Is FMCG in planning or fire fighting mode?

How can FMCG plan for the future when it’s fighting fires today?

The FMCG industry is facing a very difficult period – and this is making it more difficult to balance the short and long term planning needed to sustain a business.

FMCG companies are facing a massive shift in buying behaviour created by the cost of living crisis’ rapid increase in the energy price cap. Many consumers now have a reduced budget to spend on necessities – let alone luxuries – and this is greatly impacting their regular spending habits. In August, the British Retail Consortium-KPMG sales monitor showed that UK retail sales slowed as consumers started to reign in their purchases.

For FMCG companies themselves, margins are being squeezed as supply chain issues persist following the pandemic and products sourced internationally are becoming increasingly expensive as the pound depreciates. Indeed, Fitch Ratings reported that Unilever expects its operating margin to decrease by up to 240bp this year as a result of the high share of energy, palm oil and petrochemicals in its costs.

Balancing long and short term priorities

These immediate priorities can lead FMCG companies to focus solely on fighting fires. But with a number of longer-term trends in play that will also affect the future success of these companies, FMCG leaders need to look beyond the immediate issues so as to not risk being unprepared for future obstacles. 

A greater focus on ESG (Environmental, Sustainability and Governance), for instance, requires many FMCG companies to rethink how products are sourced, packaged and delivered. This is down to both increased industry regulation and consumer demand. There is also the need to acknowledge the broadening age demographic of customers, which spans from senior citizens to Gen-Z. This wide age range emphasises the need for FMCG companies to understand their customer base on a deeper level to ensure their products, marketing and customer experiences are tailored and relevant to the right audience. 

Gaining a better understanding of the customer

How can FMCG companies manage the response to all of these challenges? It all comes down to one key thing: understanding your customers.

It is important for companies to know what their customers want and need from them today, but also what their broader priorities are. With this knowledge, companies can stay relevant to their consumer base well beyond their initial purchase decision, building lasting relationships. 

This customer understanding enables FMCG companies to build long-term goals into short term action plans. For instance, Gen-Z are widely reported to have great concern for the environment, so could a product targeted at their demographic change its packaging to be more ecologically sound whilst also reducing costs?

 ResTech brings consumers and companies closer

Consumer insights are crucial to understanding what your customers want from you today and what will keep them coming back to you as the situation continues to evolve. Taking a dynamic approach to consumer insights need not break the bank either, as ResTech platforms can now offer always-on insights without the heavy investment of traditional market research consultancies. 

The QuMind platform provides all of the research capabilities a company needs to bring businesses closer to their customer. And this deeper understanding will help FMCG companies balance the short and long term planning that will help them stay relevant to their customers, now and in the future.

If you would like to hear more about the all-in-one QuMind platform and how it can provide you with valuable insights without the overhead of traditional market research, reach out to [email protected] or sign up for a demo here