Field Service

The Biggest Challenges Faced By The FMCG Industry In 2023

Shoaib Ahmed
January 31, 2023

What's on this page

  • Introduction
  • What Is FMCG?
  • The Relationship Between COVID And FMCG
  • What Are The Challenges Faced By The FMCG Sector In 2022?
  • What Are The Benefits Of A Field Service Management Tool?

Introduction

Do you know what is common between Nestle, Dove, Pepsi, Coca-Cola, Dabur, L'Oréal, and Domex? Well, think further than saying " brands" Before you think this is a script for an Advertisement or a brand deal and end up going back, trust me, you're at the right page. The one thing all these items have in common is that they are the products of the FMCG aka the Fast-moving customer goods sector. Read more about the FMCG sector here!

The FMCG sector offers us products that people use every day in their lives. From eatables like chocolates and chips to bathing products like soap and shampoo, this sector brings all of these goods to the consumer market at a low cost. Since the FMCG sector dominates the goods consumed by every household, its market has high revenue and turns out to be competitive.

With brands like Colgate and Pepsodant fighting for the top place and taking digs at each other, to the iconic Pepsi vs Coca-Cola rivalry, the FMCG market is constantly trying to evolve and reach the pinnacle of success. Through this article, we will be exploring in detail the FMCG sector and the challenges the industry faces to date.

What Is FMCG?

FMCG - known as the Fast-moving customer goods - involves the production and distribution of goods that are quick to consume, high in demand, and highly accessible due to their affordable prices. These are non-durable products that are sold in packaged form. To give you an example, products you essentially buy in a supermarket be it your 2 min magi packets, dove shampoo, or even baby napkins, are all products that are a small entity of this gigantic industry.

These products have a huge turnover because they're produced and bought in large numbers and sold for cheap and affordable rates. The FMCG sector is one of the key contributors to the Indian economy and is currently the fourth largest sector of our economy.

The Relationship Between COVID And FMCG

The world has been hit by a deadly pandemic for the last three years and sadly persists to date. People have gotten accustomed to lockdowns, isolation and have been trying to cope with the changes. Days have gone where people wait for the pandemic to get over to get back on track with their lives. Over time, Sadness, grief, and anger have converted to acceptance and the world has come to terms with the new normal.

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Similarly, markets and industries have been trying to meet new demands and restrictions and are desperately trying to keep their heads above the water. These industries have been hit hard by the lack of revenue and are trying to incorporate new strategies to thrive in the post-covid era. On the flip side, there have also been markets that have taken advantage of digitalization and come up with innovative methods to tackle the restrictions imposed by covid on their business.

The FMCG industry has gone through its share of ups and downs in the pandemic. At the peak of the pandemic when grocery and other non-essential stores were temporarily closed, a lot of venues all over the world faced a reduction in revenue and decreased frequency of customers. As the vaccination drives started rising, there was a change in customers' shopping behavior and demand forecasting was needed more than ever to cater to the customer's needs.

Trying to develop ready-to-eat and frozen meals, implementing more health care and hygiene products, commercializing pharmaceutical goods into consumer-packed goods are a few ways the FCMG sector has pushed to engage with customer needs and hence promote revenue.

Here are a few challenges and trends the FCMG sector is likely to face in a post-pandemic era.

What Are The Challenges Faced By The FMCG Sector In 2022?

Proper Retail Execution

Have you ever walked into a store to get a packet of milk and ended up walking out with two bags filled with well, everything? Well, "I have not," said no-one ever. This is most likely to have happened at the store physically and that split-second decision to buy everything apart from your list is the result of a well-drafted retail execution plan.

So, what exactly is this retail execution? It is a form of sales strategy aimed at improving sales in the store or venue of the brand by implementing certain regulatory measures.

From an FMCG perspective, it ensures that the product on the store is how exactly it needs to be to increase revenue. A proper retail execution plan includes shelf merchandising, order replenishment, trade promotions, store audits, and more. Though driving the distribution and display promotions to contribute a chunk to sales, proper retail execution is very essential in driving the sales to new heights.

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It has been reported that there has been a loss in 25 percent of sales due to poor retail execution and 79% of impulse buys occur at physical retails with a strong execution strategy. With the pandemic and lockdown, countries have been advised to shut down a majority of the shops and this has resulted in empty shelves and deserted shops. In addition, people have also resorted to buying essential supplies in bulk and stocking them.

In uncertain times, budget constraints and health consciousness have taken precedence and have changed customer perspectives on indulging. All these have led to poor retail execution planning and brands must step up and rethink their customer demands to foster a feasible retail execution plan.

Sales Automation

FMCG has been an industry that has highly depended on traditional sales practices. As the world has taken a digital turn, digitalizing field service in FMCG has become essential for running a successful brand. With people becoming less accessible to each other, sales automation through digitalization has been prioritized over traditional sales practices.

With the loss of laborers due to several issues including migration laws and health concerns, the FMCG sector should not only ensure that the sales force gets their job done but also ensure that their work is productive, optimized. This is why sales force automation in your field teams in important, but that's a story for another day.

What Are The Benefits Of A Field Service Management Tool?

With a field service automation tool like Fieldproxy, you can easily

  • Create unique dashboards
  • Identify areas of improvement
  • Track resources with greater efficiency
  • Create tasks for different employees and manage them seamlessly.

Help and assistance should be provided to push them to achieve a good ROI. This requires a well-strategized sales force automation plan to go the extra mile with recommendations and acquire insightful data. Sales automation software not only increases sales but also boosts employee productivity and collects insightful data with the help of IoT and AI to go the extra mile and streamline the business.

A recent McKinsey report outlined that 30% of all sales tasks can be automated. Field sales automation helps in reducing the cost of sales processes by reducing the time spent on manual processes and reporting.

Here are three reasons explaining why sales automation is essential for FMCG

  • Provides a way for a smart approach: It helps identify areas of market coverage in terms of potential and not geography. Through this way, companies can focus on meeting customer demands effectively instead of trying to crunch up their numbers.
  • End-to-end digitalization: Helps FMCG brands with end-to-end digitized sales scheduling and planning with the help of in-depth market intelligence through IoT and AI.
  • Encourages fulfilling customer experience: Salesforce automation puts the customer first and focuses on giving importance to their customer experience. Demand is created by identifying customer expectation.

Ageing

FMCG has been a sector that depends on age-old brand loyalty. But the trick here is to identify the audience to which they cater. Being a very traditional and an old market, FMCG has a widely ranged consumer number from senior citizens to our very own millennials. Unlike certain industries that have catered to a specific set of consumers, finding the right balance to satisfy and stay relevant with a wide variety of age groups is going to be a tough nut for the FMCG industry.

The population of the older generation is on the rise, and it is expected that there will be a rise of 41% in India's elderly population over the next decade to touch 194 million in 2031. Senior citizens are often the pioneers of brand loyalty and have been the pillars of the industry. With the onset of the pandemic, their needs have shifted towards simple, reliable, and risk-free products.

To cater to such needs, FMCG brands can simplify products by making small changes while choosing the ingredients, reducing the use of chemicals, and boosting the use of natural ingredients in both food and non-food products. At the same time, attention should be given to the present generation as well.

With the millennials being exposed to a whole lot of technology and products from all over the world, there is pressure for the FMCG market to remain 'cool' enough for them to retain customers of this generation. Finding the middle ground is essential. Constantly evolving their strategies, digitalizing while ensuring easy accessibility can help strike this balance.

Environment And Sustainability

Sustainability for field service in FMCG has been a major issue in the present world. Industries have been dumping their wastes in water bodies and the amount of smoke from manufacturing plants has taken away the lives of countless animals, water species and has slowly started killing humans. As children of the earth, it is our responsibility to protect it and change our lifestyle adhering to sustainable practices.

The FMCG sector has bought its fair share of controversies by undergoing practices that degrade the environment. PepsiCo, Hindustan Unilever, Dabur, ITC, Kelloggs, Mother Dairy, Nestle are some classic examples. The youth of today are smart consumers and are looking to choose brands that have values that include sustainability. According to a report by Forbes, FMCG companies have a key role to play in curbing over a third of global greenhouse gas emissions and should invest in R&D for the same.

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Adapting to sustainable ways by reducing the usage of plastic, conscious elimination of waste, adopting alternate ways of packaging, sustainable sourcing, plant alternatives are among the many ways in ensuring that companies are adhering to the environment and inculcating sustainable practices. Industries must keep the environment and sustainability at the center of their plan.

Even though FMCG companies struggle to tackle the environmental responsibility of their production, packaging, and waste management, some brands have taken initiatives to reduce the amount of degradation. Dauber has taken several steps to be environmentally responsible and has eliminated cartons from their packaging. They have also initiated recycling and reusing thousands of kilograms of waste. Brands must incorporate strategies in their supply chain management and be socially and environmentally responsible.

Closing Thoughts

The Covid era has worked through its way in altering the world economy, industries, and the lives of people altogether. It's been more than 3 years since the world has thrown lemons at us and it's time to make it into lemonade! Industries must work harder than ever to renovate their strategies around changing customer demands.

Especially a customer-oriented, long-time pioneer FMCG sector must adopt new methods to survive and thrive in the post-Covid era. The biggest challenges that the industry might face have been covered in this article.

All the major solutions for these challenges revolve around digitalization and changing strategy based on customer needs. It is also the responsibility of the industry to take charge of its operations from an environmental perspective and it is up to us, the consumers to make a difference to the world by choosing the right brand wisely

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