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What Big Consumer Brands Can Do to Compete in a Digital Economy

December 4, 2018
Prasatporn Nilkumhaeng/EyeEm/Getty Images

Summary.   

No industry is failing faster than retail. A recent report by the consultancy BCG documented a general decline in sales among consumer packaged goods (CPG) companies in the United States during 2017, with mid-sized and large companies losing market share and small companies increasing theirs. Whereas the Gillette aisle in the local supermarket targets exactly one neighborhood, Harry’s Razors’ website reaches millions. When someone buys a razor in a store, Gillette has no clue who’s buying what and when; Harry’s knows it all. Competitors like P&G can no longer be a mere “industrial corporation with a future based on technology” but rather must become a house of startup brands that runs pop-up stores, makes home deliveries, celebrates communities with parties, fosters subscription models, and curates compelling product personas, all while gathering comprehensive consumer data to guide new product innovation. In effect, they becomes a sort of coherent conglomerate. They make a lot of bets, own numerous largely separate businesses, but use a few key centralized capabilities like branding and retail distribution to provide each of its subsidiaries with something independent CPG companies can’t match.

No industry is failing faster than retail. Just last month, the 125-year-old Sears—once the world’s largest retailer—filed for bankruptcy. The public has more or less come to expect the shuttering of stores such as Macy’s, Sears, Toys ‘R’ Us, Kmart, Kohl’s, J.C. Penney, and Barnes & Noble. The ones that manage to escape are discount chains—such as T. J. Maxx and Marshalls—which compete aggressively on price.

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