Salesforce Report Illuminates How CPG Brands Are Thinking About Digital Transformation

52% of those surveyed say it's hard to tell the brand story

Only 48% of CPG leaders think their marketing goes as planned in retail. Getty Images
Headshot of Ann-Marie Alcántara

Despite all the criticism CPG companies receive in regard to their retail and commerce strategies, at least 99% say they’re investing in direct-to-consumer strategies.

At least that’s according to a new Salesforce report, commissioned in February 2019, with insight from 500 CPG leaders in North America, Asia and Europe. The report takes a look at some of the barriers these CPG companies are facing in digital transformation and B2B relationships, as well as their thoughts on Amazon, DTC and other trends in the industry.

“What we heard as more and more products have become commoditized, retailers and consumer product goods manufacturers [are] looking to differentiate,” said Rob Garf, vp of industry strategy and insights at Salesforce.

Amazon is neither foe nor friend

According to the report, 79% of those surveyed believe Amazon has raised the bar for what a consumer expects, 68% believe consumers have more loyalty with Amazon and 51% find that Amazon’s marketplace is a “critical threat.” However, Garf said CPG brands don’t see Amazon as the total enemy; companies need Amazon to see what consumers like on the platform, and of course learn their shopping habits.

“[Amazon] is this great competitor who’s created high expectations and brand love. But on the other hand, given that—and because it’s such a vehicle for research and discovery and price comparison—that CPG manufacturers see them as a friend, as a way to breach and engage and ultimately fulfill or serve the consumers,” Garf said. “It’s emerged as a powerful intermediary.”

Without data, telling a brand story gets harder

But with Amazon comes a lot of data these brands don’t necessarily know what to do with, considering 55% believe there are barriers in churning the data into actual insights. Another pain point for CPG companies includes the relationship these brands have with their actual retail partners, with only 38% satisfied with how a company sells new products. Only 43% are “completely satisfied” with the customer insights they gain from stores, and 42% find that the ongoing “retailapoclypse” issues “negatively affect their business.” All of this in turn affects how brands can tell their story, with 52% stating that it’s hard to do so, and another 62% concerned about supply chain transparency more this year than in 2018. Yet, 76% believe their company is transparent about the business.

“Part of the difficulty is connecting directly with the consumer and engaging them in a genuine and transparent story, if you will,” Garf said. “They’re getting limited data. And on the other hand, a vast majority of their products are still being sold through intermediaries.”

As a solution, 82% want to invest in first-party data and digital customer service support, while 14% plan on decreasing phone support, 16% say the same about TV ads and 18% agree with direct mail—all channels that sometimes include less rich data.

CPG brands are definitely headed toward DTC

“For CPG manufacturers, it’s not a question of if—it’s a question of when they are going to go direct-to-consumer,” Garf said.

It explains why 99% said they’re investing in DTC, but yet, 64% don’t have a strategy that’s different from each other or incumbents in the space. Fifty-four percent think their strategy “is on par” with everyone else, but that’s not ideal either. Additionally, only 49% believe their company can create new product categories, get into new markets and actually move new items from “idea to shelf.”

“As we think about CPG manufactures differentiating themselves, we see personalized product, genuine brands and subscriptions to really not only attract but retain loyalty that consumers love,” Garf said. “The challenge is one, continuing to operate in their traditional business and selling through intermediary, and on the other hand, moving into into this new world of DTC that has significant operational, technical and supply chain shift that must occur.”

@itstheannmarie Ann-Marie Alcántara is a tech reporter for Adweek, focusing on direct-to-consumer brands and ecommerce.