Forty-five Percent of CPG Manufacturers are Unable to Optimize Pricing, Trade Allocations and Go-to Market Strategies

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The annual Promotion Optimization Institute State of the Industry report found that traditional CPG manufacturers need to transform their enterprises to drive efficiency, effectiveness and profitability

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POI research demonstrates that CPG leadership can no longer use historical practices to grow a profitable business due to industry shifts. Retailer and manufacturer operating models were not originally built to handle today’s industry complexity.

The Promotion Optimization Institute (POI), the leading resource for enterprise planning, trade marketing, RGM, and merchandising executives, today released the sixth annual POI 2021 State of the Industry Report. Forty-five percent of CPG manufacturers surveyed reported that their headquarters’ support teams do not have the necessary capabilities required to optimize pricing, trade allocations and go-to-market strategies. The report also found that 64% of manufacturers continue to have challenges with retailers sharing foundation data - point of sale, daily, and shopper– with them.

The annual POI 2021 State of the Industry Report focuses on the intersection of the people, processes and technologies required to be a suitable collaboration partner in the promotion and distribution of consumer products. This report utilizes the data and insights from the recent POI 2020 Trade Promotion and Retail Execution Surveys and represents responses from over 100 leading consumer goods manufacturers. To respond to the COVID 19 challenges faced by the CPG industry in 2020, POI has incorporated COVID 19 insights on how peer manufacturers are resetting and re-planning the business in 2021, as well as noting leadership and enterprise priorities throughout the State of the Industry Report.

“POI research demonstrates that CPG leadership can no longer use historical practices to grow a profitable business due to industry shifts. Retailer and manufacturer operating models were not originally built to handle today’s industry complexity,” said Pam Brown, author of the POI State of the Industry report and Chief Commercial Officer, POI. “In the last 5-7 years we have seen young digital savvy brands, who are typically less matrixed and more agile, taking share from larger retailers and manufacturers. Combine this with Covid-19 pandemic consumer buying behavior, omni-channel shifts, the impacted supply chain, working from home, operational safety concerns etc., and it is clear that organizations need to create and execute new strategy in order to compete in today’s retail environment. This report was written to serve as a guide to support CPG manufacturers and retailers as they reset, re-plan and transform in 2021.”

Key Industry Report Findings:

  • Data quality issues continue to plague manufacturers. Sixty-four percent of companies reported having data quality issues with external sources and data anomalies that, when left unfixed, can lead to inaccurate analysis results.
  • Revenue Growth Management (RGM) is growing in popularity. Forty-nine percent of respondents noted their organizations are advancing practices, diving deeper optimized promotion, pricing, and pack growth analysis. Forty-six percent are adding tools or analytical capabilities to support new RGM processes. RGM teams have been at the center of cross-functional Covid-19 decisions to reset and re-plan trade, sku/mix rationalization, pricing and supply decisions.
  • Trade Promotion, Planning and Optimization (TPx) solutions bring transformative results to CPG manufacturers. According to respondents, TPx helped eliminate poor performance (44%), led to process improvements (51%), and provided greater visibility to the business and opportunities/risks (44%).
  • Retail execution of aligned promotions is improving, yet needs to be accelerated. POI research reveals that companies continue to struggle with compliance and in-store execution. Forty-eight percent of respondents reported that their companies are struggling to have retailer aligned promotions executed at store level. Seventy percent don’t have the tools needed to make appropriate decisions at store level.
  • CPG manufacturers have substantial digital needs that need to be addresses. Fifty-four percent of respondents noted that developing a digital practice starts with gaining necessary digital budgets. Thirty-five percent reported a need for a dedicated digital team, and 35% reflect a need for dedicated analysts. In addition, 47% said that in order to understand the potential, impact, and ROI of digital enablement the team needs digital ROI evaluation capabilities.
  • Twenty-six percent of respondents note that their organizations are working to incorporate AI capabilities in the TPx promotion cycle while 24% of the respondents are already working to incorporate AI capabilities to impact retail execution.

The 2020 POI State of the Industry Report is available today for download here.

About the Promotion Optimization Institute:
POI brings together manufacturers, retailers, solution providers, analysts, academics, and other industry leaders with the specific objective of collaboratively improving enterprise planning, promotion management and distribution of consumer goods. Members of POI share cross-functional best practices in both structured and informal settings. Additionally, members benefit through our industry alliances, the Certified Collaborative Marketer (CCM)™ program, share groups, and industry-leading summits around the globe. POI aims to instill a financial and metrics-based discipline not typically found with other trade groups. The goal of our innovative approach is collaborative promotion optimization. The focus is on the consumer/shopper through sales, marketing, and merchandising strategies. Our POI executive advisory boards keep us apprised of industry needs and help us provide desired outcomes for members, sponsors, and academia.

For more information visit: http://www.poinstitute.com or contact:
Michael Kantor Founder & CEO Promotion Optimization Institute (POI) 914-319-7309 mkantor(at)p-o-i(dot)org
Pam Brown, Partner & CCO Promotion Optimization Institute (POI) 707-332-0450 pambrown(at)p-o-i(dot)org

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Theresa Smith
POI
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