Consumer Goods Manufacturers must listen to their workforce

Do you see meaningful changes in suppliers’ labor management in the future?

I'm on a few boards of consumer goods manufacturers where plants are running at virtually 100% yield. However, they're doing this with only 65% to 75% of their employees, who are working a lot of overtime. There's a lot of fatigue in America today. So you're seeing increased wages, incentives for people to stay, bonuses either to sign on or to work weekends.

Consumer goods manufacturers must listen to their workforce — provide a safe environment and things like multiyear retention and referral bonuses. And I think culture, ethics, and values matter.

People today want to work for companies that have values similar to their own. You're signing up to live a lifestyle with your company.

What impact will inflationary pressures have on the relationship between retailers and their suppliers?

Folks that have strategic relationships will be able to leverage years of co-investing, co-innovating, mutual business plans, winning together, and losing together. So they can take some shared risk. If there are cost increases of 10%, they can say, “Let's put in 6% now, and we’ll migrate to the other 4% later.” If you've been a transactional partner, it is going to be more difficult, and I think there are going to be some ugly endings. This will also have an impact on who gets what supply and when: In a strategic partnership there will be a longer-term target that has been mutually agreed to.

The CPG brands that are going to win are in shoppers’ daily lives and are easy to access.

In consumer-packaged goods (CPG), what traits are going to define the winners and the losers?

The CPG brands that are going to win are in shoppers’ daily lives and are easy to access, whether it be direct to the CPG company or through a retailer. I never thought I’d see a 10% grocery e-commerce penetration in my time, but within 12 to 18 months we went from 3.5% to 10%.

That opens the door to a direct relationship with the consumer. Those CPG brands in their customers’ lives, helping them solve everyday problems, are going to win. So will those that are leveraging social commerce today. This gives the small entrepreneur a real opportunity to get direct access to the digital customer. Who would have thought that you could buy product off TikTok? The world has changed. The customer has changed.

What innovative practices have you seen retailers or consumer goods manufacturers develop over the last few years?

The biggest surprise to me was how fast retailers adapted to e-commerce and personalized shopping experiences. The ones that are winning are those that have quickly gone to seamless, touchless pick-up/delivery and understand their customers the best.

We always measure experience in a physical store. But we also have to make sure we understand the experience a customer is getting digitally, because it's so easy to click away to a new site. How do you make sure that you're providing the customer with the right experience? A comprehensive 360 degree solution.

The big guys can invest in new shopping channels. Where does that leave the other retail formats?

The pandemic scared people and they like smaller store sizes, because they have fewer people in them. Anyway, customers today — particularly Gen Z — prefer a smaller store. So I think we're at the dawn of smaller stores, and I don't think it's going to be uncommon to see very large retail stores — say 150,000 square feet (about 14,000 square meters) — shrink to half of that. I think there will be more micro fulfilment centers, so retailers can fulfil quickly in neighborhoods.