CGT - May 2017

PLUS

M AY 2 0 1 7

RETAIL AND CONSUMER GOODS

ANALYTICS STUDY 2017

Who’s Who in Sales & Marketing Trade Promotion Tech Solutions Guide Retailing: Everything New is Old Again

THE

DILEMMA MONDELĒZ INTERNATIONAL’S NEIL ACKERMAN FACES THE FUTURE — ONE OREO TIN AT A TIME

Š 2016 EYGM Limited. All Rights Reserved. ED None.

Is big judgment the next evolution of big data?

Find out how EY is helping companies transform the way decisions are made. ey.com/analytics #BetterQuestions

CONTENTS May

V O L U M E 25 N U M B E R 5

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CGT ADVISORY BOARDS

COVER STORY

EXECUTIVE COUNCIL Tony Bender Edgewell Personal Care Justin Honaman Accenture Michael Forhez Oracle Mike Gorshe Accenture

THE EDITORIAL Kevin Barnes Ferguson Enterprises Tony Bender Edgewell Personal Care Rick Brindle Mondelez International Ann Dozier Southern Wine & Spirits Michael Ferrara HairUWear Jon Harding Conair Corporation Peter Hatch Reynolds American Inc. Service Co. Chris Hobson VF Corp.

DILEMMA Despite an understandable reluctance prompted by valid business concerns, consumer goods companies in all product categories need to start treating direct-to-consumer sales as part of their future.

PHOTOGRAPH BY MICHAEL SEXTON

Mondelēz International’s Neil Ackerman outside the company’s Seattle office.

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Departments 04 E D I T O R ’ S N O T E At Retail, Everything New is Old Again 29 T E C H N O L O G Y

SOLUTIONS GUIDE

2017 Trade Promotion Solutions CGT presents a comparison chart of trade promotion management and optimization solution providers for the consumer goods industry in 2017.

Plus, industry experts from Accenture, EY, Nielsen, T-Pro Solutions, UpClear and Vistex offer thought leadership for companies that are navigating the challenges and opportunities impacting the TPM/TPO landscape.

42 C U S T O M R E S E A R C H Supply Chain Challenges in Emerging Markets

Features

WHO’S WHO IN SALES & MARKETING

05 CGT continues its new Who’s Who series focusing on the people behind the systems and processes that make consumer goods businesses run efficiently. This month, we home in on noteworthy executives who are driving sales and marketing success within their organizations.

Special Report 2 0 1 7 R E TA I L A N D C O N S U M E R G O O D S A N A LY T I C S S T U D Y

13 CGT and sister brand RIS News again join forces to examine how consumer goods companies and retailers are using analytics both individually and collaboratively. This year’s findings: Analysts widely agree that the future for both groups relies heavily on using digital engagement to drive a greater understanding of the consumer.

RESEARCH Gene Alvarez Gartner Lora Cecere Supply Chain Insights Michael Forhez Oracle Nona Cusick Capgemini Kimberly Knickle IDC

Jon Harding Conair Corporation EJ Kenney SAP Doug Rammel BAI Suavecito John Rossi Capgemini Steve Sigrist Newell Brands

Constance Howlett The Estée Lauder Companies, Inc. Betsey Nohe Morton Salt, Inc. John Phillips PepsiCo Kevin Puppe Johnson & Johnson Doug Rammel BAI Suavecito Steve Sigrist Newell Brands Dan Woo Nestlé USA Filiz Yavuz Perry Ellis International

Don Lanham Hitachi Consulting Meena Surti Patel Cognizant Cheryl Perkins Innovationedge LLC Radha R Mindtree Steve Rosenstock Clarkston Consulting

Consumer Goods Technology (USPS 0011255, ISSN 1530-8421) is published 7 times per year: January/February, March, May, June, September, October, and December,

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C O N S U M E R G O O D S . C O M | M AY 2 0 1 7 | C G T

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MANAGING DIRECTOR AND PUBLISHER Albert Guffanti aguffanti@ensembleiq.com

Everything New is Old Again

EDITORIAL Editor-in-Chief: Peter Breen pbreen@ensembleiq.com Editor: Alarice Rajagopal arajagopal@ensembleiq.com Contributing Editors: Tim Binder, Jamie Grill-Goodman, Nidhi Madhavan, Patrycja Malinowska, Charlie Menchaca, Samantha Nelson

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If traditional retail is dying, then why are most new consumer goods companies still lining up to get on store shelves?

The entire marketplace has found a new home in e-commerce, the lines between retailer and product manufacturer are blurring, the very definitions of “retailer” and “manufacturer” are evolving, and the need to build a deep understanding of consumers is more critical than ever. (For more about these trends, check out “The DTC Dilemma” on page 9 and our annual “Retail & Consumer Goods Analytics Study” on page 13.)

One company that exemplifies all of the above trends is Stitch Fix, a six-year-old apparel makercum-retailer that’s already racking up more than $300 million in annual sales, according to reports.

Consumers provide their size, style and price preferences through stitchfix.com and pay a $20 styling fee. The company’s proprietary algorithms and “expert human stylists” then go to work to create five unique apparel items that are shipped (free of charge) to consumers, who buy what they want and send back the rest (free of charge).

Stitch Fix employs about 2,800 mostly part-time stylists and 1,000 warehouse workers, according to Forbes. It also has 75 E-commerce data scientists working on the algorithms, according to chief disruptors are algorithms officer Eric Colson, who spoke in January at ShopTalk. endees of the two-year-old conference were enchanted now also by aAttwealth of such innovative thinking. If you think you know every market-shaking business model that’s out there, you sold through should probably think again. traditional retail.

To be clear, not all the innovative thoughts came from new companies. ShopTalk’s agenda was also filled with traditional CG execs like this month’s cover subject, Neil Ackerman of Mondelēz, along with Unilever’s Doug Straton and Keds’ Emily Culp — two names from our “Who’s Who in Sales & Marketing” feature (see page 5).

Still, there were enough disruptors to make you think the old way of doing business is completely doomed, with new strategies poised to replace old models and new companies ready to take control of the marketplace from the anachronistic old guard.

However, a lot of these e-commerce disruptors seem to adopt old-school practices after reaching a certain size and maturity level. Recent success stories at ShopTalk like Walker & Co., Mon Purse and Harry’s Inc. (which we profiled last month on consumergoods.com) all have something else in common: They’re now also sold through traditional retail. (OK, so Stitch Fix probably won’t follow this trend.)

What’s more, a lot of these new-age challengers seem destined for acquisition by the very consumer goods companies they’re threatening to replace. (Some companies seemed to be at ShopTalk to actually attract acquisition.) We were all ready to showcase Dollar Shave Club and Bai among this year’s list of “Standout SMBs” (also published online in April), but they were scooped up

by Unilever and Dr Pepper Snapple Group, respectively. Now, they’re both Super Bowl advertisers.

Yes, the traditional consumer goods industry requires some massive transformation to stay relevant. But let’s not write off all the old business models just yet. Some of them may still apply.

Peter Breen, Editor-in-Chief

SALES Associate Brand Director: Diana Masurack Mann dmann@ensembleiq.com Director of Business Development: Mike Johnson mjohnson@ensembleiq.com Assistant to Brand Director: Jen Johnson jjohnson@ensembleiq.com EVENTS SVP, Events & Conferences: Maureen Macke mmacke@ensembleiq.com Director, Event Planning: Patricia Benkner pbenkner@ensembleiq.com Director, Event Content: John Hall jhall@ensembleiq.com MARKETING VP, Marketing & Communications: Bruce Hendrickson bhendrickson@ensembleiq.com MARKETING DIRECTOR: Kim Sterling ksterling@ensembleiq.com CIRCULATION Director of Audience Development: Gail Reboletti greboletti@ensembleiq.com Audience Development Manager: Jeffrey Zabe jzabe@ensembleiq.com ONLINE MEDIA Director Product Development: Jason Ward jward@ensembleiq.com Web Development Manager: Scott Ernst sernst@ensembleiq.com Online Project Manager: Whitney Ryerson wryerson@ensembleiq.com ART AND PRODUCTION Corporate Director of Production: Kathryn Homenick khomenick@ensembleiq.com Creative Director: Colette Magliaro cmagliaro@ensembleiq.com Production Manager: Pat Wisser pwisser@ensembleiq.com Subscriptions: 978-671-0449 Reprints: edgellreprints@parsintl.com, 212-221-9595 CORPORATE OFFICERS Alan Glass Executive Chairman Peter Hoyt President & CEO Rich Rivera Chief Operating Officer Jeff Greisch Chief Brand Officer Len Farrell Chief Financial Officer Korry Stagnito Chief Business Development Officer & President, EnsembleIQ, Canada Ned Bardic President of Enterprise Solutions/Chief Customer Officer Joel Hughes Chief Digital Officer Greg Flores Chief Human Resources Officer

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Who’s

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WHO IN SALES & MARKETING

RECOGNIZING THE PEOPLE BEHIND THE TECHNOLOGIES, SYSTEMS AND PROCESSES THAT DRIVE EFFECTIVE SALES AND MARKETING

A

ANHEUSER-BUSCH

CJ Watson, Vice President, Small Format Sales Watson championed an extensive data platform that helped A-B build more effective plans for thousands of retail partners, leading to a CGT Visionary nod in 2015. He serves on the board of the National Association of Convenience Stores.

C

CHURCH & DWIGHT

Sean Crapps, Director of Sales Finance and Strategy

COCA-COLA

Chad Riley, Customer Development Director, U.S. Grocery Channel and Retail Operations Laura Houghton, Director, Digital Shopper Marketing Houghton has been helping Coke develop a more realistic measurement model for digital shopper marketing that factors in some of the more unique characteristics of the online world.

CONAGRA BRANDS

Jonas Paretzkin, Director, Emerging Technologies and E-Commerce The first half of his title puts Paretzkin in charge of finding startups and other innovative technology companies that can help Conagra improve various business practices.

CONSTELLATION BRANDS

Paige Guzman, Director of Marketing Innovation

COTY INC.

David Russell, VP, Sales Strategy

D

DR PEPPER SNAPPLE GROUP

Scott Sieffert, Director of Sales Operations Mike O’Hare, Vice President, Category Management

E

ENERGIZER HOLDINGS

John Abshear, Director, Global Trade Investment Planning

ESTÉ E LAUDER COMPANIES

Constance Howlett, VP, Packaging Operations A brand new member of CGT’s Executive Council, ongoing member of its Editorial Advisory Board and a past Visionary, Howlett is a 20-year Estée Lauder veteran who helps the company make “careful investments in technology and people.”

Tulie White, Executive Director, Global Sales Capability In her current role, White is dedicated to creating excellence at retail. Her tech-savvy notwithstanding, White told CGT last year — when she was tapped as a Visionary — that effectively (and personally) managing people is the most important part of her job.

F

FRUIT OF THE LOOM

Nicholas Matar, Director of Category Management Matar’s current role leverages fact-based analyses grounded in consumer needs to drive strategic, actionable recommendations for internal and external stakeholders.

“By partnering with IT, we elevate our capabilities through advanced tools and technology,” he explains.

G

GENERAL MILLS

Brad Hiranaga, Vice President, Brand Building Services His work transforming Totino’s from generic frozen pizza into a vibrant, rapidly growing lifestyle brand earned Hiranaga kudos as one of CGT’s 2016 Visionaries. He was promoted to his current position in January.

Dion Kells, Director, Sales Technology

H

HAIRUWEAR

Michael Ferrara, Chief Marketing Officer

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HEINEKEN USA

Roy Avijit, Director, Business Applications & Data Warehousing

HENKEL CORP.

Michael Rybnick, Director, Customer Investment & Optimization Over the course of 25-plus years in CPG, Rybnick has implemented seven different trade management systems at several companies. He’s currently helping Henkel align its systems with those of 2016 acquisition Sun Products.

HORMEL FOODS CORP.

Kevin Kroymann, Director of Trade Marketing

J

JOHNSON & JOHNSON

Ben Walker, U.S. Sales IT Director Douglas Dickler, Senior Director, Sales Operations & Business Intelligence

K KEDS

Emily Culp, Chief Marketing Officer Business Insider named Culp one of the “Most Innovative CMOs” in the world last fall. She joined Keds in 2015, just in time to help the iconic footwear brand celebrate its 100th anniversary a year later.

KELLOGG

Chris Tutor, Vice President of Marketing

KIMBERLY-CLARK

Mukund Kaushik, Vice President, IT Services, Global Marketing Since 2013, Kaushik has been helping K-C’s marketing organization build IT capabilities that make it more effective in an increasingly digital world. He joined the packaged goods marketplace after 10 years in the automotive industry.

KRAFT HEINZ

Brian Sobecks, Senior Digital Innovator and Evangelist

L

L’ORÉAL USA

Rachel Weiss, Vice President of Digital Innovation and Entrepreneurship

M

MASTER LOCK

Marti Gahlman, Director of E-commerce

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WHO

Pam Brown

Director, IT Governance Del Monte Foods Pam Brown spent the early part of her career in sales leadership before segueing into the director of trade promotion management role at Del Monte, where she led sales operations, trade management systems and, in 2016, assumed responsibility for sales BI analytics. “During the 10 years in this position, I found a love and passion for connecting with the business on large systems & process improvements.”

In 2015, the recently acquired consumer foods portion of Del Monte moved to the SAP platform, making the massive transition in just six months. “Everything changed,” says Brown. “When your systems change, your end-to-end processes need to be holistically re-evaluated. An enterprise transformation is never perfect, and I am proud of everything our Del Monte teams were able to execute to keep the massive change as transparent as possible for our retailers and consumers.”

After 10 years directing sales operations and 26 in sales leadership, Brown shifted last June to a company-wide IT position, a role that she herself proposed. She’s now leading IT governance and the project management organization across the total enterprise.

“We’re taking the business, systems and process deployment expertise that we did well for sales and executing on an enterprisewide level,” Brown explains. Moving out of her sales comfort zone into new business territories — warehouses, accounts payable, etc.

— “is the hardest work I’ve ever done, but also the most exciting.”

Among recent noteworthy accomplishments was deploying a reporting suite to support Del Monte’s refreshed integrated business planning process. “Facilitating design sessions, driving cross-functional alignment and overcoming obstacles is hard, but it’s extremely fulfilling when it all comes together,” Brown says. “When systems and processes are fully adopted and drive greater efficiency for the organization, that’s when the team has succeeded.”

The biggest challenge currently facing the industry is adjusting to rapid change. “The marketplace is shifting, center store is challenging and, as a result, our teams are working to develop new strategies and products that will make a difference,” she says.

“Our consumers are researching and buying products differently.

We must be proactive to meet their needs before they walk in the store.” CGT

MATTEL

Jessica Lopez, Director of Retail Development Barbara Haas, Director, Retail Services

MONDELĒZ INTERNATIONAL

Steve McGowan, Director of Shopper Marketing A veteran of 20-plus years spanning brand marketing, sales planning and sales strategy, McGowan currently leads the shopper marketing function across all of Mondelēz’s customers and categories. His team has won three Effies and five Reggie awards in the last three years.

Michael Marzano, IT Lead, Retail Solutions

MTD PRODUCTS

Dan Birch, Senior Director of Sales

N

NESTLÉ USA

Mark Nichta, Director, Sales Information Strategy A CGT Visionary in 2014, Nichta currently focuses on technologies that Nestlé’s sales teams can use to interact with retail customers to improve sales while reducing administrative overhead.

NESTLÉ-PURINA

Shawn Cully, Director of Retail Experience

NEWELL BRANDS

Richard Davies, Chief Development Officer Joining Newell in 2013 as chief marketing and insights officer, Davies immediately began to implement an insights-first strategy (that made him a finalist for “CMO of the Year” in 2015). He was named to his current post in fall 2015, adding product innovation to his duties.

NIKE INC.

Pamm Chambers, Director of Category Operations, Young Athletes

P

PEPSICO

Jeff Swearingen, SVP, PepsiCo Demand Xcelerator Esperanza Teasdale, Senior Director of Shopper Marketing Teasdale drives the shopper marketing agenda and commercial results across 14 strategic customers. She is most proud of her team achieving “Marketing Vendor of the Year” status for key customers including 7-Eleven and Dollar General.

PERNOD RICARD USA

Mike Thome, Director of Route-to-Market Excellence and Commercial Planning

WHO

Joel Warady

Chief Sales & Marketing Officer Enjoy Life Foods Sales and marketing isn’t literally in Joel Warady’s blood, but it’s close: “I had a father who had a side business that demanded he attend trade shows and work a booth,” he explains. “I started working trade shows at age eight and never looked back.”

The uniqueness that drives Warady’s business outlook doesn’t end there: “I used to own a toothbrush and dental products company” that made private label products for major retailers. “The great thing about being in private label is that it teaches you how to market multiple brands simultaneously, as each retailer positions its own brand slightly differently.”

Having been involved with Enjoy Life since its inception in 2001 (and as CSO/CMO since 2011), he’s delighted to still be helping guide the brand now that it’s a subsidiary of Mondelēz International (since 2015). “I have a strong attachment to the brand, and to the culture and mission behind it. I now have a responsibility to grow Enjoy Life Foods under Mondelēz while maintaining its integrity and heritage. We are growing our team, our sales, and our brand awareness. I’m proud of the smooth transition, as indicated by our current execution and record sales.”

“It will not be unusual for us to see the use

of artificial intelligence in homes to make the

decisions about what families will eat for dinner.”

“The marketplace is evolving, which is nothing new. Change has always been a constant. What is different today is the speed with which change is happening, and technology is the common thread,” says Warady. “Retailers and manufacturers who don’t plan for this change will be left behind, and they won’t realize it until it’s too late.”

“It will not be unusual for us to see the use of artificial intelligence in homes to make the decisions about what families will eat for dinner,” says Warady, when asked for a future forecast. “Through IoT and machines talking to machines, software will order the ingredients and products from the fulfillment center, and the fulfillment center will place the completed order in an autonomous delivery vehicle that ultimately will reach the house for same-day delivery with no human interaction.

Consumer goods companies and retailers must be ready for this truly transformational shift in how consumers purchase and consume our products.” CGT

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PROCTER & GAMBLE

Steve Aaron, Senior Global Enterprise Architect Aaron’s position has him working on all consumerfacing systems and experiences, including data, websites and customer support. He was named a CGT Visionary in 2014 after architecting “1, Consumer Place,” P&G’s single, secure ecosystem for all global marketing content.

PINNACLE FOODS

Richard Mayers, Senior Director of Sales Technology Mayers champions sales technology initiatives across the organization and partners with Pinnacle’s IT division to help drive sales efficiency and effectiveness. He leverages his early sales background to help drive real initiatives for improving sales force operations.

R

REYNOLDS AMERICAN

Peter Hatch, Senior Director, Strategy & Planning

REYNOLDS CONSUMER PRODUCTS

Vernetta McDowell, Director of Sales Operations A 20-year industry veteran, McDowell currently leads a corporate team responsible for trade system administration, business analytics, data synchronization, sales coaching and development, and policy development.

RICH PRODUCTS

Daryl Miller, Director of Marketing

SC JOHNSON

Chad Niemuth, Director, Business Process & Technology (BPT) Demand Management

TYSON FOODS

Christopher Haller, VP, Commercial Capabilities, Planning & Development, Customer Growth Capabilities A 30-year Tyson veteran, Haller’s broad experience encompasses consumer marketing, trade promotion and sales.

His current role puts him in charge of the company’s Customer Development Organization.

UNDER ARMOUR

Michael Lee, Chief Digital Officer Named CDO in July 2016, Lee is responsible for the strategic direction of Under Armour’s Connected Fitness business. He joined the company in early 2015 when it acquired MyFitnessPal, the health community he co-founded.

UNILEVER

Doug Straton, VP, Digital, E-commerce/Omnichannel, Data

WORLD KITCHEN

Ken Bausch, Vice President, Global Digital Marketing 8

WHO

Jeffrey Deutch

Digital Innovation Lead Kraft Heinz Deutch’s mission in leading the Kraft Heinz digital innovation team is to scout for ownable and scalable technologies that can provide competitive advantage to the brands and customer teams.

The ultimate goal is to develop win-win partnerships with these emerging technology suppliers. His role recently expanded to encompass research & development and quality systems. The vision behind the change was to enable stronger visibility to the product pipeline and identify how innovative technology can support product launches.

One recent example of the digital innovation team’s work is the establishment of a long-term partnership with Fetch Rewards, a scan-as-you-go shopping app for the grocery channel. This enables Kraft Heinz to use its extensive recipe database to drive engagement, send promotional offers to targeted groups of consumers, and gain insightful data on shopper behavior. “It gives us access to a real world shopping panel,” Deutch says.

Deutch has been involved in sales and marketing IT for nearly 20 years, and previously helped Kraft Heinz develop an IT strategic plan. “That role required balancing core IT demands versus investing in transformational capabilities,” he explains. Among his proudest achievements was the recent launch of a “Kraft Heinz Rewards” pilot program that incentivizes consumers to purchase any of the company’s numerous brands, thereby leveraging the scale of the entire portfolio.

“The most significant challenge I am currently facing is the ability to provide the business with the capabilities required to meet the speed of new product development,” says Deutch.

“Speed to market for both physical goods and digital services is essential to providing a competitive advantage for the Kraft Heinz family of brands.”

In terms of the future, Deutch believes that “The consumer goods technology marketplace will transform in various ways over the next five years. From an IT perspective, I would foresee significant consolidation in shopper marketing solutions, as oneoff tools are cobbled together to develop more meaningful value for consumers and CPGs. From a consumer goods perspective, I would anticipate that successful CPGs will need to integrate services as part of their physical offerings to remain relevant in a digital world.” CGT

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BY P E T E R B R E E N

THE

DILEMMA

Despite valid reluctance, direct to consumer sales are part of the CPG industry’s future Neil Ackerman is helping Mondelēz International take the right steps into its e-commerce future

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Last December, Mondelez International unveiled gifts.oreo.com, a seasonal website that let consumers order festive gift tins of White Fudge Covered Oreo cookies for the holidays.

The limited-time initiative, which “went from concept to consumer in 45 days,” marked the first time that Mondelēz “managed 100% of the direct-to-consumer supply chain, from the bakery to the consumer,” explains Neil Ackerman, global director of integrated supply chain, e-commerce & product technology innovation. “We also created a unique proposition that generated great excitement in the marketplace.”

The effort “gave us some key learnings while enabling us to capture a differentiated, incremental online occasion,” said Ackerman. Those learnings will be critical as Mondelēz plots its future: The company has publicly pledged to become “an industry-leading e-snacks business” by achieving $1 billion in total e-commerce sales by 2020.

While Mondelēz will continue conducting similar programs, it isn’t expecting DTC activity to provide much of that lofty sales goal. And it doesn’t expect to turn itself into a full-blown directfulfillment company any time soon. Still, Ackerman promises that Mondelēz will follow a strategy that every consumer goods company needs to heed: “At the end of the day, we’re going to be where consumers want us to be.”

Late to the Party — Again?

While there are numerous similar examples of consumer packaged goods companies testing the DTC waters, there’s still plenty of industry skepticism about the overall need and few manufacturers who’ve embraced it as a critical strategy. In CGT’s “2016 Sales and Marketing Report,” only 18% of CGs said that supporting omnichannel fulfillment via DTC (or postponement) would be a business priority over the next few years.

“It’s been a slow burn. Everyone knows they need to be thinking about it, but it’s still a relatively small business,” says Simon Ellis, program vice president for supply chain at IDC Manufacturing

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Insights. “It’s still more talk than walk — thinking about how to do it rather than doing it.”

To be clear, ambivalence about DTC is only an issue in the CPG space. Most manufacturers of apparel, electronics and other product categories have already acknowledged the need to go direct and are restructuring accordingly. In a survey conducted last winter by Shopper Marketing, 75% of non-CPG manufacturers said they’re already selling directly — versus just 18% of CPG respondents.

“I don’t see a mass move — call it 20% or 30% of the market — to direct-to-consumer consumption,” Procter & Gamble chief financial officer Jon Moeller told analysts last October.

“How many people do you really know that want to satisfy their household products shopping needs … by going to 40 different websites with 40 different passwords and 40 different packages that arrive at 40 different times?”

That’s a valid argument, to be sure. But there was a time not too long ago when the widespread assertion, “Consumers will never buy groceries online,” also had plenty of merit.

CPGs don’t necessarily want to make a similar mistake here — because the assumption that consumers will never want to order items like, say, razors or granola directly from the

Oreo managed its entire holiday program — bakery to consumer — internally.

You have to look at the supply chain as a business driver, not an operational cost.

— Andrea Atwell, L’Oréal manufacturer is already being disproven by the likes of, respectively, Harry’s, Inc., and Kellogg Co.’s Bear Naked.

Supply, Not Demand

Of course, it’s not the direct selling part that’s the issue. P&G, among others, has long operated online storefronts that sold directly to consumers, but the orders are fulfilled by a retailer partner (usually Amazon or Walmart).

The sticking point, of course, is the logistics of direct fulfillment, the need to reconfigure existing supply chains to make the shipment of “eaches” to individual consumers financially sustainable. “P&G and Unilever probably ship 75% of their orders in full-pallet quantities,” notes IDC’s Ellis. “Going direct will require a fundamental reconfiguring of the supply chain.”

“Supply chain costs are a significant portion of the P&L, no question about it,” says Andrea Atwell, vice president, direct-to-consumer e-commerce for L’Oréal USA, whose upscale Luxe division has sold DTC for about 10 years. “But you have to look at the supply chain as a business driver, not as an operational cost.”

The Luxe brands presented a more obvious opportunity for DTC because they have higher price points and more limited retail distribution. (“If people have to drive 50 miles to buy your product, it’s more logical to let them buy it online,” says Atwell, who ran Luxe’s U.S. supply chain before taking on her new role last September.)

L’Oréal now has a solid base of learning and capabilities that can be applied to its mass market brands (starting with 2014 acquisitions Nyx and Carol’s Daughter).

Although the Oreo program was relatively small, Mondelēz still learned a few tricks that look to be scalable, according to Ackerman. “We had to build one muscle well: manage low-order quantities in a profitable way,” and did so in part by upgrading the order system and increasing the picking process to twice daily, he says.

Atwell suggests that the issue is as much about changing the organizational mindset as it revamping operations. In the traditional supply chain model, “we stopped worrying about the product once it left the distribution center. Now, we have to track it right into the hands of the consumer — and then worry about the reverse logistics of returns. It’s about putting the consumer first.”

Signs of the Times

IDC expects 50% of all manufacturing supply chains to be home delivery-ready by 2020, either by building internal capabilities or outsourcing to third-party logistics vendors.

That, of course, still leaves the glass half-empty at best, even though all signs in the marketplace point to the need for all CPGs to develop these capabilities. If the C-suite is still hesitant, there are four critical segments of the industry that would beg to differ: Your marketing team wants you to do it. A deep understanding of shopping behavior has become critical to success, and that behavior increasingly is taking place through e-commerce channels — into which CPGs don’t have much visibility yet.

According to most analysts, the reason Unilever spent a reported $1 billion to acquire Dollar Shave Club last summer wasn’t the e-commerce start-up’s market share, but its insight into digital consumers.

“What CPGs lack more than anything is actionable consumer data,” says Brian Cohen, head of digital integration at marketing agency Catapult. “A DTC engine allows them to collect insights directly.”

Handling every step of the transaction in the Oreo program “allowed us to have more direct interaction with shoppers, and complete ownership of the customer experience,” adds Ackerman.

Similarly, the idea behind the Bear Naked Custom Made website, which lets consumers select from 50-plus ingredients to create their own custom blends, is partly to sell more boxes of granola — but it’s also to “learn more about consumer preferences so that we can continue to drive innovation,” Chris Tutor, then-vice president of strategy, told CGT last summer.

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Cover Story

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Your new competition doesn’t want you to do it. If P&G could go back in time and proactively launch a DTC program for Gillette before Dollar Shave Club and Harry’s, Inc. arrived to usurp about $400 million in shaving category sales, do you think it would?

The category leader was ultimately forced to reactively go direct with the Gillette Shave Club subscription service in mid-2015. (Perhaps to keep history from repeating itself, P&G is currently beta-testing a Tide on Demand auto-replenishment program in Cincinnati.)

If the brief history of digital media and e-commerce has taught the industry anything, it’s that competitors can rise quickly. Harry’s co-founders Jeff Raider and Andy Katz-Mayfield readily acknowledge that they never would have succeeded in a pre-digital marketplace. But they did, and challengers in other categories will, too, unless traditional CPGs head them off at the pass.

3

Even your retail partners want you to do it (sort of). Amazon.com sparked its latest firestorm in April when news broke that it was hosting a special summit to encourage top CPGs to become direct sellers. Such an industry-wide move would, of course, benefit the operator of the world’s largest third-party marketplace while severely hampering its brick-and-mortar competitors.

And those competitors probably aren’t thrilled with the prospect of facing direct competition from product manufacturers (even as many keep building their own private label portfolios). In fact, fear of damaging retailer partnerships is often cited as another reason to avoid DTC. But while they might not want manufacturers to sell directly, retailers are starting to want their partners to ship directly. In the race toward faster delivery times, some retailers have been working with manufacturers to drop-ship online orders. To cooperate, CPGs would have to restructure their supply chains anyway.

Concerns over direct competition are, of course, largely unique to the CPG industry. Manufacturers in other categories (think of Apple, Nike, Van Heusen) have long sold direct — both online and through their own stores — while still keeping retailer partners content.

4

Your consumers want you to do it. The most compelling reason of all is that consumers increasingly are looking for new and easier ways to buy the products they need, and manufacturers must be at the ready to fulfill their needs if they want to stay relevant.

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Convenience is an important need, and one that retailers are probably more qualified to satisfy (as Moeller’s earlier comment implied). But if some consumers want their detergent, pet food, diapers or toothpaste delivered to their homes each month, there’s no reason why CPGs shouldn’t be ready to oblige directly to maintain a personal connection.

More strategically, however, is the increasing consumer demand for unique and even personalized products. For Mondelēz, the Oreo program “confirmed that consumers are interested in buying these kinds of unique products, so gifting and bundles will be part of our story going forward,” notes Ackerman.

Unique products are also a perfect way to strike a democratic compromise with retail partners, who can continue selling the mass-produced SKUs while the brand gets more personal via DTC. Another consideration is that some CPGs (including Coca-Cola and Jack Link’s) are finding e-commerce to be a great method of supplying the long tail of retail partners: Single-store owners who only need small quantities can simply place their periodic orders online. Once that operation is established, it’s easy to let consumers order by the case as well.

Consumer demand for unique products and convenient fulfillment options — fueled by retailers focusing on both as competitive advantages — keeps growing. That means manufacturers already are being forced to make significant changes to their supply chain operations. (Among them: storing smaller amounts of inventory in more local facilities, a strategy IDC calls “micrologistics,” Ellis notes.) Soon, the only thing most CPGs will lack is conviction.

“We’re at a point in time where everyone understands how important e-commerce is,” says Atwell. “It’s a way to complement and supplement and drive the overall brand. It’s inevitable that we all have to jump in and play. It’s not a matter of if, it’s a matter of how.” CGT

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EDITOR’S NOTE

The Great Analytics Divide ver the past five years, we’ve been analyzing and contrasting the analytics maturity of retailers and manufacturers, and our efforts have reaffirmed that the analytics/insights divide will be the single biggest differentiator in consumer industries.

While there is significant intent amongst both retailers and manufacturers to improve their maturity and move to more data and fact-based decisionmaking, execution continues to lag intent because of competing priorities and an unclear understanding of where to focus limited resources. At the same time, what we uncovered five years back holds truer than ever: Both retailers and manufacturers treat Amazon as the benchmark and gold standard for analytics and the gap between them and Amazon is widening.

This has created the great analytics divide between the analytics haves and analytics have-nots and survival and growth in this world of the ‘what-I-wantwhen-I-want-it’ consumer depends squarely on the ability to use insights to improve decision-making.

There are four key areas of focus where retailers and manufacturers are investing to bridge the gap:

1 | Data

DESCRIPTION: Garbage in is garbage out. The foundation of any successful analytics initiative is unified, consistent, regularly updated and relevant data from trusted sources. With an explosion in consumer data and machine data in years to come, this is a foundational step.

INDUSTRY MATURITY: MEDIUM Stagnant due to low investment and long ROI.

2 | Analytics Tools & Machine Intelligence DESCRIPTION: The infrastructure and tools required to clean, integrate, manage and analyze the data to generate actionable insights. Use of big data/machine learning/cognitive learning and automated decisionmaking tools to make decisions faster.

INDUSTRY MATURITY: MEDIUM Slow but rising. No dearth of tools/tech.

3 | Skills & Ingenuity

DESCRIPTION: Skills and resources required to interpret the output produced by analytics tools. A layer of human intelligence, creativity, intuition and intellectual ambition to question the outcome, weigh the impact and discuss what data does and does not say before making the final business decisions.

INDUSTRY MATURITY: LOW Hardest area to overcome. Investments in niches.

4 | Strategy Codification

DESCRIPTION: Building a data-driven DNA of the organization that spans culture, organizational structure, business processes and codified knowledge in the form of patents and algorithms.

INDUSTRY MATURITY: LOW Not a focus for most.

However, retailers and manufacturers need to remember that analytics isn’t a goal, and analytics for analytics sake is a sure-fire way of wasting resources and draining credibility.

The biggest challenges that even mature firms have are: • Simplicity-Prescriptiveness: The inability to translate analytics into simple, clear language that someone can act on.

• Focus: Focusing on the wrong things or on unclear problem statements that provide little impact to the business.

The greatest challenge with the analytics divide is that you don’t see it until it hits you; you know when your competitor has turned on BOPIS, but you don’t know when your competition has turned on their analytics to win share of wallet with your loyal customers till they defect — defense doesn’t always win championships. .

Gaurav Pant Principal Analyst, EKN Research

NOTE: This report is a collaborative effort between the CGT, RIS News and EKN teams. The data featured in the report was collected in early 2017 through two targeted surveys tailored to measure and contrast the current state of analytics maturity in the consumer goods and retail industries.

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OVERVIEW

Analytic Growing Pains R E TA I L A N D C G C O M PA N I E S S T R U G G L E T O G E T T H E R I G H T P E O P L E , G O V E R N A N C E A N D T E C H N O L O G Y nalysts widely agree that the future for both retailers and consumer goods companies relies heavily on digital engagement and their ability to understand the consumer. The story unfolding in both industries is one of striving to collect more rich and varied data; mastering the complexities of cleaning and managing it; and assembling the right assortment of tools, talents and processes to quickly draw and act on the analytic insight. Organizations must also move analytic capabilities for specific application areas along the maturity ladder according to each one’s ability to deliver dividends through the insights they produce.

Shifting organizational structure and culture so profoundly is a substantial undertaking demanding executive-level commitment, significant resources and strong change management. Retailers and CG companies must accomplish all this in a marketplace that is also rapidly changing. They face constant evolution in omnichannel expectations and digital platforms as well as consumer demand for an everwidening array of delivery options. Add in the implications of emerging technologies such as artificial intelligence and the Internet of Things and life gets even more complicated.

It’s a fast-moving target. That’s one reason both retailers and CG companies report little overall improvement in moving the needle on analytics maturity (Figure 1). For every prescriptive analytics capability they gain, they must start at square one with a new application area that pulls back their overall average. So while retailers in particular report making real progress against their competitors in analytics, as a group they feel there is still lots more work to be done to get beyond the basics. Small and mid-size CG companies work in an industry that is generally further along in analytics, but they remain bested by deep-pocketed leaders who have rebuilt their businesses to be data-centric.

Retailers and consumer goods companies face similar obstacles in pushing their analytics programs along, with technical and organizational challenges dominating the tops of their lists (Figure 2). They share issues with limited tool sets, inadequate staff and data integration woes. But

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FIGURE 1

Level of Maturity Basic analytics

36%

Basic reporting No formal analytics Investigative analytics Predictive analytics

33%

26% 19% 14%

27% 13% 20%

5% 7%

RETAIL 2017 CG 2017

FIGURE 2

Top Analytics Challenges 20 16

R E TA I L Limited software toolset Culture of the company is more intuition-driven than data-driven Absence of clearly articulated analytics strategy CG Inadequate resources to interpret output of analytics tools Culture of the company is more intuition-driven than data-driven Lack of sufficient budget Absence of clearly articulated analytics strategy

41% 41% 35% 44% 40% 34% 34%

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R E TA I L Inadequate talent or dedicated staff Limited software toolset Inability to integrate data from multiple sources CG Limited software toolset Inability to integrate data from multiple sources Culture of the company is more intuition-driven than data-driven Inadequate talent or dedicated staff

56% 47% 47% 36% 36% 32% 30%

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while retailers cite the lack of a centralized analytics process ― a structure issue ― CGs are more concerned about the cultural change: Getting staff to think more analytically across the organization. Shifting a culture can lag technology advancement by years.

It’s easy to get discouraged in the face of so many obstacles, but companies can overcome their data analytics hurdles by readjusting their thinking about how to define success. “Don’t let the perfect be the enemy of the good,” says Robert Hetu, research director, Gartner Retail Industry Services. “Some companies are paralyzed by data and analysis, seeking the perfect answer. A good answer based on relatively accurate data that is arrived at quickly is preferable to a perfect answer — if that were even possible — that takes weeks or months to develop.”

Getting Talent Right

One significant obstacle both CG companies and retailers struggle with in the quest to become more mature analytics organizations is assembling the right talents and skill sets to get a handle on their data and generate actionable insights.

Figure 2 highlights the issues both sides face with inadequate talent or dedicated staff.

“There are two problems,” says Gaurav Pant, SVP research & principal analyst, EKN Research. “The first is you don’t have enough of the right people to analyze the data. The second is you’re able to do all the grunt work but you have few people who can make sense of it, to translate it from a business action perspective.” Retailers and CG companies must feel their way to a best-fit strategy for both how the team is put together and the responsibilities of each member.

Despite naming the talent gap as a significant pain point, both CG companies and retailers are not planning to do much to change it (Figure 3). While CG companies are starting out better staffed, neither plans to hire aggressively. The handful of CG companies and retailers who rate themselves as beating Amazon in analytics maturity are also likely the ones pushing forward in hiring.

To close the talent gap, Ken Morris, principal at Boston Retail Partners, recommends companies develop solid relationships with local universities to foster strong analytics programs, then tap that talent pool. Already, such programs are increasing the availability of data scientists, he says.

“The new, and more difficult to address, talent shortage is [finding] analytics leaders that have deep business/

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FIGURE 3

Status of Analytics Staff R E TA I L

Data scientist

34%

7% 5%

Statistician

32%

9%

Chief insights/ analytics officer

16%

55% 57%

2%

68%

5% 11%

CG Data scientist Statistician Chief insights/ analytics officer

14%

10% 5%

24%

62%

5% 10%

7% 10%

CURRENTLY EXIST PLAN TO HIRE IN THE NEXT 12 MONTHS

functional/industry expertise balanced with enough quantitative awareness/ understanding to define strategy and execution for analytics opportunities.”

There is a critical need for retailers to hire chief digital officers, which is “an absolute requirement if a retailer plans on being in business in 2025,” says Jeff Roster, VP of retail strategy for IHL Group. “The stakes have never been higher. The margins for error have never been smaller. Amazon has redefined customer expectations of inventory visibility, two-day delivery and endless aisle. Every retailer must respond or risk being an afterthought in the customer’s mind.”

Who Runs Things?

71%

Closely related to the proper staffing of analytics functions are their governance.

Currently, both CG companies and retailers tend to place responsibility for managing analytics resources within the departments that use them (Figure 4). CG companies are slightly more likely than retailers to embrace

83% PLAN TO HIRE SOMETIME IN THE NEAR FUTURE NO PLANS TO HIRE

a centralized approach through an analytics department or center of excellence, treating analytics as a shared service.

The current dominance of decentralized analytics is also seen in levels of shadow spending. Nearly half (48%) of consumer goods companies and at least a quarter (26%) of retailers report purchasing BI/analytics software outside the IT budget last year, with many others unsure of just who is funding these efforts.

Unifying analytics spend is one potential outcome of moving to a centralized analytics department or center of excellence ― considered widely by both sides as the ideal approach (Figure 5).

EKN Research’s Pant expects companies to use a center of excellence approach as a means of structuring their operations and gaining competence in analytics, then moving the expertise out into individual departments in five years or so. A category manager, for example, would simply need analytics competency as part of the skill set.

FIGURE 4

Who is responsible for executing business analytics in your organization?

40%

Managed by department

21%

IT/technology department Shared analytics department/center of excellence

14%

Strategy department

9% 9%

18% 20%

16%

Other

34%

RETAIL CG

18%

FIGURE 5

Who should ideally be responsible for executing business analytics in your organization?

Shared analytics department/center of excellence

50%

68%

26% 7%

Managed by department IT/technology department

7% 2%

Strategy department

14% 14%

Other

2% 9%

RETAIL CG

FIGURE 6

What Retailers Share and Don’t Share Share Most

Share Least

1 | Inventory

1 | Online customer behavior

2 | Promotional performance

2 | Loyalty/CRM

3 | POS

3 | Pricing and online sales (tie)

Data Sharing Slogs Along Analytics is all about putting data in context to gain insights that drive business decisions. Drawing data from a wider pool often enriches owned data with new perspectives and data points that enhance

the understanding of every aspect of the business, including the all-important consumer.

But CG companies and retailers have a long, fraught history with data sharing.

Despite analyst views that both sides enjoy a wide range of benefits, from better demand forecasts to lower inventory levels

to better on-shelf availability, some retailers remain skeptical about sharing the needed data, preferring to keep some data close to the vest ― or charge their partners a fee.

For that reason, data sharing is still limited. CG companies and retailers agree that inventory, promotion performance and POS data are the most shared. Weekly or daily sharing is most common, although a surprising percentage is still ad hoc. The numbers haven’t shifted much in recent years, but since this year’s average CG company respondent is smaller, survey results could indicate that data sharing for these well-established data types is becoming standard across the industry. That’s good news for analytics programs across the board.

But the big focus now is on using data to better understand customers, and that’s where old habits kick in. Many retailers are highly reluctant to let consumer goods companies gain access to their valued customer data. Fully 70% do not share online customer behavior data, and just over half do not part with loyalty/CRM, pricing and online sales data. There is some good news, however. There is upward movement in data sharing of all three “share least” data types compared to 2016.

Pricing data saw the biggest rise.

CG companies must hope this trend continues.

According to McKinsey, CG leaders in their categories are much more likely to be closely partnering with online retailers to obtain more customer data and use their own sites to increase understanding of consumers.

“Our survey revealed that all winners receive full-basket and shopper-panel data from retailers; most winners also receive loyalty-card and coupon-redemption data,” according to McKinsey’s “Winning in Consumer Packaged Goods through Data and Analytics” report. That puts CGs at a distinct advantage in achieving customer insights over companies who are still battling to obtain this retail data.

The digitally empowered consumer is disrupting traditional approaches to managing every step of the consumer goods/retailer value chain. As Amazon has demonstrated, the more you can understand consumer expectations, the better you can anticipate, respond to and even shape them. All that takes a substantial investment in people, resources and culture change.

Both retailers and consumer goods are working hard to keep up with a moving target. They are making progress but are also continually challenged to adapt to new demands. CGT/RIS

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R E TA I L

Analytics Transformation Mid-Stream T H E R E TA I L I N D U S T R Y I S I N A N A N A LY T I C S A R M S R A C E . M AY T H E B E S T I N S I G H T S W I N ustomer centricity and the rise of digital commerce, led by Amazon, has pushed retailers to collect and measure more data than ever before. Many are in the midst of a cultural and technical transformation, shifting toward a more analytics-driven approach to how they manage their businesses. Along with such a dramatic change are inevitable delays and hurdles, with the ability to attract the right analytics talent leading the list.

The good news is that retailers are making real progress and gaining ground on the competition.

Progress on All Fronts

Companies investing in analytics for the long haul know it all starts with a solid foundation: clean data, robust tools and good governance. It’s not sexy, but it’s essential to support analytics applications that will deliver accurate, meaningful insights and true ROI. Retailers have spent the last year making those needed investments (Figure 7). They’ve made progress across the board, with the biggest gains ― the number of retailers saying they are now better or significantly better than the industry ― coming in data management, data quality and analytics tools. This year’s survey also asked about retailers’ ability to use data to make decisions, and found a healthy 37% besting the competition. At the other end of the spectrum, most respondents have pulled themselves out of the “significantly lagging” category across capabilities.

But progress against Amazon is little changed over the past year ― except for a small group who now call their analytic capabilities significantly better than Amazon’s.

Amazon continues to push the bar aggressively forward, making even achieving par a significant accomplishment.

While some retailers collect detailed data as part of the sales process, such as furniture dealers, “It is possible that this represents retailers across a wide variety of business models,” says Ken Morris, principal, Boston Retail Partners.

“Innovative or digitally native companies (e.g., Zappos, Bonobos) are more likely than established brick-and -mortar retailers to have effective analytics capabilities.”

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FIGURE 7

Retailer Gains Against Competitors 2016 Data quality

6%

19%

Analytics strategy

26%

Data management

2% 17%

Analytics skills/ people Analytics tools

4%

26%

40% 37%

26%

43%

19%

4% 13%

11%

32%

31%

40%

42%

32%

SIGNIFICANTLY BETTER THAN OUR COMPETITORS BETTER THAN OUR COMPETITORS AT PAR WITH OUR COMPETITORS

9%

6% 6% 9%

LAGGING OUR COMPETITORS SIGNIFICANTLY LAGGING OUR COMPETITORS

2017 Using analytics for decisions

9%

23%

40%

28%

Data quality

5%

Analytics tools

7%

19%

50%

21%

Analytics strategy

5%

23%

47%

26%

Data management

5%

42%

28%

Analytics team/ resources

7%

26% 19%

SIGNIFICANTLY BETTER THAN THE INDUSTRY BETTER THAN THE INDUSTRY AT PAR WITH THE INDUSTRY

40%

29%

26%

24%

40%

2% 2%

9% 9%

LAGGING THE INDUSTRY SIGNIFICANTLY LAGGING THE INDUSTRY

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R E TA I L

Like retailers, Jeff Roster, VP of retail strategy for IHL Group, considers Amazon the gold standard for analytics skill. “Until retailers can offer their customers perfect inventory visibility, tracking of all orders and a seamless customer experience instore, they will be behind. That is where the focus will be for the next three years.”

FIGURE 8

Maturity of Retail Supply Chain Analytics PRIORITY THIS YEAR

Advanced Supply Chain Retailers’ supply chain analytics capabilities are the most mature (Figure 8) and retailers are most likely to be using investigative or predictive analytics in this area. This includes demand forecasting, a merchandising discipline used to direct supply chain management and execution, as well as replenishment, an area which has seen heavy retailer investment over recent years. In addition, inventory management continues to be a high priority.

“Our research shows a majority of retailers are in the diagnostic phase of advanced analytics maturity,” says Robert Hetu, research director, Gartner Retail Industry Services. “This is the second of the four-stage maturity: descriptive, diagnostic, predictive and prescriptive.”

Marketing and merchandising analytics capabilities lag those of supply chain, with the move toward more advanced capabilities very much a work in progress (Figure 9). As retailers’ focus shifts more sharply to being customer-centric, they are seeking similar levels of investigative and predictive analytics capabilities for these functions. Customer insights tops retailers’ analytics priorities this year (53%), followed by personalization and promotion effectiveness (30% each).

One reason for supply chain’s relative maturity is the availability of solutions in those areas. Major vendors started in financials and supply chain ― and benefited from the horizontal nature of those solutions. As solution providers build out merchandising, marketing and other customer-centric analytics tools, retailers will more easily adopt those capabilities.

Top Challenges

As Figure 7 illustrates, retailers have made progress in the maturity of their analytics team/resources; 19%

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AREA

12%

Replenishment

7%

37%

Inventory management

7%

14%

Demand forecasting Logistics optimization

7%

26%

29% 21%

37% 19%

16% 21%

33% 26%

23%

NO FORMAL ANALYTICS BASIC REPORTING

14%

24% 26%

9%

19%

14% 12%

19%

INVESTIGATIVE ANALYTICS PREDICTIVE ANALYTICS

BASIC ANALYTICS

FIGURE 9

Maturity of Retail Customer-Centric Analytics PRIORITY THIS YEAR

53% 28% 19% 30% 9% 30% 23% 5%

AREA

Customer insights

12%

29%

38%

17%

Pricing

12%

29%

38%

19%

Assortment management

16%

Promotional effectiveness

14%

19%

Marketing spend

21%

Personalization

23%

In-store analytics

24%

Social media influence NO FORMAL ANALYTICS BASIC REPORTING BASIC ANALYTICS

33%

28%

33%

16%

40%

28%

28%

7%

14% 12% 2%

35%

38%

2%

12% 2%

52% 26%

5%

31%

5% 2%

33%

7%

INVESTIGATIVE ANALYTICS PREDICTIVE ANALYTICS

FIGURE 10

Top Analytics Software Plans

68% 63% 61% 61% 60% Website/online analytics

Enterprise BI & reporting tools

In-store analytics

Customer personalization

Data visualization/ dashboards

FIGURE 11

Next-Gen Analytics Adoption Use of artificial intelligence

63%

Use of Internet-of-Things (IoT)/connected devices analytics Use of big data analytics

40%

47%

33% NOT A FOCUS LEARNING MORE

say they are better than the industry, and 7% rate themselves significantly better. But they still call inadequate talent or dedicated staff their biggest analytics challenge (56%, in Figure 2). This suggests that while progress has been made, as retailers have pursued analytics talent they have also seen how difficult it can be to assemble the ideal complement of skills, tools and data governance. However, as seen in Figure 3 in the overview section, retailers’ plans to fill specific analytics positions are anemic at best, suggesting they are still not confident on how to organize and properly staff this key function.

Limited software toolsets and the inability to integrate data from multiple sources are the

2%

35%

37%

14%

16%

14%

DOING PROOF-OF-CONCEPTS (POC) EXECUTING PROJECTS

next biggest analytics challenges for retailers (47% each, in Figure 2). But the indicators are much stronger here for intent to solve these issues than for filling the talent gap. More than half of retailers intend to add for the first time, upgrade or change suppliers for a long list of analytics application areas (Figure 10).

And lack of intent to make changes may just mean they have already checked those boxes.

Investment plans appear quite healthy, with retailers prioritizing web/online analytics, enterprise BI & reporting tools and in-store analytics for their spending this year.

Budgets and Vendors

Budgets also reflect retailers’ focus on

continuing to strengthen their analytics chops; while they devoted an average 10.5% of IT budgets to analytics in 2016, they project that climbing to 16.6% by 2021, a CAGR of 12.1%.

Retailers are split nearly 50/50 on whether they currently, or plan to, turn to outsourced resources to conduct data analytics vs. building out this capability completely in-house.

IHL Group’s Roster sees outsourcing as a key strategy to help retailers overcome their staffing issues. “I don’t believe it’s a requirement for many retailers to have data scientists on their teams,” he says. “I do think it’s mission critical though to have access to that expertise.

We’re seeing a rapid scale up of service providers offering this capability.”

A portion of retailers’ IT budgets must be carved out for forward-looking applications of analytics (Figure 11). Big data has seen the most progress so far: 14% are already executing projects and 16% are in the proof-of-concept phase. Applying analytics to data from the Internet of Things, connected devices and artificial intelligence are at earlier phases of education and adoption.

IoT will dramatically increase the data available for customer insights. “With this explosion of data, it is even more critical to understand decision modeling — identifying what data actually drives key decisions and what data is merely excess noise,” says Morris. Other analytics trends to watch include graph databases, cognitive capabilities, open source analytics platforms and the impact of cloud-based POS to enable real-time analytics.

It’s difficult to underestimate the importance of robust data management and a strong analytics focus to the future of retail. Omnichannel and brick-andmortar retailers are being challenged by pure-play retailers built from the ground up based on these competencies, as well as consumer goods companies with a longer track record in analytics pushing for direct and sometimes transactional relationships with consumers. All are continuing to work at establishing and maintaining the analytics talent, tools, structure and culture that will allow them to remain competitive in the new, insights-based, customer-centric retail marketplace. CGT/RIS

C O N S U M E R G O O D S . C O M | M AY 2 0 1 7 | C G T

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The Bar Keeps Getting Raised C G C O M PA N I E S A R E S T R U G G L I N G T O K E E P U P W I T H T H E D ATA - D R I V E N M A R K E T L E A D E R S onsumer goods companies as a group have a longer track record than retailers do in using analytics to understand and drive the business. But as digital has gained steam, data availability has mushroomed and analytics capabilities have taken a quantum leap forward, many CG companies have struggled alongside retailers to keep up with the data-driven market leaders.

That’s particularly the case for the CG companies that responded to the survey supporting this report. The majority (65%) of last year’s respondents had annual revenues of $1 billion or more, while just 46% of this year’s respondents were that large, and the percentage of sub-$100 million CG companies doubled. With fewer resources, these SMB respondents face even greater challenges at achieving par with competitors in their ability to wield analytics power to understand, serve and influence customers.

But the good news is that CG companies recognize this deficit, and are focusing their investments moving forward on analytics capabilities that support their customer-centric business goals. They are also continuing to build up their already well-established analytics acumen in supply chain to further their maturity in areas such as planning and demand forecasting.

Analytics Maturity

This smaller-skewing group of CG companies see themselves lagging their competitors significantly in analytics data quality, data management and analytics team/resources, which have continued to challenge the industry as a whole (Figure 12). Getting the right analytics tools in place also looms as a huge challenge. These basic building blocks are critical to creating the bedrock on which analytics-driven organizations are built.

“There’s an element of greater pessimism on their performance across everything that we’re seeing,” says Gaurav Pant, SVP research & principal analyst, EKN Research. “They generally feel that they’re not doing as well as they should be.”

When Amazon’s substantial analytics prowess is the

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FIGURE 12

Analytics Maturity in CG 2017 Using analytics for decisions

2%

27%

Data quality

5%

20%

Analytics tools

20%

Data Management

2% 16%

5%

27%

52%

7%

30%

5%

41%

34% 34%

2% 9%

5%

23%

43%

2% 9%

Analytics strategy

Analytics team/ resources

43%

9%

39% 37%

44%

7%

SIGNIFICANTLY BETTER THAN THE INDUSTRY

LAGGING THE INDUSTRY

BETTER THAN THE INDUSTRY AT PAR WITH THE INDUSTRY

SIGNIFICANTLY LAGGING THE INDUSTRY

2016

Data quality

34%

9%

Analytics strategy

7%

Data management

6%

30%

8%

24%

Analytics skills/ people Analytics tools

6%

35%

21%

10% 3%

44% 39% 41% 34% 42%

16% 18%

3% 6%

32% 28%

1% 3%

SIGNIFICANTLY BETTER THAN OUR COMPETITORS

LAGGING OUR COMPETITORS

BETTER THAN OUR COMPETITORS AT PAR WITH OUR COMPETITORS

SIGNIFICANTLY LAGGING OUR COMPETITORS

(NOTE: AVERAGE RESPONDENT SIZE WAS SMALLER IN 2017 THAN IN 2016.)

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yardstick, CG respondents’ self-evaluation is even more dismal. At least 80% of respondents rate themselves as lagging or significantly lagging Amazon in every aspect of their analytics programs. That’s not all that much higher than the scores last year’s respondents gave themselves compared to Amazon.

It’s possible that until Amazon began ramping up its private label business in some categories, some CG companies did not see them as head-to-head competitors, and therefore did not aggressively invest in technologies to improve their chances to compete.

Supply Chain Maturity

CG companies’ growing efforts to develop direct consumer relationships through digital channels is reflected in the increasing application of advanced analytics capabilities in areas such as price and promotions and customer insights, where greater transparency is yielding rich data (Figure 13).

Marketing personalization and social media influence are also seeing the use of advanced analytics.

Trade promotion capabilities are similar to these categories in the application of advanced analytics, but this is a much more mature area, so investment to push to more predictive analytics capabilities may be lagging because CGs have found it challenging to derive value.

CG companies are far more mature in inventory and supply chain analytics, with 41% using investigative or predictive analytics in category management and nearly as many in inventory management. Demand forecasting leads use of predictive analytics at 14%.

CG companies’ business goals are clear in their analytics priorities (Figure 14). Enhancing understanding of the consumer and improving digital marketing effectiveness lead the list at 39% each, followed by improving price performance and trade spend effectiveness. All are indicative of CG companies shifting from an operations and execution focus to getting to know consumers more directly through digital channels.

According to McKinsey’s 2016 survey of North American companies, CGs that are besting their competitors are twice as likely to view advanced analytics as critical to business strategy and are

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FIGURE 13

Maturity by Application Area MARKETING AREA

Price and promotions

7%

Customer insights

32% 30%

18%

30%

25% 20%

7%

23%

9%

Trade promotion

16%

30%

32%

18%

Marketing spend

16%

30%

34%

14%

Marketing personalization

16%

Social media influence

34%

26%

30%

7% 11%

12% 7%

28%

28%

NO FORMAL ANALYTICS BASIC REPORTING BASIC ANALYTICS

9%

5%

INVESTIGATIVE ANALYTICS PREDICTIVE ANALYTICS

SUPPLY CHAIN AREA

Demand forecasting

7% 11%

Category management

7%

Inventory management Transportation/logistics

5% 12%

48%

23%

23%

building “insights factories” — analytical models, tools, and processes ― to do so.

CG companies struggle to establish a firm foundation for analytics ― especially small and mid-size firms. Top areas for adding new software, upgrading existing systems

14%

34%

30% 34%

23%

NO FORMAL ANALYTICS BASIC REPORTING BASIC ANALYTICS

Investment Focus

20%

7% 2%

36% 37%

23%

5%

INVESTIGATIVE ANALYTICS PREDICTIVE ANALYTICS

or changing to a new supplier are data visualization/dashboards, enterprise BI and reporting and social media analytics (Figure 15). These areas all reflect a desire for CG companies to build capabilities that deepen consumer relationships and make effective use of digital marketing.

At the same time they’re shoring up

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Obstacles to Progress

FIGURE 14

Top Areas of Analytics Focus 39% 39% 32% 30% 30% 27%

Enhance your understanding of the customer Improve digital marketing effectiveness Improve price performance Improve trade spend effectiveness Improve supply chain planning and demand forecasting Provide relevant insights to the sales force

FIGURE 15

Top Analytics Software Plans

66% 65% 60% 55% 51% Data visualization/ dashboards

Enterprise BI and reporting

Social media analytics

Data warehouse/ storage

Web/online analytics

FIGURE 16

Emerging Analytics Enabling Technologies Use of artificial intelligence (AI) Use of big data analytics Use of Internet of Things (IoT)/ connected devices analytics

66% 30% 27%

36%

14%

50%

20% 16%

NOT A FOCUS

DOING PROOF-OF-CONCEPTS

LEARNING MORE

EXECUTING PROJECTS

core capabilities, CGs must keep up with emerging technologies that will support analytics programs in the future. Big data analytics is furthest along in moving from that watchful state into proof-of-concept and executed projects (Figure 16). Internet of Things applications follow, while artificial intelligence remains the least explored.

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11% 2%

20%

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7%

AI might be the answer to some of the integration woes CG companies cite as among their top challenges. “Data needs to be harmonized and synchronized, and CGs have a great opportunity to use artificial intelligence to manage the context with master data,” says Lora Cecere, founder and CEO, Supply Chain Insights.

As seen in Figure 12, CG companies as a group are generally frustrated with their progress in analytics, and they lag in maturity on some fundamental infrastructure needed to build themselves into more sophisticated, insights-driven organizations.

That frustration is clear in their rankings of the top challenges to leveraging analytics more strategically.

Limited software toolsets and inability to integrate data from multiple sources tie at 36% each to lead the list (Figure 2). This is no surprise: Small and midsize CG companies in particular have a difficult time funding foundational investments in tools and data management infrastructure when the return on those investments may be far off. Data integration has long been a struggle, but it is particularly vexing as CGs increase their focus on the consumer.

People issues ― both the culture and the need to staff appropriately to derive the most benefit from analytics ― are also top challenges.

“We are limited by talent availability,” says Cecere.

“The industries of financial services, insurance and telecom are sucking up the available resources with better salaries. The consumer industry is a laggard. The jobs just are not as interesting, the executive teams not aligned, and the salaries are not as competitive.”

Presumably, the CG industry’s budget plans will address at least some of those gaps. Analytics accounts for an average 11.3% of IT budgets now, but will rise to 18.1% by 2021.

Just under half (45%) are spending a portion of that budget on outsourced resources to provide data analytics; another 14% have plans to do so.

For small and mid-size CGs who feel their in-house foundation for building a strong analytics platform is lacking, outsourcing may be the right path to catch up with analytics leaders.

The race to build closer relationships with consumers is on, and CG companies know analytics turbo charges those efforts. Many are working diligently to build their programs, allocating a larger portion of IT budgets, working on data integration, tool and management issues and seeking to attract the right talent. While frustrated at the pace, they are slowly making progress. CGT/RIS

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SALES AND MARKETING

INFORMATION TECHNOLOGY

|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| INNOVATION

SUPPLY CHAIN

2017 TRADE

JASON MURPHY Managing Director, Consumer Goods Software Strategy & Development Accenture PATRICK MORIARTY Executive Director, Advisory Services Practice EY LLP

PROMOTION

SOLUTIONS

In this month’s edition of CGT’s Technology Solutions Guide series, experts from Accenture, EY, Nielsen, T-Pro Solutions, UpClear and

MIKE DORGAN Vice President, Revenue Management & Optimization Nielsen WAYNE SPENCER President/Founder T-Pro Solutions, Inc.

THIERRY SOUDEE Chief Executive Officer UpClear

Vistex provide thought leadership for consumer goods manufacturers that are navigating the challenges and opportunities surrounding trade promotion management and optimization.

Q

What is the greatest advancement that’s been made in the field of trade promotion management in the last five years? What’s coming in the next five years?

MURPHY: Undoubtedly, it has been the level of sophistication and availability of tools and data — but it is the recognition within organizations that TPM needs to be business-led and not an IT process that’s been among the greatest advancements in the field in recent years. Most CGT readers are probably

second- or third-generation users of such tools now; they know what works and what to avoid. Not even looking five years out, consumer goods companies will face their biggest challenges from competition and products that are possibly not even in the market today.

The rapid rise of smaller, agile companies attracting consumer adoption through digital media and subscription-based commercial models will, we believe, continue for some time. Today’s consumer goods companies need to look at their trade and consumer marketing spends holistically to ensure their dollars work harder for them.

GARY ADAMS Industry Principle, Consumer Products Vistex

MORIARTY: The greatest advancement over the last five years has been the ability to measure return on investment consistently. Companies have always been able to calculate ROI with some effort. But in recent years they’ve been able to track it regularly, as improvements in data and systems have made promotion costs more visible. Why is this so important? It’s impossible to improve trade spend productivity if you can’t understand event ROI. The biggest advancement we need to see over the next five years is a furthering of the skills needed

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“Only by truly understanding shopper behavior through combining internal and external data can a true picture of demand, promotional performance, and ROI be seen.”

— THIERRY SOUDEE, UPCLEAR to use analytics effectively. Only 17% of consumer goods companies feel confident in their ability to use analytics for promotion decisions, according to EY research. Companies need to recruit and train people with the skills to analyze ROI. And they need to measure/reward performance based on their ability to make promotion decisions — thereby incenting workers to invest in their own skills.

DORGAN: There have been pockets of success in the last five years: the emphasis on account planning as opposed to just promotion management, ease-of-use improvements for account team adoption, and post-event analysis all come to mind. Ultimately though, the bottom line is that the industry has spent hundreds of millions of dollars on TPM over this time frame and still, most promotions are not profitable for the manufacturer — and their efficiency is declining. In the next five years, the focus needs to shift toward getting

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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| smarter volume through trade. The industry needs to move from price and promotion guidelines that are either outdated or not applicable to individual account situations and account teams armed to sell smarter.

SPENCER: The greatest advancement in the past five years has been the ability to effectively manage massive amounts of disparate data in the cloud. This has opened up the opportunity to marry existing sophisticated modeling (i.e. constraint-based modeling) with the shipment, spending and POS data necessary to optimize the significant CPG trade spend. The most critical advancement in the next five years will be expanding the power of TPO from a manufacturer’s perspective to the category. The technology is available to mutually optimize the trade investment for both retailer and

allowed vendors to deploy rapidly and, in our case, often phased by a functional module, delivering a rapid ROI for new users. The capital expenditure outlay is minimized, with the vendor then responsible for data management, integration, and ongoing support — reducing the burden on IT. SaaS also benefits clients who always have the latest version of the software and the ability to add new functionality, allowing the solution to grow with business requirements.

In the next five years, the focus will be increasingly on data, both in terms of integrating third-party EPOS (electronic point of sale) or distributor reports, and also in using the software to deliver real value-driving insights.

The line between TPM and TPO will become increasingly blurred as, data facilitates fact-based decision-making, especially as increasing ‘intelligence’ is embedded.

“The most critical advancement in the next five years will be expanding the power of TPO from a manufacturer’s perspective to the category.”

— WAYNE SPENCER, T-PRO SOLUTIONS, INC.

manufacturer benefit. This is a critical next step toward moving from simply talking about joint business planning to effectively executing it. This will only be accomplished when ‘one version of the truth’ in a real-time, real accurate database can optimize the total trade spend at the category, brand and PPG/ SKU level.

SOUDEE: Without question, the greatest leap forward in TPM over the last five years has been the growth of software-as-a-service. SaaS has

ADAMS:The greatest advancement is the move from pure tactical TPM to an analytically supported promotion decision-making and planning process.

There is continued pressure on brand margins as to how to budget and spend funds across the different programming types: media, consumer, shopper, trade and digital. CGs have attained this level of sophisticated planning by capturing the required performance data over time and are now systematically integrating these data points to enable users to make

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more profitable promotion and funding decisions. Moving forward, we will need to focus on compressing the planning cycle. While clients embrace the analytical power and insights available for better decision-making, they struggle with spending more time on their laptops than ever before.

Those CGs that can define how they value promotion events and scenarios — ROI, margin impact, incremental volume, etc. — and systematically support users with those insights will gain face time with their customers while bringing more meaningful promotion programming to the table.

How are TPM Q solution providers responding to the

challenge of incorporating consumption data and other outside information into CG companies’ trade processes?

MURPHY: We cannot speak for others, but we’re seeing a rapid rise in initiatives around a much broader range of data elements than in the past. The traditional data of sell in, sell out, weather and media indexes are all still there, but we’re now seeing the use of economic factors, population growth, social media listening data and category metrics to help drive some excellent mediumto long-term business planning results. One of our clients is currently combining these long-range planning metrics to better plan trade and market spend allocation across its entire product portfolio.

MORIARTY: The vast majority of TPM/O solutions can use consumption data, whether syndicated or EPOS, in their planning tools. For customers/ channels where consumption is not available, solutions need to handle

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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| “Digital enablers – via social, loyalty and e-commerce platforms – are helping manufacturers and retailers offer deals that are better targeted and more efficient.”

—PATRICK MORIARTY, EY LLP

shipment data, as it’s possible to calculate most key performance indicators using shipments.

Bigger challenges limit the use of TPM/O solutions as effective planning and forecasting tools. These include integrating consumption data with 1) promotion calendars, as syndicated/EPOS data do not always contain all causals; 2) retailer price lists, to compute manufacturer and retailer KPIs; and 3) event costs/product margins, to model profitability.

One or more of these components is often missing. We should not just blame solution providers — often companies do not have the information, or it is not available in the right format or level of detail. But data is getting better all the time.

And when it is available, leading providers are integrating it into their solutions. So this is no longer an excuse for not having better planning processes.

DORGAN: The response to this particular challenge has been mixed.

The insights necessary to improve

forecasts and the decisions that allow volume to go up despite flat or declining trade rates have been largely available for 20 years, but the industry has had trouble overcoming the barriers to make use of these analytics. The language of business-critical deliverables such as the annual operating plan, demand forecasts and others (i.e., cases and bill-to/ship-to) is different from the language of predictions and insights (i.e., UPC, scan account).

Most accounts don’t have POS data, and predictive analytics solutions have typically been confusing and complex.

These barriers can be overcome.

Predictive analytics based on consumption insights remains the key. But in order to achieve adoption, some key requirements need to be fulfilled: 1) insights and simulations are crucial, but they must not get in the way of planning/selling; 2) the user interface for account teams must be tailored specifically to them; 3) while an end-to-end solution is ideal, practical considerations usually

“Clearly, e-commerce has affected the traditional trade promotion process — but the jury is still out on exactly how.”

— MIKE DORGAN, NIELSEN

EVERYDAY PRICE AND PROMOTION ANALYTICS MAKE SMARTER DECISIONS EVERY DAY.

For more information, contact revenuemanagement@nielsen.com

Copyright © 2017 The Nielsen Company (US), LLC. All Rights Reserved.

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Tech Solutions Guide

mean modularity and integration.

And in some cases, change management needs to be instated and incentives need to be modified.

SPENCER: A post-promotion analysis and predictive planning solution can harmonize and map the critical disparate data (shipments, spending, POS/syndicated and consumer/shopper marketing) necessary to perform accurate post-promotion analysis, as well as accurately develop optimal customer plans solving for volume, revenue and profit. This type of solution can also seamlessly integrate to a TPM solution with the ability to electronically export optimized customer plans with no redundant entry. Accurate

|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| fact-based insights and decision-making around “one number,” giving a company the ability to make strategic and valueaccretive choices, external data needs to be brought into the equation.

Only by truly understanding shopper behavior through combining internal and external data can a true picture of demand, promotional performance and ROI be seen. The integration of third-party sales-out data, overlaying sales-in data and financial metrics enables complete visibility of profitability for both the supplier and the retailer. In turn, this can facilitate joint forecasting and planning and a truly collaborative approach, making a TPM tool strategic rather than purely tactical.

“Not even looking five years out, consumer goods companies will face their biggest challenges from competition and products that are possibly not even in the market today.”

— JASON MURPHY, ACCENTURE

baselines (modeled monthly) and predictive/historical merchandising lifts provide the foundation for extremely accurate post-event KPIs, in addition to generating accurate optimized future customer plans, for both the manufacturer and retailer.

SOUDEE: As the question suggests, without integrating data, a TPM tool is merely a glorified library of promotions. Integration, at a minimum, needs to cut across an existing landscape, allowing information to flow freely through a business rather than getting stuck in silos of knowledge. To truly enable

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ADAMS: Most TPM solution providers realize that their solutions must offer the ability to tap into the consumer goods company’s data, both internal and external.

Whether this connection is made through a series of integration hooks between solution and database, or through an integrated data platform component that is part of the TPM solution being offered, the path to optimization and more sophisticated pre/post-event analytics is driven by how the data platform manages external and internal data sets.

The challenge goes beyond just “getting the data into the solution.”

It requires cleansing, harmonization, normalization and staging to specifically support the types of outputs users require, whether during planning, execution, or evaluation of trade promotion programs. The market is seeing the re-emergence of the demand signal repository concept, as pure data providers and TPM/O solution providers build out these capabilities for clients and prospects.

How has e-commerce Q affected the traditional trade promotion process?

MURPHY: In short, massively.

It’s a commonly known fact that most consumers and shoppers want to see regular promotional activity for both new products and their favorite brands, but with online channels the proportion is higher still. Organizations that plan their promotions to enhance the overall product with marketing and appropriate incentives, showing some real added value to the shopper, do best. Those that spend the time to analyze trends in traffic, looking at where visitors are dropping out and using promotions to prevent it from happening, do well here. Not all the traditional tools or processes were created at a time when so much depended on positive referrals, a strong social media presence and a tightly coupled multi-channel approach to planning and execution of promotional activity. So it’s time now to rethink existing e-commerce tools and processes.

MORIARTY: E-commerce has created a wealth of capabilities that consumer goods companies are using to engage consumers. Digital enablers — via social, loyalty and

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“E-commerce programs require funds, just as any other programming type.

That will place extra pressure on trade promotion spending to be more efficient.”

— GARY ADAMS, VISTEX

e-commerce platforms — are helping manufacturers and retailers to offer deals that are better targeted and more efficient. Still, challenges remain, and people are reluctant to depart from old paradigms.

A big challenge is that digital offers are often executed as incremental activities, separate from off-line retail. Much of the margin advantage is then lost, because savvy consumers compare or stack e-tail and retail promotions. Despite this challenge, digital promotion and e-commerce strategies are delivering future promise.

The industry can use incentive platforms, marketing exchanges and programmatic promotions to engage consumers on a personal basis in real time. Mar-tech solutions use a combination of behavioral triggers and new processes to deliver personalized offers and better measurement capabilities. Firms that use these technologies effectively can improve the consumer experience, reduce deal subsidization and drive profitable growth.

DORGAN: Clearly, e-commerce has affected the traditional trade promotion process — but the jury is still out on exactly how.

E-commerce has the potential to fundamentally impact the way price and promotional offers get

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communicated to consumers, on how consumers perceive what a promotion is, on how a promotion is structured financially between manufacturer and retailer, and even on what metrics are used to evaluate promotions and price changes. This will create challenges with respect to estimating volume and liability, assessing what a good spend is, and the data necessary to do both.

SPENCER: E-commerce has provided a challenge for accurately evaluating the effectiveness and efficiency of the total corporate trade spend. As e-commerce channels evolve, it is critical that we capture all of the key data components necessary for brick-and-mortar TPO and evaluate the overall ROI. As the conventional channels of distribution erode in sales, it will be critical to have a comprehensive solution that can conduct accurate realtime post-event analysis, as well as to develop accurate optimized channel/customer plans that are allocating promotional funds to the appropriate areas of growth.

SOUDEE: The rise of e-commerce, both via traditional retailers entering the space and from newer, dedicated online retailers, presents CPG companies with challenges — but more importantly, with

opportunities. The established path to purchase has been disrupted as consumers discover, compare, and review brands online checking prices from different retailers — even, occasionally (especially for bigger purchases) while physically in-store.

The opportunity for CPG companies is to subsequently disrupt the new model. Brands must learn to interact and manage their reputations online while looking to bespoke pack/price architecture with tailored online promotional mechanics to blur cross-retailer comparisons. Promotional plans need to be driven by integrating the available data to understand shopper behavior and create winwin activities for manufacturers and retailers, and particularly for those prepared to share their data.

Consumer goods companies that throw out the traditional playbook and approach the digital shopper with fresh eyes will be the winners.

ADAMS: E-commerce programs require funds, just as any other programming type. That will place extra pressure on trade promotion spending to be more efficient. For most CG brands, the size of the pie hasn’t changed but there now are more mouths asking to be fed. As CGs begin executing digital programs, it is imperative that they capture the associated performance data so that, over time, post-event analysis of digital programs aligned with trade promotions can begin to show the value of running them in conjunction with each other and gain the synergies that may be available. Once again, the success of CG programming will be the users’ access to analytical insights as to which programs are a solid return on investment and can profitably grow the brands. CGT

THE DIFFERENCE BETWEEN A HALF-BAKED CAMPAIGN

©2017 Accenture. All rights reserved.

AND A SMART COOKIE.

JOIN US AT THE CONSUMER GOODS SALES AND MARKETING SUMMIT 5–7TH JUNE 2017 Accenture Cloud Solutions for Consumer Goods accenture.com/cloud.cg

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2017

TRADE PROMOTION SOLUTIONS CHART KEY CG C U S T O ME R S

U N I Q U E F E AT U R E S /B E N E F I T S

Did not provide

All business process outsourcing performed in-house by experienced industry professionals; comprehensive and economic system with accelerated implementation process; customizable user interface, business planning calendars, claiming & deduction management workflows, settlement and dashboard reporting/analytics.

Accenture Cloud and Accenture CAS Trade Promotion Management

Did not provide

The Accenture TPM solutions help transform sales and marketing processes by combining Accenture’s industry expertise with Salesforce’s cloud-based customer success platform, establishing a single system of engagement driving insight into action.

AFS Trade Promotion Management Retail

• Hain Celestial • Hostess Brands • Jarden Consumer Products

AFS TPM Retail provides the ability to plan, deploy, execute, and report trade at any level of the hierarchies, both direct and indirect customers, with a low-cost, low-risk predictive capability.

www.brillio.com/solutions/ optimix

Brillio Optimix

• Kraft Heinz • The Hershey Co. • Mondelēz International

Brillio Optimix is a trade promotion optimization plus digital marketing optimization solution that uses artificial intelligence to assess lifts, ROI and optimal plans with attribution across vehicles, cannibalization, execution and channel/competition drivers.

CPGToolBox

CPGToolBox Trade Planner

• Fruit of the Loom • Popchips • SlimFast

This is a TPM solution built on the Salesforce platform in order to provide global promotion planning in any currency/language, rapid implementation, new target management app, and fast workflow at an affordable price.

Polaris, a suite of cloud-based revenue management tools for CPGs

Did not provide

Part of Deloitte’s CP Insights Hub, Polaris embeds Deloitte’s expertise in CPG commercial into “decision pathways” that provide users with data-driven context for decision-making. It includes local sales opportunity tools and persona-based TPM, and integrates with DecisionPrint, Deloitte’s performance management tool.

Eversight Offer Innovation

• Coca-Cola Co. • Ferrero • Kimberly-Clark

Offer Innovation software complements TPM/TPO by utilizing machine learning to identify, create, and digitally test new offers never run before. Eversight offers deployed in-store typically out-perform historical offers by 10% to 25%.

COMPANY/W EBSI TE

PRO DU C T

The Advertising Checking Bureau

ACB TPM and MDF Management System

Accenture

www.acbcoop.com

www.accenture.com/cloud.cg SEE A D O N PAGE 37

AFS Technologies http://tpm.afsi.com/

Brillio

www.cpgtoolbox.com

Deloitte Polaris

www.deloitte.com/polaris

Eversight, Inc.

www.eversightlabs.com

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Tech Solutions Guide

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2017 TRADE PROMOTION COMPANY/W EBSI TE

Exceedra

www.exceedra.com

Flintfox International www.flintfox.com

Hitachi Consulting Corp.

www.hitachiconsulting.com

IBM

www.ibm.com/watson/ customer-engagement/industry-consumer-products/

Kantar Retail

www.kantarretail.com/xtel

Nielsen

www.nielsen.com SEE A D O N PAGE 33

Relational Solutions Mindtree

www.relationalsolutions. com

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PRO DU CT

KEY CG C U S T O ME R S

U N I Q U E F E AT U R E S /B E N E F I T S

Exceedra Integrated Business Planning & Trade Promotion Management/ Optimization Solution

• ACH Foods Inc. • Bayer • McKee Foods

Exceedra solutions deliver capabilities for clients to simplify sales, financial and demand planning processes and achieve greater performance in trade promotion management and optimization, customer business planning, demand planning and S&OP.

Flintfox RMx Advanced Pricing

• Bush Brothers • Chobani • New Belgium Brewing Co.

Flintfox RMx for any ERP eliminates disconnected spreadsheets, applications and manual processes to manage pricing, promotions and trade agreements. RMx delivers sub-millisecond response times for complex pricing calculations.

Our solution encompasses strategy, organizational change, process and technology selection/ implementation.

Did not provide

By including all the key elements of a successful TPM/TPO program — strategy, organizational change, process and technology selection/ implementation, post go-live — Hitachi customizes its approach and methodology to meet the needs of clients.

Trade Promotion Planning and Analytics

Did not provide

IBM seeks to eliminate the complexity of detail planning and analyzing promotions including competitors, weather and events; applies Watson Cognitive Analytics to enable true non-linear optimization; cloud, BPO, and self-service for global, multi-channel implementation.

Kantar Retail Trade Optimization — Trade Promotion Management and Optimization Solutions

Did not provide

Kantar Retail’s TPx footprint enables an optimal go-to-market approach around the promotion, from strategy through implementation; 20-plusyear proven record in the CG industry for clients around the globe.

Revenue Management & Optimization

TradeSmart: Trade spend ROI analysis for manufacturers and retailers.

C G T | M AY 2 0 1 7 | C O N S U M E R G O O D S . C O M

Did not provide

Did not provide

Nielsen’s RMO is a global solution that combines comprehensive storelevel data with best-in-class analytics and fully integrated, modular TPM and TPO cloud-based software. Leveraging RMO’s activation-ready insights and always-on tools, clients are able to deploy data-driven strategic and account planning to make informed decisions.

TradeSmart includes margin analysis, competitive analysis, new item, PEAT, 100% coverage, etc. Integrates COGS, POS, shipments, plan, 3rd party, etc., for real-time trade analytics, true ROI. It also has editing, tactic grouping and write-back capabilities.

SOLUTIONS CHART KEY CG C U S T O ME R S

U N I Q U E F E AT U R E S /B E N E F I T S

20/20 Analytics platform

Did not provide

Sequoya is proven scalable against virtually any POS data source, syndicated or non-syndicated, fueling a modeled, full category analytics platform encompassing: advanced pricing, promotion simulation and effectiveness, trade ROI, category insights and automated analytics.

SAP Trade Management

• Colgate-Palmolive • Nestlé • Johnsonville Sausage

SAP Trade Management enables consumer products sales leaders to be P&L owners, driving revenue, volume, and profitability that leads to internal margin growth as well as customer category growth.

SYSPRO Trade Promotion and Deductions Management System

• Perrone & Sons, Inc. • Stover & Co. • Universal Power Group

SYSPRO TPM fully links to other SYSPRO ERP modules so SMB distributors that rely heavily on trade promotion can experience all the efficiencies of an integrated supply chain solution.

T-Pro Optimum Trade Promotion Optimization Solution

• Kellogg Co. • Perfetti Van Melle • Sargento Foods

T-Pro Optimum optimizes individual merchandising tactics and annual customer plans for revenue, profit and volume. With comprehensive data harmonization, post-event analysis and predictive planning capabilities, T-Pro Optimum considers itself a powerful, accurate and easy-to-use TPO solution utilizing constraint-based modeling.

BluePlanner Revenue Management SaaS Solution

• Danone • King’s Hawaiian • LALA U.S.

UpClear’s modular and highly configurable sales planning, TPM, TPO, and analytics SaaS solution can be deployed to provide promotional insights in weeks, rather than months, delivering rapid ROI and value capture.

SAP Paybacks & Chargebacks; SAP Incentive Administration

by Vistex; GTMS Trade Programs

• Barilla • Dr Pepper Snapple Group • Tyson Foods

Vistex offers sophisticated tools to model, administer and analyze trade spend and promotional programs, providing businesses with complete visibility to make informed decisions and maximize program performance. Integrated with SAP Business Suite or in the cloud with any ERP.

Promax Advanced & Promax Optimize, End-to-end trade promotion management and optimization solution

Did not provide

With 27 years of global expertise, Wipro Promax aims to provide business value via its rich, modular software and associated services to address diverse markets and maturity level, from transactional to advanced analytics.

COMPANY/W EBSI TE

PRO DU C T

Sequoya Analytics

SAP

www.sequoya.com

www.sap.com/consumer

SYSPRO

www.syspro.com

T-Pro Solutions

http://t-prosolutions.com/ SEE AD O N PAGE 31

UpClear

www.upclear.com SEE AD O N PAGE 35

Vistex

www.vistex.com SEE AD O N PAGE 39

Wipro Ltd.

http://promax.wipro.com

CONSUMERGOODS.COM |

M AY 2 0 1 7 |

CGT

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Supply Chain Challenges in Emerging Markets ...

In a recent survey of supply chain executives conducted by CGT and GT Nexus, nearly half of respondents (48%) reported significant increases in product demand in emerging regions over the last five years — and almost all (91%) noted some level of growth.

Those numbers illustrate the critical need for consumer goods companies to adapt their supply chain capabilities to profitably meet the needs of populations that, on a world-wide basis, are exhibiting varied levels of urbanization — especially since domestic sales growth is becoming increasingly difficult to achieve.

Among the greatest challenges that CGs face in emerging markets are the cost pressures involved in creating a profitable fulfillment model in urban settings that, from market to market, have widely different degrees of sophistication in transportation and other civic infrastructures.

What’s more, the global shift in populations toward cities is creating specific challenges for 58% of respondents.

Not surprisingly, urbanization has a greater impact on supply chain strategies than it does other areas of the CG business. And the “digitization” of supply chain practices is having a mixed effect, with roughly half of respondents claiming it’s made their response to urbanization easier, but nearly half saying that it’s had little impact.

Naturally, service levels are also affected by large population centers, with respondents saying they create new logistics challenges and strain fulfillment costs and schedules. Those effects are intensified in emerging regions, where there inevitably are new risks to contend with and, correspondingly, additional pressures on profitability.

One clear implication from the survey is the tremendous need for flexibility. With additional pressures caused by such regional (or even market-level) variables as regulations, social norms and even political volatility, the ability to adapt nimbly to local environments will be critical to future success. CGT

VISIT CONSUMERGOODS.COM TO DOWNLOAD THE FULL REPORT

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C G T | M AY 2 0 1 7 | C O N S U M E R G O O D S . C O M

INCREASE IN DEMAND FOR PRODUCT/ PRODUCT CATEGORY IN NEW/EMERGING REGIONS (LAST 5 YEARS) Significant increase

43%

Minimal increase

43% 10%

No increase

5%

Major increase

91

%

of consumer goods companies are facing increased product demand in emerging markets.

GREATEST SUPPLY CHAIN PRESSURES DUE TO EXPANSION INTO NEW/ EMERGING REGIONS

43% 33%

New risks and costs Challenges to fulfillment profitability Hurdles to deliver on time Assurance of quality

14% 5%

Visibility and transparency challenges

52

%

of executives say digital capabilities have made efforts in emerging markets easier.

81

%

say that large population centers create logistics challenges and fulfillment strains.

BIGGEST CHALLENGE IN ADAPTING SUPPLY CHAIN TO NEW/EMERGING REGIONS

38%

Cost pressures/profitable fulfillment

24%

Demand volatility/forecasting

Them

10%

Transportation/ logisticst

38

%

BUSINESS AREA MOST IMPACTED BY URBANIZATION OF GLOBAL POPULATION

14%

New Product Development

of CGs are facing pressure developing profitable fulfillment models in emerging regions.

57%

Supply Chain

29%

to Address

29%

Increased complexity of supplier network

Sales/ Marketing

EXTENT OF INFLUENCE ON GLOBAL SHIFT IN POPULATION FROM RURAL TO URBAN CITIES IN NEW/EMERGING REGIONS

48%

Moderately influential

43%

No influence Highly influential

10%

EXTENT THAT LARGE POPULATION CENTERS AFFECT SERVICE LEVELS Severely

They place a major strain on time and cost to fulfill

19%

Moderately None

New and emerging markets represent one of the most significant growth opportunities for consumer goods companies today. But within that opportunity exists a distinct set of challenges — particularly for the supply chain.

Opportunity in these markets often comes as the result of a rising middle class and a shift of population from rural areas to large urban centers. That leads to uneven pockets of demand, paths to purchase, and routes to market, thus adding more pressure for consumer goods companies to identify and focus on the right targets. One can’t simply focus on entire countries or regions, but must also consider specific cities and metropolitan areas, each presenting their own distinct challenges. Those challenges range from new risks and costs, to profitable fulfillment, regulations, and social and political activity.

The results of this survey underscore the need for flexibility and agility in the supply chain. New demand patterns, unanticipated risks, and additional logistics challenges call for greater resiliency and the ability to adapt to change more quickly than in established markets, where supply chains are optimized around repeatability and cost efficiency.

In new markets, the emphasis shifts from planning to responsiveness.

A networked approach to supply chain and fulfillment that connects all suppliers and trading partners on the same platform is the first step. By incorporating digital technologies in the supply chain, consumer goods companies position themselves to take full advantage of the opportunity in new and emerging markets, while also improving on the core efficiencies needed for success at home.

—Richard Barnett

62%

They pose some new logistics challenges

They don’t have an impact

… and How

19%

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