The greatest danger in times of turbulence is not the turbulence; it is to act in yesterday’s logic

~Peter Drucker

Disruption is a term that businesses in the private sector have become all too familiar with in modern times. No doubt, the emergence of the COVID-19 Pandemic has re-conditioned businesses in immeasurable ways.

The Consumer-Packaged Goods (CPG) industry in Nigeria has been particularly hard hit with major disruption in its supply chain, with the increased cost of imported raw materials further occasioned by FX volatility. While some companies have shut down operations completely, others are operating at a relatively lower capacity. The alcoholic beverage industry, for example, has lost a major component of its Route to Market (RTM) Model which includes, events, restaurants, bars, clubs, and hotels.

Some of these market routes are either completely shut down or operating below capacity. The beauty, cosmetics, and fashion industry are also not left out, their businesses have suffered through the lockdown experienced globally, as a result of reductions in high footfall events; parties, social activities.

It is not all doom and gloom as major news sources would have you believe though. While others are counting their losses, some categories are effortlessly cleaning out and dealing with Out Of Stock (OOS) issues. Take the hygiene, health, and food subsector where demands have gone through the roof as a result of the panic buying, causing depletion rates beyond anything projected for the entire year. The unpredictability of COVID-19 and the sudden desire to stay healthy and alive led to a massive stockpile of food, immune-boosting drugs, and hygiene products.

The impact of COVID-19 on the CPG industry especially in the retail end is expected to continue producing winners and losers across the industry for some time to come. 90% of experts expect this disruption to last up to 5years before any semblance of normality returns. Thus there is a need for a broad and dramatic transformation across businesses playing in this CPG market. Some of this transformation would have to be regional because the disruption is exhibiting different patterns and characteristics across different markets.

The real dilemma then is in knowing what kind of transformation to drive, which part of the business to transform, when, and how to initiate this transformation. Stakeholders struggle with deciding whether this disruption is just a glitch in the market that would go away in a matter of months or if the marketplace has indeed changed for good.

According to KPMG companies that embraced transformation during the economic downturn, 2008 experienced up to 30% better performance than those who didn’t. Understanding that transformation is not an ideas problem, but a resource allocation problem is key to being successful at it. Consumer goods businesses have in recent years come to appreciate the need to leverage technology and digital channels to unlock growth. The percentage growth coming from digital channels and online shopping has been on the rise in the last few years. But the emergence of COVID-19 is prioritizing it hence driving a higher sense of urgency.

Typically, most businesses would leverage historical data in trying to predict future patterns, combining this with domain experience in formulating a new strategy. Unfortunately, the pandemic has only been here for a few months and very little data is available to anyone. Too little to be used for any form of prediction.

However, in this writeup, I have tried to identify some of the key areas where CPG businesses can safely start the transformation journey. This ensures that scarce resource is efficiently allocated where it will drive the best impact. Whether your sector is thriving or suffering, focusing on these key areas would ultimately determine if you sustain the growth for those in luck or avoid imminent disaster for those badly hit by the pandemic.

1. Invest in knowing your customer (KYC)

Typically, on my birthday I receive text messages, emails, and sometimes a call from my bankers, insurance providers, and the airlines that I have patronized in the past. I also get reminder emails weeks before my insurance runs out, and likewise when my internet subscription is about to expire. What do you think would happen to my loyalty if on my birthday I get a message from Gillet, OralB, Sure, or Johnny Walker? What if customers receive a personalized message during festivities, and greetings on a child’s birthday or wedding anniversaries?

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The modern consumer is connected, loaded with marketing content throughout the day, and struggles with choice overload. Everywhere he turns, someone is trying to sell him/her something, they have a volatile choice architecture and would decide on impulse at any opportunity. Knowing who they are, what they do, their spending habits and patterns increases the likelihood of earning and retaining their loyalty and upselling them on other products of yours and more. A robust KYC dataset can be mined for insight, repeatedly used to inform design, developing promotions, improve brand communications, and all kinds of forecasts.

2. Explore Online distribution Channels (E-commerce)

With disruptions in the traditional trade channels and the strong desire to stay safe, most customers especially in the urban cities have resorted to exploring online e-commerce channels to fulfill their shopping needs. Aside from shopping online, customers increasingly rely on online channels for product research prior to making a buying decision. Hence it is important that your brand is fairly represented and ranked among others. Investment in search optimization, online content marketing increases the chances of your product ending up in the online shopping cart. The online channel guarantees an infinite share of shelve, and with great ratings, it holds an untapped potential for growth. According to Jess Smith the Strategy Director at Grey London, repeat purchase is 22% more likely with consecutive digital shops.

Jumia the largest local e-commerce provider recently announced partnerships with brands like Reckitt Benckiser, Procter & Gamble, Coca- Cola to close the last-mile gap occasioned by the closure of traditional channels. Alcoholic beverages and Spirit businesses strengthened their relationship with www.Drinks.ng; Nigeria’s first primarily alcoholics drinks specialist internet retailer. While some brands are collaborating with established e-commerce channels, others are embracing Direct to Consumer (DTC) models. Some good examples are MYCOKE and HEINZ to HOME.

3. Leverage data locked in Customer Loyalty programs.

A distribution channel is a chain of business and intermediaries through which goods and services pass and does not end until it reaches the consumer or is consumed. Over the years, CPG businesses have invested hugely in distribution infrastructures covering distributors -wholesaler-retailers. When the consumers in the emerging markets started getting sophisticated, retail outlets started deploying POS and inventory systems. most started running customer loyalty programs.

However, very little insight is gleaned from this data besides allotting customer points most of which are never redeemed or utilized. Data from loyalty programs run at retail partner outlets can be leveraged to identify which customer segments to prioritize and how best to do so. Given that a business’s top 10% of customers spends almost 3 times more per transaction than the lower 90% of customers, there’s no point in giving all customers the same offers when not all of them will deliver the same return.