Consumer Goods Technology - October 2018 - 6

1 5 T H

A N N U A L

TECH

TRENDS
REPORT 2018

changes the role of IT with respect to budgets and decisionmaking, he says. "I don't think that is ever going to go back to
where it was," Kenney says. "I definitely see the business taking
a more active role going forward."

F I G U R E 2:

6

CGT | OCTOBER 2018 | CONSUMERGOODS.COM

46%

Insights/analytics

34%

Supply chain

The Impact of E-Commerce
Ongoing changes in consumer shopping behavior have finally
drawn CGs from all product categories into e-commerce, in
support of retailer customers as well as for their own nascent
direct-to-consumer efforts.
Sixty three percent of survey respondents reported an increase
in IT spending directly related to e-commerce, 46% at "conservative" levels and 17% with more substantial boosts (Figure 4). The
remaining 37% of respondents say the adoption of e-commerce
tools hasn't affected overall spending levels.
Nevertheless, a solid e-commerce infrastructure will be essential for CG companies looking to keep pace with market trends.
According to Kantar Worldpanel, while the overall fast-moving
consumer goods (or consumer packaged goods) market grew
1.9% globally and 0.5% in the U.S. in 2017, online-only sales rose
15% globally and 29% domestically.
Regardless of the effect on spending totals, e-commerce is
clearly altering the way companies operate, with three areas
experiencing the greatest impact (Figure 5):
* The need to develop and deepen relationships with consumers
via marketing (81%), which involves such tech-heavy practices
as digital marketing, content personalization, product information management and search engine optimization.
* A corresponding reworking of sales practices (61%), including
customer management, account planning, retail execution and
trade promotion management.
* An overhaul of supply chain capabilities (47%) covering such
needs as single-product logistics, accelerated speed to market
and direct-to-consumer delivery.
"This is all new territory," says Tony Bender, former CIO and
vice president of global business services at Edgewell Personal
Care. "A lot of what we're doing is through partnerships, particularly in terms of pick-pack fulfillment. We're partnering with
third parties that can provide that capability because it wasn't a
core competence of our business."
While 33% of respondents identify direct-to-consumer sales
as a critical component of their future go-to-market strategy
(Figure 6), only 18% called it critical today - although 6% said
it's already core to the business.
One word of caution to the 27% of respondents who say directto-consumer is not, nor will be, critical to their business: A lot of
packaged goods companies used to say that about e-commerce.
Of course, more traditional support for the e-commerce efforts
of retailer partners is a pretty significant adjustment in itself. At
Kimberly-Clark, "We're helping our retailers build that extended

Areas of Spending Increases

31%

Marketing

29%

Sales

23%

No increases in spending

17%

Manufacturing

3%

Other

F I G U R E 3:

IT vs. Business Unit Spending

3%

Spending migrating
to BUs without IT
involvement

63%

IT continues to
manage most
spending

14%

BUs already
manage much
of the spending

20%

IT always has
input, but spending
is migrating to BUs

F I G U R E 4:

Impact of E-com on Spending

Conservatively increased
spending

46%
37%

No impact on spending
Substantially increased
overall spending
Substantially increased
spending in new areas

F I G U R E 5:

14%
3%

Areas of E-commerce Impact

In which areas has e-commerce had the greatest impact?
81%

Marketing

61%

Sales

47%

Supply Chain
Product Development/
Manufacturing

11%
Consumer Goods Technology - October 2018

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