Exploit these 10 trends to drive CPG growth in 2016

Conservative spending behaviors that made 2015 a challenging year for consumer packaged goods companies will remain intact for 2016, according to IRI, but there will be pockets of growth available to those who capitalize on 10 trends.

IRI is out with the latest installment of its Times & Trends report series, “Taking Stock of CPG Past and Future: Gear Up Now for a Year of Growth,” in which the company analyzes the lessons learned in 2015 and provides insight into several key trends that will drive growth in 2016.

Driving growth continued to be a challenge for the consumer packaged goods (CPG) industry in 2015. Manufacturers and retailers had to deal with the ebbs and flows of the economy and its impact on consumer spending as well as the increased demands of digital-savvy shoppers.

“We are taking a hard look at the peaks and valleys of 2015 and using these learnings to make a new plan for the coming year,” said Susan Viamari, IRI’s vice president of thought leadership. “We’re offering up insights into several trends that will provide growth opportunities for 2016 and beyond and are taking a deep dive into the three trends that we think will make a big impact.”

The CPG industry has been searching for growth for the past several years due to the challenging economy and conservative shopper spending. Last year, volume sales continued to slide and dollar sales growth was fed largely by inflationary pricing trends. When looking across channels, mass merchandisers and supercenters posted sharper-than-average declines and the club channel showed some resilience. The grocery and drug channels held volume flat, outperforming the industry average of negative 1.7%, according to IRI. Private label share of overall CPG spending changed very little during 2015 and remained relatively flat at the store level.

Looking ahead, IRI expects more of the same. Consumers will remain entrenched in their conservative purchase behaviors in 2016 even though one-third of Americans feel their financial situation will improve this year, according to the firm. Fifty-seven percent of consumers will make their purchase decisions before they enter the retail store, so marketers must continue their efforts to engage shoppers early in the planning process. One-third of shoppers will choose brands based on coupons they have at home, 29% will base purchase decisions on shopper loyalty card discounts and they will leverage Internet-based tools, such as smartphone apps and online advertising and promotions.

It will be possible to grow in 2016 and IRI’s latest research recommends take advantage of the following 10 trends, they include:

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  Circle the Wagons: Omnichannel retail is turning the CPG industry on its ear. Harness in-depth insights about how consumers travel online to understand the new path to purchase and drive in-store growth.


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  Melting Pot Gets Hotter: The growth and transformation of U.S. households are altering shopper attitudes and behaviors. Keep a finger on the pulse of increasing ethnic diversity and the explosion of non-traditional families.


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  Doing More with Less (Media): Consumers are constantly barraged with marketing messages. Cut through the noise in the marketplace and focus on quality versus quantity.


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  Lean & Mean Growing Machine: Manufacturer consolidation will continue as CPGs look for new revenue streams. Consider specialized acquisitions to fill white-space growth opportunities.


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  Big Opportunity in Small Packages: The urbanization of America will drive growth of smaller footprint stores. Meet urban shopper needs with localized specialty outlets.


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  On the Highway to Health: Consumers are embracing a wide variety of healthier-living strategies. Look across CPG aisles for new ways to deliver healthier options for shoppers and the environment.


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  Get Real: Consumers want to know what they’re putting into and onto their bodies, what they’re feeding their pets and exactly what is making their houses cleaner. Answer consumers’ thirst for transparency and authenticity.


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  Snack Attack: On-the-go lifestyles continue to have a profound impact on consumer eating behavior. Tap into grazing, the new sit-down meal.


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  Go Smart or Go Home: The focus on big data is rapidly giving way to smart data that will drive smart growth. Marry big data with technology and analytic know-how to pave the way to growth.


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  Growth Comes from Within: There is no shortage of retail outlet options, so driving growth by adding stores is an ineffective strategy. Find growth by improving efficiency and productivity from within current stores.

”Despite challenging market conditions, CPG marketers really do have reason for optimism in 2016,” said Viamari. “Advancing technology has really given retailers and manufacturers a distinct advantage during these times of rapid and widespread change. By investing to understand how best to leverage new advances to really tap into the change, marketers throughout the CPG industry will identify exciting new ways to create real and lasting market advantages.”

The full report is available by clicking here.