As the retail landscape continues to evolve, CPG brands need to take a page from retail startups if they want to survive and thrive.
A recent article in Adweek by Loren Padelford explores ways in which CPG brands should take a page from startups if they hope to survive in a changing retail landscape. Historically, CPG companies have relied on retailers to do the customer-facing work of making sales and keeping the customer engaged. However, traditional CPG brands are now facing attacks from multiple angles. Their retail partners are having to compete with online startups and Amazon, and CPGs have to compete with the ever-increasing number of private label brands from the retailers themselves (Amazon has over 70, and Target has more than a dozen).
Padelford notes that the way forward for CPG brands in this new retail landscape is to learn to be more like the startups they must compete with (such brands as Dollar Shave Club and Warby Parker).
“Startups aren’t hampered by decades’ worth of infrastructure and process; they are nimble, use the latest technology and are digitally native.”
Padelford outlines three things CPG brands can do to compete more effectively in the market:
- Experiment all the time. The way we shop is certainly undergoing a change, but it’s impossible to know how consumers will prefer to shop in the future. Successful brands are constantly experimenting to learn about their customers’ preferences and shopping habit.
- Stop acting like an IT company. Many large CPG companies are still using tech stacks they built a couple decades ago. That doesn’t work in the modern technological environment where change is the status quo. Successful companies will be moving rapidly to adopt new technologies and shed old ones.
- Obsess over experience, not revenue. The thing that makes retail startups so successful is that they are focused on the brand and customer experience first, not just the dollar signs. Startups know that dollars follow brand experience, and consumers want to love the brands they shop from.