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4 steps for FMCG firms to create sustainable growth post-COVID

4 steps for FMCG firms to create sustainable growth post-COVID

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It is safe to say that businesses and consumers have accepted the fact that COVID-19 is here to stay for the time being. Businesses, in particular, have been adapting their strategies and slashing costs to cope with the challenges posed by the pandemic. The move towards eCommerce has impacted the FMCG industry, as consumers now have a wider range of products available instead of the usual mix they previously purchased in stores.

To increase sales and create sustainable growth in this new environment, It is important to relook at the partnerships between FMCG companies and their retailers. On this end, McKinsey has proposed four steps FMCG leaders can take.

1. Differentiate

FMCG leaders should tailor their sales team and capabiliites to the unique needs of each retail partner. With sales practices becoming more standardised, FMCG companies need to be more intentional in how they approach new channels, customers, and consumer segments. This can be done by customising how data and other assets are leveraged to address the needs of each customer, as well as analysing shopper data and market insights to understand what retailers want and need. According to McKinsey, differentiation is critical in choosing the right trade-offs to manage profitability.

With a dynamic customer-portfolio strategy, a consumer-goods manufacturer can provide each customer with different resources and measure them by different metrics to balance overall costs.

While a strong track record and new products will always be key selling points for manufacturers, those that invest in developing a more sophisticated understanding of their customers and category prospects, as well as new technologies and profit pools, will ultimately forge stronger relationships, McKinsey explained.

2. Diversify

While retailers are increasingly moving towards eCommerce, McKinsey said that navigating seamlessly between brick-and-mortar stores and mobile apps or eCommerce platforms is not enough. FMCG companies need to help their retail partners move beyond the traditional four walls to capture new shopping occasions and build greater shopper loyalty. To set priorities, FMCG sales teams must ask themselves questions such as whether they have allocated resources in line with the channel strategy, or how do they manage channel conflicts among retailers, eCommerce players, and direct-to-consumer channels.

Having more data is no doubt more beneficial for a brand that wants to win in an omnichannel environment. McKinsey said:

While a retailer knows what is happening in its own ecosystem, manufacturers can see how their products are performing across multiple channels and markets.

They can help retailers understand and optimise their omnichannel offering by leveraging pooled data. "An even more powerful strategy is using the insights to identify new ways to innovate and engage shoppers. To develop the opportunities, omnichannel expertise must be infused throughout the organization, from the eCommerce team to people working in sales, supply chain, and marketing," it added.

3. Be dynamic

FMCG leaders should also encourage retail partners to join them on the journey, especially when a manufacturer-retailer relationship needs to become more agile. As such, McKinsey said it is time to reevaluate the ubiquitous joint business-planning process, aiming to morph it from a static agreement to a working plan that is constantly recalibrated as trends and conditions shift. That means more flexibility around product mix and shelf space, as well as more willingness to iterate, tweak, and learn from mistakes.

"Dynamic partnerships also require more frequency of interaction and alignment on processes, which can strengthen bonds and create more opportunities for innovation," it said.

Meanwhile, less strategically important retail partners could be transitioned to a B2B online portal that enables them to manage their own ordering and planning with light-touch support. According to McKinsey, that would lead to lower costs for manufacturers and higher satisfaction from retailers that want less friction and more flexibility around managing product flow.

4. Digitise

There are three priorities for field-sales forces coming out of the crisis - digitising route-to-market models for getting their products in front of customers; automating in-store activities; and using advanced analytics to gain deeper insights on shoppers and product performance.

Telesales, messaging apps, and specialized B2B eCommerce platforms are likely to retain their popularity after the crisis passes.

That said, in-person sales activities are often necessary, especially for new retail locations or manufacturers that deliver directly to stores. According to McKinsey, now is the time to review how sales activities can be streamlined, automated, redesigned, outsourced or eliminated altogether.

In general, in order to win, FMCG sales teams need to help retailers develop new micromarkets, personalised marketing solutions, and other opportunities. "They are the natural hubs through which manufacturers can synthesise trends, rapidly interpret real-time data, and work with both customers and internal leaders across different functions to shift strategy in real time. In all conditions, through fair weather or foul, leading sales teams can stay focused on driving mutually profitable growth by bringing new value, capabilities, and knowledge to the table," McKinsey added.

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