Consumer products – everything from detergents to soft drinks and trainers – have been sold through retailers for several decades. In most cases, the only contact between the end consumer and the manufacturer has been one-way advertising via, for example, television and billboards, but even this industry has been turned upside down due to digitization.
– Today, manufacturers of consumer products have to partly manage the traditional retailers, partly as many as 14 different types of digital sales channels, explains Mikael Ekman, responsible for digital trade at Accenture in the Nordics.
It could be a fantastic opportunity, but for many companies it has instead created major problems and high costs.
– The reason is that the companies have added one channel at a time, and then they have created teams and platforms and systems that are optimized for selling in that particular channel. The problem is that these different channels do not interact with each other.
“Two ways to solve this sprawling situation”
Over time, the number of channels has increased, and with it the mass of costs. And today, with 14 different channels that don’t talk to each other but still try to give a unified image of the brand, it all becomes unmanageable.
– As we see it now, these companies really only have two ways to solve this sprawling situation. Either they become pure manufacturing companies that are in the hands of their dealers, or they make a strategic decision to go digital through and through and make a change that spans the entire company.
Something that can be easier said than done.
– What we notice when we talk to this type of company is that everyone has digitization on the agenda in some way, but that it is difficult for them to reorganize the entire company. Instead, in day-to-day operations, it becomes easier to just create a new marketplace or a new team creating content for a new channel, but that’s not the key to success. Instead, it only reinforces the unsustainability of the situation.
Market-leading companies, on the other hand, do the opposite. This is shown in the report “Making space to grow” from Accenture.
– What distinguishes the leading companies is that they set extremely high goals for their digitization, invest heavily to achieve the goals and are not afraid to make changes that span the entire company.
The report also shows that successful transformation means that the company focuses on three areas: “Brand”, “Build” and “Become”.
– The brand must also continue to be in focus, but unlike before when this type of company worked with one-way communication, they must now build their brands in a two-way dialogue with consumers.
This dialogue is needed partly to be able to create direct sales outside the dealers, but also to obtain data about the customers and their needs. Based on that information, the company can create insights that can develop both strategy, products and new categories, as well as lay the foundation for a stronger brand experience and more effective personalized marketing.
– These companies have never had that kind of information about their end consumers before, but that knowledge has stayed with the retailer, but now they can become more efficient, and increase both sales and profitability.
But to be able to carry out this dialogue, step two is required: “Build”. This means that the company creates an organization that can both acquire, create and share insights based on consumer data.
– Instead of building one channel at a time, companies need to get the systems together so that they talk to each other, and create processes so that different functions can work together more efficiently. It is completely unsustainable for each channel to do the same job separately.
Change over time
Thirdly, the report shows that this work is far from a one-off, without the organization having to adapt to become receptive to change over time, “Become”.
– It is not sustainable in the long term to build an organization that only supports today’s channels, but what is needed is an agile organization and way of working that can quickly change over time based on what the outside world demands.
The good news is that the companies that succeed in this transformation have every opportunity to become market leaders. The bad news is that there is very little time to make the transition.
– The transition from physical trade to today’s situation took about ten years, but now is not the time to test yourself. We are not even talking about a three-year program, but the transition needs to happen now. It will be very exciting to see which companies dare to go first and really benefit from this opportunity.
The article is produced by Brand Studio in collaboration with Accenture and not an article by Dagens industri