CXO Bytes

Digital innovation: a necessary disruption in the FMCG sector


To meet evolving consumer preferences and tastes, fast-moving consumer goods (FMCG) companies have integrated digital technology strategically. Many FMCG firms are expanding digital adoption in their sales, logistics, stock management, and distribution systems in order to improve long-term efficiency, profitability, and productivity. They have also used real-time data to rethink marketing and sales methods in response to shifting consumer preferences and personalise the user experience.

In order to prosper in post-pandemic times, the sector experimented with new business models and employed digital innovation technologies to uncover new sources of revenue. Therefore, operations were mostly managed in the cloud which in turn laid the groundwork for future success with innovation at its core. However, following the transition, the FMCG ecosystem did face numerous challenges. Market demands have shifted as a result of a mix of lockdowns, store closures, remote working, and supply chain interruptions, among other necessary repercussions of COVID-19. One of the most difficult tasks the sector faced, as it embarked on its digital transformation journey, is determining the right data and technology infrastructures and investments to support its business objectives. Another was ensuring that they had the proper personnel and skills to use the digital technologies. The sector had to go through change management in order to transform its working practises and infuse more resilience and agility.

In the bargain, with more than 650 million internet users in the country, the transition from physical retail stores to online purchases is pushing digital adoption in this industry. Today, big data analytics is allowing FMCG companies to acquire a better grasp of the preferences of their customers. It is feasible to learn about customers’ real-time behavioural and purchasing habits by getting individual purchase data with the help of unique codes. Big data analytics has allowed firms to track client locations and determine whether they bought something during their daily commute to work or during their weekly grocery shopping. While companies have always been in the habit of obtaining and interpreting data in order to make commercial choices but this technique has become much more precise and faster. It can also help in staying ahead of your competitors because you can draw inferences from data and take proactive measures.

Almost every industry is now compelled to develop cohesive e-commerce strategies. Following the lead of pioneering countries like South Korea, online sales in India now account for 20% of the overall FMCG sector. According to market research firm Nielsen, e-commerce sales will account for 11% of total FMCG sales by 2030. More and more FMCG companies are attempting to have a strong online presence, not only on large e-commerce sites but also on their own dedicated online platforms.

In recent years, there has been a shift toward labelling products as ‘healthier’ and ‘herbal’ as consumers have grown more aware of the necessity of eating healthy and organic foods. Millennials are the new decision-makers. Instead of looking through a product or speaking with salesmen in person, they would look for information on the internet. As a result, digital visibility is the key. The traditional technique involved telemarketing, sending out promotional materials, meetings with potential clients, private sales presentations, and massive advertising campaigns. The new approach uses “pull logic,” which means that the impetus comes from the customers themselves. The customers decide when and where sales will take place, as well as how they will interact. That being the case, if a product is not represented digitally from the start, it is unlikely to be included in any possible customers’ shortlist.

Companies who realign their supply chain to meet consumer expectations by leveraging data both internally and externally, as well as a digital technology architecture that is responsive to demand variations, will succeed in the future. Diversification of products across food and non-food categories, as well as a greater focus on age and gender, have all contributed to the sector’s transformation in India. In addition, digital technology is a vital sector that will continue to move the FMCG industry forward in the near future.

(The author Mr. Subrata Dutta, Group Managing Director, Organic India and the views expressed in this article are his own)

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