D2C brands are revolutionizing CPG – how can traditional retailers keep up?

Published 28 September 2021 by Jenni Baker

The world of CPG is being revolutionized by disruptors who have come in, upended the traditional selling model and built strategies that put the customer front and center of the buying journey. In the midst of this retail shake-up, it’s business-critical for traditional retailers to ensure that their teams are equipped with the digital skills to keep up, get ahead and stay ahead - but where should they start?

Read on to discover:

 

eCommerce has turned the world of shopping on its head; a weekly trip down the high street has turned into a daily scroll, click and buy on the web. This complexity in the shopping journey presents new challenges for traditional retailers who can’t keep up with the new generation of disruptive direct-to-consumer (D2C) brands. They are shaking up the retail space like never before – but what are they doing that traditional retailers are not? 

They are digital by nature. Unlike their traditional retail competitors, the business model gives D2C brands the flexibility to experiment with distribution models. They utilize every channel and touchpoint within their reach to communicate what they do and sell products.

According to eMarketer, D2C eCommerce sales in the US grew 45.5% from $76.68bn in 2019 to $111.54bn in 2020 and will grow another 15.9% to reach $129.31bn by the end of 2021. This will only get stronger in the next few years, reaching almost $175bn by 2023. 

 

What customers want

Research from PYMNTS.com found that over 50% of consumers say they made a consumer packaged goods (CPG) purchase from a new brand since the pandemic began, and 83% of consumers who adopted D2C channels during the pandemic plan to maintain some or all of their new habits.

Speed, convenience, relevance, and availability of products; consumers not only want the right products at the right time, but they want everything they need right at their fingertips. They also want to know the ins and outs behind the brand they are purchasing from – from how products are sourced, packaged, and delivered to their door.  

McKinsey & Company speaks of 12 disruptive trends which have battered the old value creation model for CPG brands over the last decade – and Covid-19 has turbocharged many of them. Five of those trends are disrupting mass-market brand-building and product innovation: digital ubiquity (data, mobile and the Internet of Things); the importance of value/price sensitivity; the ‘Millennial and Gen Z Effect’; conscious eating and living; and the explosion of small brands. Four of the trends are transforming selling channels, most notably e-marketplaces (with meteoric growth of 17% over the last five years, generating 65% of the growth among the top 150 retailers across the globe across all categories). 

 

5 lessons from the D2C disruptors

  • Digital by design

D2C businesses don’t just rely heavily on the digital ecosystem, but they were born as digital natives, with social media and eCommerce coded into their brand. That means they already have a head start over traditional retailers on what it takes to appeal to the digital shoppers of today. 

  • Brand authenticity

Many of the most successful D2C brands we know today were born out of mission-driven initiatives. Beyond high-quality products, they have found a niche in their sector and they have a distinct personality recognizable to their consumers. 

  • Personalization

D2C brands get personal with their shoppers – and it’s not just within the shopping experience (using shopping, search, and browsing history data to tailor website navigation) but the product experience too (through gifting options, for example). 

  • Community and advocacy

Humans are inevitably social creatures and want to feel a sense of belonging. By creating and nurturing their own social communities, encouraging customer reviews or incorporating their online fan base into their marketing efforts, they create open dialogue with customers and use feedback to tailor their strategies. 

  • Speed, agility and flexibility

The D2C model is built on speed, agility and flexibility giving them the ability to adapt to changing consumer trends at pace in line with consumer demands. That puts customer centricity truly at the center of everything they do. 

 

Clicking with consumers in the new D2C reality 

In the midst of digital disruption, increased competition and changing consumer expectations, the ever-evolving world of retail brings not just challenges but new opportunities every day. To help get ahead, it’s imperative that traditional retailers learn from the D2C disruptors and digitally upskill their teams with new strategies that meet today’s expectations. 

What they are doing

What I should be doing

What results will I get?

Digital by design

Develop a digital DNA for your business

A digital-first strategy that speaks to customers where they are

Brand authenticity

Empower your teams with full brand knowledge

A more consistent, credible, long-term relationship

Personalization

Invest in data experts

More relevant and personalized connections with consumers

Community & advocacy

Social media training

Social-first strategies that resonate with what your customers think

Agility and flexibility

Digitally upskill teams

A better omnichannel experience for your customers

 

What should I do next?

Circus Street offers a range of tailored lessons that empower brands and businesses to digitally upskill their teams, putting them in a stronger position to pivot strategies to catch up, then get ahead and stay ahead of the competition. To find out how Circus Street can help your business beat the D2C disruptors, sign up for a free trial today.

 

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