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Estimated reading time: 1 minute
Consumer Goods Industry Viewpoints
Until recently, the global retail model had remained largely unchanged for hundreds—if not thousands—of years. The notion of creating a valuable commodity or product, showcasing it in physical premises, and selling it to the consumer is as old as currency itself. But now all that is changing. We’re making, selling, and buying things in entirely new ways, and the lines between supplier, manufacturer, and retailer are blurring.
“The lines demarcating industries and sectors have often blurred or disappeared. Retailers are increasingly bleeding into other consumer sectors, while those offering retail experiences are growing.”
Deloitte: 2019 Retail Outlook
Groundbreaking new technologies, and agile, cloud-native competitors have given rise to the hyperconnected consumer. These new buyers have unprecedented power, information, and choice in the palms of their hands, and as a result, their expectations are higher than ever. But the same technologies that are disrupting the consumer goods industry, provide an opportunity to better understand the hyperconnected consumer, and deliver the frictionless, personalized experiences they demand.
To succeed in the new consumer landscape, suppliers, manufacturers, and retailers must be willing to recognize, embrace, and become catalysts for change.
“None of the steps on the journey are incremental changes, nor are they as simple as finding the next technological tool to do what you’re already doing today.”
Accenture: Technology Vision 2020
Estimated reading time: 5 minutes
The Latest News and Updates
To successfully adjust to a new consumer-packaged-goods landscape and effectively serve the hyperconnected consumer, you’ll need all the facts, figures, and insights you can get. But it’s impossible to read everything. That’s why we’ve hand-picked a selection of links to provide you with the best information and opinions on the hottest topics in consumer markets.
Adapt to data-driven customer expectations.
Direct-to-consumer (DTC) brands continue to up-end business models and rewrite the playbook on how to engage customers. This report from CommerceNext and sponsored by Oracle Customer Experience (CX) Cloud, shows an increasing divide in ecommerce marketing spending and priorities between traditional retailers and digital-first DTC brands.
Discover Oracle modern marketing.
Watch Oracle’s Global Managing Director of Consumer Markets, Michael Forhez, as he explains the shift in consumer demands and how important it is for retailers and consumer goods manufacturers to be agile and open to change in the fast-paced world of digital transformation.
Our connected age: Imagining the future, today.
For consumer brands and retailers, there has never been a better time to be bold, nor a worse one to be uninspired. Shoppers have infinite choice, and zero patience for the status quo. It is no longer good enough to be better than the lowest common denominator within your industry, category, or market.
The latest from Oracle.
Innovation has never been more complex or rewarding.
Oracle is working with University College London and startup Monochain, to facilitate an industry consortium focused around the potential adoption of blockchain in the retail value chain.
Estimated reading time: 4 minutes
LiDestri improves forecasts, reducing inventory and waste with Oracle Cloud.
John Matrachisia, CIO of LiDestri Food and Drink, discusses the LiDestri supply chain and how the company was able to significantly reduce inventory requirements and decrease food waste through improved forecast accuracy with Oracle Demand Management Cloud.
"Being a food producer, we have to provide traceability from where that ingredient came in from the field, to when it came into our plant to what jar we put it in."
John Matrachisia, CIO, LiDestri
Blue Nile becomes more customer centric with Oracle Cloud.
Blue Nile, a leader in online jewelry, improves efficiencies in financial planning/analysis and customer focus with Oracle EPM Cloud and Oracle CX Cloud.
“To preserve our focus on exceptional customer service as our business continues to grow, we needed to be able to seamlessly connect all parts of our organization. Oracle Cloud Applications are not only helping us bring all our teams together, but just as importantly, they are helping us really use data to our advantage.” Andre Woolery, Senior Director of Brand Marketing, Blue Nile
Cano ensures product sustainability with Oracle Blockchain Platform.
In order to build brand loyalty and enable consumers to make conscious choices, Retraced is using Oracle Blockchain Platform to verify the authenticity and responsible sourcing for CANO handmade Mexican huaraches.
“If the consumer trusts the brand, likes the product, and knows where the product comes from, they will come again to you and they will order again.” Lukas Punder, Cofounder, Retraced and CANO shoes
The Wonderful Company gains visibility with Oracle Cloud.
Richard Scheitler, CIO at The Wonderful Company, explains how Oracle Cloud Applications helped them look at their organization more broadly, as opposed to the siloed way in which they had previously.
“This allows us better visibility to suppliers, better visibility to our customers, all of which have the ability to drive cost out and ultimately help the bottom line.” Richard Scheitler, CIO, The Wonderful Company
Estimated reading time: 5 minutes
Retail Opportunity and the Hyperconnected Consumer
The one trait that sets human beings apart—the trait that allowed us to transform the planet with our societies and our infrastructure—is our remarkable adaptability. This has enabled consumers to embrace groundbreaking new technologies with incredible eagerness. In 1995, less than one percent of the world’s population was internet connected. Today, it’s greater than 40 percent.
According to Cisco’s annual Global Mobile Data Traffic Forecast Update, by 2022, mobile will represent nearly 20% of all global IP traffic, fueled in part by the Internet of Things.
The hyperconnected consumer.
Today’s consumers are hyperconnected. The smartphone revolution has put unprecedented power and information in the palms of their hands, and their expectations have grown accordingly. Modern consumers expect mass personalization, speed-of-thought commerce, and a blending of physical and digital retail experiences. If they don’t get what they want, they’ll simply go elsewhere.
The hyperconnected consumer is increasingly fickle, and brand loyalty is diminishing—yet consumers care more about the provenance of what they’re buying, and the sustainability of who’s producing it. The hyperconnected consumer can connect with brands from farm to fork, and expects both transparency and honesty throughout the brand relationship.
Capturing the loyalty of the hyperconnected consumer means delivering the personalized experiences they’ve come to expect. Increasingly, the customer experience—whether preshop, shop, or postshop, is as important as—or perhaps more important than—the product itself.
Hyperconnected consumers—and the new technologies they depend on—are transforming consumer goods companies.
Driving new consumption patterns.
Hyperconnected consumers have an appetite for innovative new consumption patterns—like the as-a-service models pioneered by disruptors such as Netflix, Uber, and Dollar Shave Club—and technology is making such consumption patterns possible. The industry is moving from a ‘product’ supply model to an on-demand ‘service’ model—convenient, personalized, and experiential. It’s no longer seller-dictated, but consumer-defined.
Technology has changed the definition of ownership, delivering instant, disposable gratification. Increasingly, consumers want their products delivered in a way that matches their lifestyle and needs.
Transforming the physical store.
Physical stores are closing in droves, but statistics like the above can be misleading. The stores themselves aren’t necessarily disappearing—merely changing in nature. Where there may have been two dozen mom-and-pop stores a generation ago, there might now be a single superstore capable of delivering a retail experience better aligned to the needs of the modern consumer.
And then there are experiential stores, where prospective buyers can purchase products in person, or try out new, enriched services. Think of Apple stores—they don’t just serve a traditional retail purpose, but act as a unique opportunity to build stronger brand/customer relationships.
From shelf-stacking robots to artificial intelligence fashion assistants, technology is changing how we shop, and breaking down the walls between the virtual and the real world. This is what the future of retail looks like.
Breaking down the silos between physical and digital.
To deliver the frictionless experiences consumers demand, retailers will be expected to go ‘phygital’. That means demolishing the silos between ecommerce and traditional retail models, and better connecting with consumers across every interaction.
To deliver rich, personalized experiences and enable consumer-centric growth, brands need cloud services integrated with social, mobile, and analytic capabilities. They need the power to deliver commerce at the speed of thought, and they need to simplify and optimize their businesses for sustainable, profitable growth.
“Companies should focus on committing themselves to investing in digital technologies with built-in analytic capabilities that help them better understand their consumers and the operational problems they are trying to solve. Collecting data is just the first step. Data is only useful to the extent that it can be harnessed to generate insights.”
Deloitte: 2020 Consumer Products Industry Outlook
Estimated reading time: 7 minutes
Digital Technologies: Enabler and Disruptor
Consumer goods companies are caught in a cycle of constant reinvention and transformation. But innovation for innovation’s sake is no use to anyone. With disruptive new consumption models emerging all the time, suppliers, manufacturers, and retailers must retain perspective and create a technology strategy capable of delivering the relevant experiences consumers expect. To capitalize on the opportunities of digital transformation, industry players must define their purpose, identify new possibilities, and prioritize the opportunities available to them.
“By 2022, 20% of retailers will embrace a complete cultural shift where leadership champions disruptive innovation, driving investment that launches the next stage of growth, while 80% see deceleration.”
IDC FutureScape: Worldwide Retail 2020 Predictions
Personalization and customization.
The technology now exists to provide batch-of-one manufacture, delivering 1:1 personalization and meeting consumer expectations in entirely new ways. Thanks to technologies such as 3D printing, the Internet of Things, blockchain, and the digital thread, manufacturers can now deliver unprecedented scalability, personalization, and order customization. And through distributed manufacturing, businesses can maximize flexibility and minimize expense by reducing shipping costs and related logistical expenses.
“Voice commerce holds promise. But, not everyone is comfortable—or even interested—in using their Amazon Echo or Google Home device to make a purchase (yet).”
Rimma Kats, Executive Editor, eMarketer
Demand and supply chain management.
With the Internet of Things beginning to proliferate, the digital thread now runs through every process, factory, machine, and product. Real-time, sense-and-response, demand and supply chain management has linked the connected consumer, home, product, and store with the broader supply chain. This provides brands with access to new insights and an opportunity to modernize through value-added services.
Speed to market.
Digital technologies are slashing time to market. Retailers and manufacturers have an opportunity to become first to market, or at the very least, fast followers—rapidly responding to consumer demands with innovative product offerings.
Organizations with successful transformations deploy more technologies than others do.
Disruptive players and technologies.
Disruptive, consumer-centric players like Amazon and Alibaba are redefining the industry and raising the bar for end-to-end experience. They’re innovating rapidly, acquiring other industry disruptors, and developing new purchase models based on breakthrough technologies.
“Amazon has surpassed Walmart as the biggest retailer on the planet on Forbes' Global 2000 list of the world’s biggest public companies, as measured by a composite score of revenues, profits, assets, and market value. Behind Amazon and Walmart, the third-largest retailer on the planet is Chinese ecommerce giant Alibaba.” Forbes: Amazon Surpasses Walmart as the World's Largest Retailer
Consider also Sephora's "Color IQ" innovation, allowing customers to find the perfect makeup shade without ever putting anything on their face. Color IQ scans a customer’s face and provides personalized recommendations for foundation and concealer shades, while Lip IQ does the same to help find the perfect shade of lipstick. It’s a huge help to customers who know the stress (and cost) of finding the perfect shade by trial and error.
The war for talent.
The future of consumer goods—indeed, the present—is technologically driven. With suppliers, manufacturers, retailers, and consumers becoming less distinct, new business and consumption models becoming commonplace, and consumer expectations becoming increasingly demanding, brands must adapt rapidly, or perish. To thrive in this landscape demands top talent, but individuals with the required skills and experience are in high demand.
To attract, retain, and develop the best talent in this competitive marketplace, players will be forced to innovate and offer attractive workplace environments.
Estimated reading time: 2 minutes
Blurring the Line Between Manufacturer and Retailer
Like it or not, the consumer is increasingly in the driver’s seat. Manufacturers are moving from a push model to a pull model, adopting a demand-driven value chain where the wants and needs of consumers dictate production. This means fewer mass-produced products, and greater delivery of personalization and customization direct to consumer.Source: PLMA International
A combination of consumer demands and technological developments are blurring the line between supplier, manufacturer, and retailer—helping to reduce time to market, wastage, and operational expense. They’re causing manufacturers to completely reimagine the supply chain, moving from a traditional, linear string of processes—source, create, deliver, consume—to a more interconnected, organic approach. In our new digital world, a rigid supply chain is no longer practical—or necessary.
Value chain disruptors/thought starters:
Amazon and Alibaba—are vertically-integrated logistics providers, not just ecommerce retailers.
Warby Parker, Stitch Fix, and Sephora—are transcending ‘brick or click’ for the sake of the consumer.
Bingobox—is the unmanned, automated store being rolled out for 24-hour access.
Manufacturers are becoming retailers and retailers are becoming service providers. They’re discovering new opportunities to foster collaboration, increase revenue growth, and get ahead of the competition. And digital is changing the way trading partners manage beyond their singular enterprises—all parties, suppliers, distributors, and retailers must connect to increase efficiency and find mutual success.
Blockchain is poised to upend the way we consume from what we wear to what we eat. As solutions come to the forefront, it’s vital they’re deployed in a responsible manner, because with all these hopes come fear over hype, data security, interoperability, and access. For example, the recent outbreak of food poisoning across the US and Europe due to contaminated romaine lettuce, is a sign of larger problems in the food supply chain, problems exacerbated by consumer demand for fresher, less processed, farm-to-fork fare. If we don’t take action, we could experience a near epidemic of such contaminations. Recent IT advancements, specifically through the Internet of Things and with blockchain distributed ledger technology, provide answers to the problem.
In the consumer goods industry, change remains continuous—so predicting the next big thing is far from an exact science. Players must improve operational agility and adopt cloud-enabled, consumer-centric data analytics to better forecast where consumers are going if they’re to anticipate the next disruptive influence.“Retailers should work with suppliers on cost improvements and innovations. Suppliers can be great idea generators because they know a retailer’s bad habits better than the retailer itself does and would rather help change those habits than lose the busines.”
McKinsey: Perspectives on Retail and Consumer Goods
Estimated reading time: 2 minutes
Driving Business Growth with New Digital Technologies
Technology gives organizations the chance to use industry disruption as a catalyst for innovation and business growth. Game-changing technologies like chatbots, artificial intelligence (AI), machine learning, blockchain, Internet of Things, and 3D printing are emerging all the time, putting consumer goods manufacturers on the back foot. When is the right time to invest, and which technologies are worth exploring?
IDC estimates that the amount being spent on digital transformation will grow to almost US$2 trillion by 2022, a CAGR of almost 17 percent from 2018.
In a 2019 Accenture survey, 94 percent of respondents indicated that they’ve accelerated their pace of digital innovation over the last three years.
Chatbots can play the role of a virtual shop-floor assistant, guiding consumers through purchase decisions and enhancing the customer experience. Chatbots enabled by AI are a more effective means of answering customer queries than web pages—they’re responsive, intuitive, and quick, and can even help to close sales that might otherwise be missed.
One of the most amazing technologies that is currently enjoying a surge due to the popularity of messaging apps are chatbots. Companies are using chatbots to bridge the gap between online and offline experiences. They carry potential to replace the tasks of human workers, such as taking customer queries, providing customer service, and upselling to consumers.
According to McKinsey, using artificial intelligence to design out food waste in a circular economy could unlock up to US$127 billion per year in 2030. Artificial intelligence presents opportunities across the entire value chain from farming, processing, and logistics through to consumption. Specific identified applications include using image recognition to determine when to pick fruit, matching food supply and demand more effectively, and enhancing the value of food byproducts.
Effectively, machine learning involves ‘training’ a computer with vast quantities of data until it ‘learns’ correct responses by identifying patterns in that data. It’s already found its way into consumer technologies—such as Amazon Echo and Google Home—and it’s revolutionizing numerous business processes, too.
The Internet of Things.
The possibilities offered by IoT can be broken into two distinct parts: products and data. IoT is giving rise to a wealth of new connected products and services—from white goods to central heating systems, cars, cities, assembly lines, and even entire factories. The data generated and captured by IoT will enable the creation of new business models, enhance existing business processes, reduce costs, and offer new value-added services.
“Blockchain is one of a growing list of emerging technologies that together will have a significant impact on the way businesses operate. These emerging technologies that can combine with blockchain include: artificial intelligence/machine learning, IoT, robotic process automation, and quantum computing. The interesting combination of these emerging technologies will result in smarter solutions that predict problems and recommend resolving actions, learn from previous experience, sense real-world status information, and react accordingly.”
Peter Bambridge, Director, Retail and Consumer Goods, Oracle
Virtual reality and augmented reality.
It’s easy to dismiss virtual reality and augmented reality as fads, but both technologies are finding a host of new practical applications—from Snapchat filters to the heads-up displays in executive cars to the entertainment industry. The gaming industry alone—already worth more than double the international film industry—will be completely transformed by virtual reality, providing the opportunity to explore entirely new immersive dimensions. As a creative tool, virtual reality could prove just as groundbreakingly disruptive as the moving image.
Early trials of virtual reality in retail show strong promise for the future virtual in-store experience, while augmented reality applications can provide the consumer with new levels of insight and information overlaid on real-world scenarios.
The possibilities afforded by 3D printing are only beginning to be realized. It’s helping to slash time to market, enable rapid, on-demand prototyping and widespread customization, and greatly enhance the speed and accuracy of manufacturing. While integration issues have hampered early adopters, 3D printing has already disrupted the medical technology, automotive, fashion, and manufacturing industries, and many more are likely to follow.
Tech trends in Consumer Goods.
Retailers, manufacturers, and suppliers must:
no longer react to disruption, but cause it
adopt a fail-fast culture of innovation
develop new ways of designing, creating, and delivering products
connect with consumers through new technologies
embed AI to amplify value across the application portfolio
eliminate the complexity of combining and integrating data sets, and gain new insights with big data and visual analysis
align marketing across every stage of the consumer journey—preshop, shop, and postshop
Estimated reading time: 2 minutes
Cloud is the Destination
Consumer goods manufacturers are changing rapidly and fundamentally. In an unpredictable future—dictated by transformative technologies, agile competitors, and changing consumer expectations—only the cloud can deliver the scalability, flexibility, cost efficiency, and future-readiness consumer markets demand.
“With Oracle Cloud, we have the ability to keep the platform updated with continuous innovation.” Luca Tiepolo, Chief HR and Innovation Officer, illycaffè
Cloud acts as both an enabler and an accelerant—paving the way for implementation of any new technology.Oracle: Transformational Technologies Today
It’s imperative that consumer market players construct a cloud strategy capable of exploiting digital opportunities, enabling new consumption models, meeting the expectations of hyperconnected consumers, and responding proactively to change.
Cloud transformation helps brands:
transform their technology footprint from on-premise to as-a-service
enable seamless integration of analog and digital worlds
deliver rich, personalized experiences and real-time insights
improve trading partner collaboration
reduce costs and increase speed to market with simplified IT
Rethinking Consumer Goods.
In this era of profound change, we’re being forced to re-examine the nature of consumer markets themselves. What is a manufacturer? What is a retailer? What is a consumer? No longer will they slot so neatly into individual boxes. With the lines between supplier, manufacturer, and retailer blurring, the new world of Retail and Consumer Goods Industries practically defies description.
In a world where innovative manufacturers go direct to consumer, where innovative retailers own no stock, and where hyperconnected consumers want to combine the physical and the digital in entirely new ways, consumer markets must recognize, embrace, and implement change.
With the right cloud strategy in place, businesses can prepare for—and thrive in—a challenging future.