Can the CPG Industry Balance D2C Strategies with a Positive In-Store Experience?

We've all heard this phrase a lot during the COVID 19 pandemic. Companies have to find new ways to adapt, especially when it comes to reaching consumers. Many food and beverage brands during the height of the pandemic utilize to initiatives to test out various goods. We spoke with Dr. pKa kanaan, who is the dean's chair in marketing science at the University of Maryland's Robert H. Smith school of business about this concept. Many food and beverage brands like frito-lay and PepsiCo use the coronavirus pandemic shock to test their DTC initiatives. Many of the consumers who are sitting at home, they were not able to go to the grocery stores as often as they would like to, and this seemed like a very good opportunity to test out direct to consumer initiatives. Frito-lay and Pepsi launched two websites, one is snacks, where they carry different kinds of snacks and chips, et cetera. And the other one is pantry shop, where they actually carry bundles of snacks and beverages and tested out different concepts of bundles and snacks. Frito-lay was able to carry some of the snacks, which were niche snacks, which were low share brands so that they can test out and see the receptivity of consumers. For these brands and that pantry shop, they did the same thing with the bundles. Now such initiatives are essential for every CPG and food and beverage company because consumer shopping habits are changing fast. And as the coronavirus shock indicated, people have taken on to online channel in a big way. And so all these companies need to test out what will work online and what will work offline in the retail stores. And for consumers, this is a good way to figure out what are the products that they like, and they can actually search online in the DTC at the DTC websites and find out more about some of the brands which are not easily available at the stores and for stores and for retail stores. This is a good opportunity to learn from what the brands are doing online and how some of those learnings can be implemented at the retail store itself. Despite some success in the digital sphere, products, according to canon, are still going to do well in physical stores, he says. It's OK to lean on to see for insights, but it's important to remember where consumers buy the most product. It is important to note that for food and beverage brands, see stores and grocery stores will remain dominant channels through which they will reach customers. Many of the products that are being sold by these brands tend to be impulse purchases, and they really sell well when there is merchandising push in retail stores in order to encourage sales. And also, consumers want these products immediately and not wait for them to be shipped overnight. And so it makes sense for retail stores to be the major player to which these brands will reach customers. Now, DTC can provide insights, market research insights to tell brands which brands have strong following and which will do well. They have some new products. They can test it out in the DTC setting, and those learnings can be taken to the retailer. And then given that shelf space is very premium in retail stores. Not all brands can get shelf space, and if brands can really show based on their DTC experience that certain niche brands have very strong following, then the retail stores can actually stop them. Right so regardless of what are we talking about, DTC will remain a very small percentage of the sales for these particular brands if physical grocery stores are still the go to for consumers. How do you bring digital experience to the store and maximize both outlets? Canon says it begins with a little device like this. So how can the digital experience be brought to stores? Digital experience can be brought to stores through mobile options these days, many CPG, as well as food and beverage companies are coming up with their own mobile apps and these are good ways to connect with customers, have relationships with customers and provide them options. And so when mobile phones enter into a retail store, you can use geofencing kind of technology to really give coupons to customers to shop for new brands and provide an experience where both the digital and the physical stores are melded together. I see these are the new ways in which digital technology will start entering into stores through mobile apps and through QR codes and things like that, where the physical and the digital will all come together and really enhance the experience that customers have within stores. Before you make your next trip to the grocery store and check out your goods, be sure to check out our grocery content on markets such as Melissa Gonzalez's retail refined about the future of grocery. And, as always, be sure to subscribe.