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Seventy-eight percent of CPG Manufacturers are Struggling to Manage Total Enterprise Modern Trade Spend, The Promotion Optimization Institute Finds


News provided by

POI

Jan 30, 2023, 07:30 ET

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POI's annual state of the industry report found that Digital Transformation, Omni-Channel balance and automation of Holistic Enterprise Planning & Supply Chain capabilities are critical to future growth.

NEW YORK, Jan. 30, 2023 /PRNewswire-PRWeb/ -- The Promotion Optimization Institute (POI), the leading resource for holistic enterprise planning, trade marketing, RGM, and retail merchandising executives, today released the eighth annual POI 2023 State of the Industry Report. In our third year of pandemic recovery and with an economy heavily impacted by geopolitical issues and dramatic inflation, retailers and manufacturers are re-establishing new reality planning, optimization, and trade and supply norms. POI's annual report found that 78% of CPG manufacturers are struggling to manage their total enterprise modern trade spend. In the report POI notes that as shopper, digital, ecommerce, Direct to Consumer and other modern trade elements grow, it is important to have holistic enterprise planning capabilities that can evaluate opportunities (individually and total portfolio), appropriate a balanced omni-channel enterprise funding allocation, and proactively evaluate execution results quickly.

"POI research demonstrates that holistic enterprise planning, creating omni-channel balance, digitally transforming and finding areas of efficiency with people, process, and systems are critical to making faster, agile decisions that meet consumer needs and generate value across the enterprise," said Pam Brown, author of the POI State of the Industry report and Chief Commercial Officer, POI. "All of these elements lead to increased organizational growth potential in the new reality. POI reflects that to thrive in the future, companies must build internal and external resilience to enable their organizations to withstand unpredictable change and arise stronger."

POI research demonstrates that holistic enterprise planning, creating omni-channel balance, digitally transforming and finding areas of efficiency with people, process, and systems are critical to making faster, agile decisions that meet consumer needs and generate value across the enterprise.

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The annual POI 2023 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 2022 Enterprise Planning, Revenue Growth Management and Retail Execution Surveys and represents responses from over 130 leading consumer goods manufacturers.

Key POI State of the Industry Report Findings:

  • Historically, CPG companies have spent between 11% and 27% of revenues on Trade Promotions. In 2022, POI survey respondents reflect a broadening of the trade spend spectrum with 22% of companies spending below 11%. In addition, 24% spend between 11-15% and 27% spend between 16-19%. Twenty-one percent of respondent companies are spending between 20 and 27%, while 6% spending over 27% in trade. POI expects 2023 trade spend levels to increase again as retailers and manufacturers work to meet consumer needs in inflationary times. This year will establish fresh baseline levels of trade spend in the post pandemic new reality.
  • Data quality is growing in importance for manufacturers. When asked how their organizations will improve and transform trade efficiency and effectiveness, data cleanliness and management ranked #1 over volume planning accuracy and even promotion planning and optimization. As planners, RGM teams, and organizations understand that advanced models need high quality data, more companies are prioritizing this important foundational aspect.
  • Enterprise Planning, Optimization and revenue management (EPx) solutions bring transformative results to CPG manufacturers. End-to-end enterprise planning maximizes cross-functional insights to deliver strategic objectives and efficiencies to enable Joint Customer Business Planning. Increased focus on Integrated Business Planning to improve coordination of the expected demand and supply forecast. According to respondents, 53% were able to eliminate poor performing promotions, 45% had greater visibility to the business & opportunities/risks, and 28% experienced process improvements.
  • Inflation and recessionary headwinds have been catalysts for organizations to expand their Revenue Growth Management (RGM) practices. Eighty percent (+14) are adding tools or analytical capabilities to support new RGM processes, 79% (+7) are advancing practices, diving deeper optimized promotion, pricing, and pack growth analysis, and 48% (+2) are adding new RGM personnel to support.
  • In-store retail execution is dramatically changed in the post pandemic reality. Seventy-five percent (+17%) of respondents reported that their companies are struggling to have retailer aligned promotions executed at store level.
  • When asked about the quality of the organizational data 20% of responders note poor quality and 45% responded it was average. To move the needle on RGM, 61% note that data cleanliness and management need to be improved.
  • The pandemic has been a catalyst for enterprise digitalization. Forty-one percent of respondents noted that developing a digital practice starts with gaining necessary digital budgets. Twenty-four percent reported a need for a dedicated digital team, and 31% reflect a need for dedicated analysts. In addition, 57% said that in order to understand the potential, impact, and ROI of digital enablement the team needs digital ROI evaluation capabilities.

2023 POI State of the Industry Report can support CPG industry leaders focus on cost management, holistic enterprise planning and Revenue Growth Management capability enhancements, digital transformation, omni-channel balance, and execution excellence to meet the needs of retailers and ongoing changes to consumer behavior. The 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

###

The Certified Collaborative Marketer (CCM)™ is a trademark belonging to the Promotion Optimization Institute. All other trademarks are the property of their registered owners.

Media Contact

Michael Kantor, POI, 1 914-319-7309, [email protected]

SOURCE POI

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