almost 40% of offline shoppers and more than 30% of online shoppers reported that technology's impact is greatest during the discovery phase. More than a quarter of both offline and online shoppers said that its biggest impact is in the search phase. In addition, almost a quarter of in-store shoppers reported online activity as one of the three most influential factors on their purchasing pathway.
 
Digital channels currently have the greatest influence on purchases of home care and general food products but are likely to expand in importance during the next five years as the market moves to a 1-5-10 world.
 
Traditional retailers face a massive wave of new competitors and competitive models. Large technology companies with deep pockets are building disruptive digital grocery businesses to serve this category and support broader strategic goals. Start-ups are using value-added services to take share and build defensible niche positions, often by combining new product offerings with digital channels.
 
CPG manufacturers will need to participate in multiple retail models; the winning models have yet to be established, and it is likely that numerous models will prevail.
 
“The cost of inaction for incumbent manufacturers is ceding control of their brands, share position and margins in the fast-growing digital channel,” said Jamil Satchu, a partner at IRI Global Analytics and Consulting and a co-author of the report. “Companies that do not play in the digital game are likely looking at flat or shrinking sales. Brand equity is at risk as the purchasing pathway shifts online and consumers more often search for and discover brands digitally. But the experience of other sectors demonstrates that early movers often establish tough-to-trump positions and advantages.”
 
The report argues that while many companies have established a digital presence — a website, some digital advertising a presence in social media — most have yet to fully integrate digital into their operating model, build a big-data analytical capability, pursue a multichannel (or omnichannel) strategy or tailor their product offerings to the digital or e-commerce marketplace.
 
All companies can make a series of low-risk, 'no regret' moves that will better prepare them for a 1-5-10 world. These steps include developing an integrated strategy for how far the company needs to go and how to get there, shifting investments to establish a digital brand presence, building the necessary capabilities and organization for a fast-moving digital world and shaping the evolution to digital with channel partners. Manufacturers also need to recast their existing capabilities, including product placement, marketing content development and supply chain management, for the digital world.
 
 
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Target shoppers can now buy on Instagram

BY Antoinette Alexander

MINNEAPOLIS, Minn. — Target has announced that consumers can now buy products featured on Instagram.

With more than 300,000 followers each, Target and Target Style have been known to garner thousands of likes on a single Instagram post. Now, with the adoption of Like2Buy, a new product from visual marketing platform Curalate, those “likes” can be turned into actual purchases.

“We’re excited to be one of the first brands to offer guests the opportunity to shop our product on Instagram,” said Dustee Jenkins, VP public relations and social media at Target, in the company’s “A Bullseye View” newsletter. “We frequently get questions from our guests who are excited about something they see on the platform and want to know how to purchase it  — this tool helps us address this need.”
 

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Giant Food Stores, Martin’s Food Markets announces food drive initiatives

BY Michael Johnsen

CARLISLE, Pa. — In recognition of Hunger Action Month this September, Giant Food Stores and Martin's Food Markets are asking customers to join them in the fight against hunger in the local communities the grocers serve. Throughout the month, Giant/Martin's-sponsored food drives and hunger awareness initiatives will support regional Feeding America food banks, including the Central Pennsylvania Food Bank, Philabundance, Second Harvest Food Bank of Lehigh Valley, FeedMore, Central Virginia Food Bank, Food Bank of Western Maryland, Greater Berks County Food Bank, Water Street Rescue Mission in Lancaster, Food Resources of Washington County, Md., and the Blue Ridge Area Food Bank in Virginia.
 
“While Hunger Action Month is a time to raise both funds and awareness for local food banks, it’s important to remember that there is a need every month of the year,” said John MacDonald, director of marketing and external communications. “Too many in our local communities go hungry, which is why as part of our ongoing better neighbor efforts, Giant/Martin's remains committed to the fight against hunger through the donation of food, funds and volunteer time.”
 
Running Aug. 31 through Sept. 13 is Giant/Martin's annual Bag Hunger in-store campaign, in which customers have an opportunity to donate $1 at the checkout to benefit their local food bank. Those who donate will receive a free Unilever product coupon book. A similar campaign held earlier this year raised a record-breaking $607,035 in support of local hunger relief efforts.
 
Also in partnership with Unilever, Giant/Martin's is hosting a Stuff-A-Truck event at its Havertown, Pa., store on Sept. 6. 
 
In addition, for each flu shot Giant/Martin's pharmacies administer this year, Unilever will donate three meals to Feeding America, the nation's largest domestic hunger-relief charity.
 
Recognizing that high quality protein is most in need by hungry families, Giant/Martin's “Meat the Needs” frozen meat donation program has donated more than three million pounds of meat that would otherwise go unsold to its regional food bank partners since 2010.
 
In 2013, hunger relief efforts and donations to regional food banks accounted for approximately 40% of Giant/Martin's community giving with more than 100 regional food banks and local pantries receiving $10 million in product, customer, vendor and corporate donations.
 
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