In 2017, Amazon’s purchase of Whole Foods sent the grocery industry into an uproar. It seemed that the ecommerce mogul was changing the rules of the game, thanks to their ability to implement low prices and push private label. Analysts now speculate that in 2018, Amazon may move onto Target as their next acquisition. For manufacturers, the potential of Amazon’s control in the industry is fear-inducing in its uncertainty.
As Amazon continues to move into the in-store space, they are slashing prices to bring in more consumers. As a result, other retailers slash prices to compete and in response, Amazon will have the power to dictate price cuts and place new requirements on manufacturers.
"CPG companies can present themselves as data-savvy partners to their retailers through analytical insights."
Despite the fear and uncertainty that this might instill, Amazon is, in fact, not primed to dominate grocery. In the Bloomberg article, “Amazon Isn't a Lock to Dominate Grocery,” Sarah Halzack states that “While many retail categories have seen a significant share of spending move online, grocery remains largely a brick-and-mortar business.” This statement highlights a key factor that should motivate CPG manufacturers to come up with a rebuttal for.
However, CPG companies can present themselves as data-savvy partners to their retailers through analytical insights. Amazon has long since learned the power of data and uses it entice customers and generate revenue based on accurate analytical insights. This is where CPG companies can stand their ground. By also adopting an analytical mindset, using a comprehensive Trade Promotion Optimization solution, companies can compete with Amazon’s disruption by making informed decisions of their own with the power of quantified post-event analysis and predictive planning.
"Manufacturers can address reactionary price-slashing issues with the ability to predict the outcome,
including retailer KPIs, of various price points and promotion tactics."
With this, CPG manufacturers can address reactionary price-slashing issues with the ability to predict the outcome, including retailer KPIs, of various price points and promotion tactics. Using constraint-based modeling means that not only can their approach be optimized on a single promotion, but also on an entire annual plan. Using this insight, companies can collaborate better with retailers instead of operating under conflicting priorities. In short, it’s a win-win situation.
To compete with the influence that is Amazon, CPG companies must also develop a decision-making strategy of their own via data and analytical insights. With the insight and predictive power of a Trade Promotion Optimization solution, manufacturers can continue defending their in-store role against disruption. With the uncertainty of the new year already predicted to top 2017, there is no better time than now to begin a trade promotion revolution.