UNLOCKING THE POWER OF CPG: DIRECT TO CONSUMER IS THE KEY
November 16, 2020
5 min read
Direct-to-consumer models have been an industry game-changer for CPG players, unlocking highly coveted access to individual, consumer-level data. But the model also brings with it the risk of mediocrity: simply creating an online catalogue of an in-store offering is not enough. Here’s how we believe CPG companies can use the model to achieve maximum value.
Many CPG brands have responded to the realities of the pandemic by investing in their online experience—most notably the direct-to-consumer (DTC) model. Kraft has launched Heinz to Home, while Pepsi has rolled out Snacks.com and PantryShop.com—even Ben & Jerry’s is shipping direct to consumer.
The DTC model’s disruption has presented a pivotal opportunity for brands—one that enables them to access invaluable consumer-level data while breaking free from the confines of the current channel structure.
But the model also brings with it the risk of mediocrity: simply creating an online catalogue of an in-store offering—an approach that only positions brands as average and undifferentiated.
To avoid falling into this trap, brands must fully commit to the DTC channel. Only those that embrace it and invest in it will unlock its consumer-level data.
That means investing in a physical retail presence. They must adapt the DTC model so that physical and online are seamlessly integrated, and together can drive cross-channel synergy.
GET PHYSICAL: OWN THE RETAIL EXPERIENCE
To own the DTC channel, a brand must be relevant to consumers beyond the sales transaction and product experience. Achieving that level of heightened engagement requires interaction within a physical space. With the growing availability of prime real estate in many metropolitan areas, there is now an opportunity for CPGs to invest in unconventional retail spaces.
Consider a vacant floor in a corporate tower, or an urban street-facing location: central, surrounded by a dense population, with plenty of foot traffic. Perfect for a short-term brand activation.
Companies like P&G and Unilever have the ability to create the ultimate house of brands experience. One that celebrates the breadth of their brands in a curated manner, without hundreds of SKUs or loud corporate messages. Our Below Zero: A Winter Treat Wonderland is an example of how we believe a house of brands experience could come to life.
The experience must be distinct from traditional retail to differentiate it and facilitate a more intimate relationship with consumers.
Done well, it’s a win-win: The CPG maximizes visibility and connects on a deeper level with customers, while the property manager maximizes occupancy.
GET EXCLUSIVE: DRIVE ENGAGEMENT
Treating DTC as a unique channel means finding ways to make it a distinct offering. Limited-run products, product personalization, and collaboration with influencers, brands, or celebrities can all help a CPG create exclusivity—a strong conversion driver.
Imagine, for instance, the product personalization opportunities during prime marketing events like the Superbowl or the holidays. Think about customizable Bitmojis launched by Snapchat or the #ShareACoke campaign. Now take that concept and bring it to life in a physical space.
Give consumers the chance to engage with products in a completely different way using AR technology. Create fun Snapchat filters to promote a new product or give consumers a behind-the-scenes look at how their favourite peanut butter spread is made.
Create Instagrammable moments with product personalization—think custom ice cream flavours, or exotic, alcohol-infused popsicles like Pina Colada.
Offer cooking classes hosted by local chefs and bloggers. Have them highlight new ways to incorporate products into home-cooked meals.
Feature an unconventional collaboration between a traditional CPG and a streetwear brand—a trend that has gained traction in recent years. Think about Kith x Coca-Cola, Nike x Ben & Jerry’s, or Anti Social Social Club x Panda Express. Together in a retail setting, both brands in the partnership benefit from the increased retail presence and effective cross-promotion.
GET MOBILE: ACTIVATE ON THE CONSUMER’S PATH
While marketing is always about reaching the target audience, it is also about driving engagement.
Food festivals, sports tournaments, and school events are all perfect opportunities to do exactly that.
Consider a branded truck outside a soccer field complex during a provincial tournament weekend: A captive audience of soccer parents, teen players and younger siblings all located in one place, with time on their hands between games.
Or imagine a university homecoming weekend, with thousands of students, families, and alumni reuniting on campus. Many are out-of-towners on a weekend away, and all are there to have fun.
Not only do such events bring in large crowds, but they also attract a dearth of brands, resulting in audiences that are interested and ready to engage.
They create a tremendous opportunity to maximize cross-category penetration and connection with the master brand—translating to increased wallet share in-store. By essentially “coming to life” at these events , brands that normally would tell their story now give consumers the chance to live it in a completely new and local way.
UNLOCK DATA: LEAD IN CONSUMER EXPERIENCE
Owning the DTC channel gives CPG brands unprecedented access to deep consumer insight—insight that informs their product portfolio, drives an increase in retail sales, and strengthens relationships with retail partners.
At the same time, brands that commit to the channel—and invest in it—can expect to foster a strong brand connection and drive fierce loyalty. Through DTC they can create an experience that is different yet complementary to the one in-store.
A truly consumer-focused DTC model has the power to propel CPG brands into a completely new territory of retail—one that enables them to connect with consumers through a much wider array of touchpoints. But only those brands that truly prioritize DTC—and make the channel its own experience—will emerge as market leaders.