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The Future is Upon Us

Direct to Consumer Becomes Direct with Consumer

Maya Oczeretko, Human-Centric Design Lead, Cognizant

Maya Oczeretko

Human-Centric Design Lead, Cognizant
April 2021

Growth within the global consumer packaged goods (CPG) industry has slowed, thanks to shifts in the overall landscape.

After 40 years of outperformance, the CPG industry is growing more slowly over the last decade—a direct result of emerging trends in D2C business models, technologies, and consumer experience. Now, the COVID-19 crisis is amplifying many of these trends, provoking imperative change to the industry.

As a result, CPG players need to rethink their current approach and reevaluate “where to play” in order to expand their exposure in growth areas. Some forward thinkers are: 

  • Igniting focus towards consumer experience through research on shifting behaviors.
  • Building new digital capabilities to grow alongside market trends.
  • Seeking global opportunities, especially in emerging Asia.

Our Point of View

The D2C boom of the 2010s now sees many of its major players in retreat, a new wave of opportunity is afoot for those who execute. (Harvard Business Review, 2020)
The CPG space is undergoing a massive transformation at the nexus of tech disruption and social change, prompting a shift to more streamlined, data driven, and relational direct-with-consumer ways of business.

The COVID-19 crisis is changing consumer behaviors and expectations, en masse. (Idea Couture, 2020)
Fundamental sociocultural norms, behaviors, attitudes, and values are morphing rapidly, some beyond recognition. Emerging trends already seem to suggest a transformation of consumer values—particularly around trust, intimacy, and resiliency.

During this time of transformation, CPG leaders are advantaged in ways digital natives aren’t.(Forbes, 2020)
Now there’s a powerful opportunity for brand leaders to create intimate relationships with consumers, while reasserting the strategic advantages of scale in the supply chain, distribution, and valuable account relationships. With the crisis accelerating consumer demand for value and reliance on digital, now is the time to leverage digital innovations to steer the industry toward targeted commercial execution.

SIGNALS OF CHANGE: THE EVIDENCE BEHIND OUR POV
Our POV is based on many shifts we’ve discovered across a wide range of perspectives, from changes in human behavior, to emerging technologies, to strategic innovations…

CHANGES IN HUMAN BEHAVIOR
The COVID-19 pandemic has fast-tracked shifts in human behavior, especially in the realms of digital interactions, social rituals, and consumerism. COVID-19 has resulted in a state of almost universal uncertainty and disruption. Despite the partial reopening in certain countries, behaviors representing the “new normal” across all aspects of life have continued post-lockdown.

Alongside the adoption of new rituals around work, self-care, and leisure, salient shifts in consumer perceptions are reflected through increased engagement towards essentials, digital channels, the “caring” economy, homebody market, and availability-over-brand sentiments.

Key attributes include:

  • Shifting Desires
  • Value-Awareness
  • Craving-Centric

 

  • Hygiene Essential
  • Purpose-Seeking
  • Availability Over Loyalty

EMERGING TECHNOLOGY
The current global transformation is a vital call to action for organizations to move into the future with a modern lens.

Advances in technology are well on pace to be accelerated by a decade within key sectors such as AI, 5G, V/AR, IoT, due the crisis. Shifting consumer behavior has also elicited uptakes in digital transactions, as well as a host of newly launched platforms to fill the gaps left behind by social distancing. With new breakthroughs promising emotional intelligence and hyper-intuitive cognitive capabilities, brand leaders must organize their thinking and take the next step in crafting the customer experience of tomorrow.

Emerging technologies include:

  • Digital Transportation
  • Experience Immersions
  • Multisensory Integration

 

  • AI and iA
  • Voice Revolution
  • Social Marketplace

INNOVATION
“The future of retail in our industry will look very different.” Given this very common predictor across various product categories, CPG organizations must identify, realize, and translate innovations for continued growth.

Business models are being adapted across the board to keep pace with the social and economic transformations occurring in today’s world.

As players within various product categories seek to elevate their current way of business, many have adopted emerging tech and strategic innovations to align with the consumer behaviors and expectations believed to be the “new normal”. And many are focused on cultivating that direct consumer relationship.

Innovative examples include:

  • Chipotle launched a direct-to-consumer virtual Farmers’ Market for the chain’s suppliers.
  • Harmay’s opened an online retail store where customers are guided by their own desire for discovery.
  •  In a multisensory experience from H&R Block, a virtual accountant whispers about the pains of filing and how H&R Block can be of service.
  • Airbnb is transforming their industry by letting customers travel digitally around the globe with private tour guides.
  • Snapchat Lens Studio is creating an AR lens tool that allows users to scan packaged foods for nutritional information.
  •  Diesel’s new digital showroom provides a hyper-realistic glimpse into what online shopping might evolve to.

The Future at a Glance

Moving forward, there will be a revolution in our relationship with consumers.

The focus must evolve from Direct to Consumers to Direct with Consumers.

We must essentially progress from efficiently filling orders to fulfilling modern experiences.

Finally, we must evolve our experiences from building screen-based interfaces to thinking beyond surfaces.

Again, the time for brand leaders to move towards creating intimate digital relationships with their consumers is now!

Success in this arena will maximize the ability to leverage the strategic advantages of scale in the supply chain, distribution, and valuable account relationships. And, as consumer reliance on digital continues to grow, the ability to incorporate digital innovation may well spell the difference between success and failure. 

To learn more, see our complete Direct WITH Consumer presentation.