This post is sponsored by Acosta.
Acosta is celebrating two anniversaries this month as it marks 90 years in the consumer packaged goods and retail sales and marketing business, and the first anniversary of President and Chief Executive Officer Steve Matthesen. We interviewed Matthesen, the sixth CEO in the company’s history, about how the the business of CPG sales and marketing has changed since Acosta was founded in 1927 and over the course of his career.
Before joining Acosta, you worked at Nielsen and The Boston Consulting Group. How has the business of CPG sales and marketing changed over the course of your career?
The CPG sales and retail landscape has changed a lot over the last few years. We are seeing more stores every year — in the US we have added more than 22,000 stores over the last 10 years. On top of this we have e-commerce players adding significant warehouse space (reportedly Amazon has 110 million square feet of warehouse space — and growing). Plus, we have significant channel blurring — convenience stores are becoming quick-service restaurants, drug stores are becoming convenience stores, grocery is adding restaurants, etc.
Acosta is celebrating 90 years in business this month. What have been the biggest shifts in the needs of clients in recent years and how has Acosta adapted to serve those needs?
As the CPG space has come under even more pressure over the last few years, it has required us to step it up. We leverage our scale to help clients in two ways. First, we can reduce their costs substantially with similar/better performance. Secondly, we can help them grow sales by improving in-store conditions. We have deployed new big-data technology to dynamically route our 22,000 in-store representatives to the highest-value tasks and stores. Doing this allows us to drive a sales lift of 4% and a huge return-on-investment. We think this is a really big idea right now — in-store is one of those rare activities that benefits the CPG brand, retailer and consumer!
What about the shifting needs of customers? How has Acosta positioned itself as a resource for retailers serving the modern shopper?
All of retail starts with the consumer. We bring significant insights based on analytics, our Shopper Panel, Space Technology Teams, and category management capabilities. We are also big believers that most consumers learn about products and make purchase decisions in-store. Getting the right products on the shelf and making sure the shelf is right is essential. You cannot buy what you cannot find. E-commerce and click-and-collect have a role to play, but consumers still like the in-store experience to learn about new products and decide what looks good for dinner.
Looking to the future, what is the most important thing retailers can do to keep up with today’s changing landscape and keep shoppers engaged?
I think retailers need to remember what drives customers to come into their stores and keep coming. Retailers feel the pressure on e-commerce, but some of the response feels more investor-driven than customer-driven. The bulk of sales are still in the store. Retailers need to ensure the store works for the consumers — the right products, good on shelf conditions, good service and sharp enough pricing. Due to pressures from e-commerce and other investments, we see some retailers reducing store labor (or moving in-store labor to click-and-collect). At the same time, most retailers are looking to reduce inventory levels. The combination challenges on-shelf availability.
As retailers embrace e-commerce and click-and-collect, they need to maintain the best features of their stores. For instance, impulse purchases are a valued part of the shopping experience that consumers enjoy and stores need. The new models often ignore this aspect of the shopper experience. I expect we will see impulse items appear in the click-and-collect pick-up locations — including things like rotisserie chicken.
The pace of innovation is unlikely to slow — the winners will be those that ensure their most loyal customers are served in ways that keep them coming back and spending.
Steve Matthesen is president and chief executive officer of Acosta.
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