Recent moves by the nation’s biggest supermarket chain echo the disruption rippling through grocery and mass-market retailing.
This year alone, Kroger acquired British online grocer Ocado Group to process its e-commerce orders; purchased meal-kit company Home Chef; and set plans to blow out its Simple Truth house brands on store shelves.
Meanwhile, big legacy consumer products brands are scrambling to consolidate their way to solvency and rejuvenation via mega-mergers like Kraft Foods-H.J. Heinz, SABMiller-Anheuser-Busch amid whispers that Kraft-Heinz might purchase the faltering Campbell Soup Company.
Longtime CPG giants have been hobbled by the rise of alternative retail channels from Amazon to Whole Foods (now one in the same), and European grocers like Aldi, just as scrappy niche brands, direct-to-consumer e-tailers, and higher-end private-label lines appeal to changing consumer tastes, while chewing away at their market share.
To varying degrees, the consumer brands that line merchants’ shelves have been sucker punched by disruption.
“There’s a grocery war that’s taking place, and there’s a risk of winning or losing,” said Jerry Wolfe, founder of CEO of Vivanda, which powers digital food and beverage customer experiences, during the SAP podcast hosted by Bonnie D. Graham, Changing the Game in Consumer Industries: Consumer Products Industry Under Attack: Time to Reclaim Market Share. “If you don’t participate you’re going to lose.”
The strategies that consumer products firms have relied on for sales growth since the 1950s — cozy relationships with mass merchants that prized big national brands — “have been turned completely on its head,” said Colby Sheridan, global industry solution owner with SAP, who along with Wolfe and myself, were guests on the podcast.
Consumers now have an embarrassment of product riches at their smartphone-tethered fingertips.
And with more than 50% of purchases influenced by a digital touch point, brands are now “fighting for share of stomach” like never before, Sheridan said.
The Embattled Store Shelf
The shift has forced brands to rethink everything from pricing to their retail partners and product mix.
Iconic brands like Campbell have long fed sales and profit margins…