Data Challenges in Consumer Packaged Goods

According to Accenture, 89% of Consumer Packaged Goods (CPG) executives agree that advanced analytics are critical, yet 74% of CPG executives also acknowledge that they struggle to scale capabilities across their business. 

The CPG industry is marked by intense competition, rapidly changing consumer preferences, and an increasingly digital marketplace. To thrive in this environment, companies need to harness the power of data to gain insights, make informed decisions, and remain competitive. However, they face numerous data challenges that must be addressed to fully leverage this resource.

What are Consumer Packaged Goods (CPGs)?

CPG refers to products that are typically sold in fixed quantities and are intended for personal or household use. These include the products you use daily like food, beverages, clothes, makeup, and household products. Due to its pervasiveness, the industry plays a vital role in the global economy, making it essential for companies to adapt to the evolving landscape of data management and analysis.

The CPG industry contributes $2T to the US’s GDP, which makes up 10% of the country’s entire GDP (Source: Consumer Brands Association). 

Recently there has been a shift in consumer behavior to the online space, such as e-commerce. This can be explained by the rise of services such as Amazon, that efficiently facilitate convenient online shopping. Typically CPG is primarily about the products, but with this new trend of online, brands need to have a focus on enhancing the user’s customer experience. The use of big data for CPG processing can create personalized customer profiles, enhance their ROI, improve customer experiences, streamline pricing decisions, and increase advertising speeds. 

Despite new market trends transforming the industry, only 50% of CPG companies have a defined data and analytics strategy in place. 

Why are Consumer Packaged Goods Companies Not Using Data?

For such a large industry that is evolving rapidly thanks to the rise of digital consumer trends, there are several barriers to why CPG companies are not utilizing data. Some of these challenges include: 

Volume of data: there is simply an extensive amount of data that is collected from various sources. Most CPGs have an expansive supply chain, thus creating multiple sources of data. Furthermore, many companies lack the essential technology to handle such volumes of data. 

Lack of data strategy: since a majority of CPG companies don’t have a defined data strategy set in place, data is often collected and analyzed in silos. There is often an inadequate unified data strategy to formulate a comprehensive understanding of customers, products, and the overall market. 

Lack of data culture: there is a general deficit in data culture amongst CPG companies. For instance, data is often inconsistently integrated into business decisions and strategies, which continues to aid data reluctance in the business culture. 

Real-time Data Analysis: Consumer preferences can change rapidly. To stay competitive, CPG companies must be able to analyze data in real-time and adapt their strategies accordingly. Achieving this real-time analysis is a significant challenge, as it requires advanced analytics and technology infrastructure.

Supply Chain Optimization: The CPG industry relies heavily on supply chain management, however, supply chain data is complex and dynamic, making it a challenge to harness effectively. Companies need to use data to optimize production, reduce costs, and minimize waste. 

Data Privacy and Compliance: As data privacy regulations evolve, CPG companies must navigate the complexities of collecting and using customer data while ensuring compliance with privacy laws. This challenge becomes more significant with the growing importance of e-commerce and online marketing.

Consumer Engagement: Understanding consumer behavior and preferences is vital for CPG companies. With the rise of digital channels, collecting and analyzing consumer data to drive engagement and brand loyalty is essential but can be challenging due to data privacy concerns.

How Can Consumer Packaged Goods Companies Use Data


Despite these challenges, data has immense potential in the development of CPG processes. Especially considering the growing prominence of e-commerce in consumer activity. Here are some examples of how data should be utilized for industry improvements:  

  1. Data organization and teams: multidisciplinary teams should be utilized to manage end-to-end integration of data into the business operations through a standardized data strategy model.
  2. Distribution strategies based on geo-analytics: geo-analytics like weather and social sentiments can help further inform and explain CPG demand forecasting. This could increase customer loyalty, along with other marketing approaches. 
  3. Build a sustainable data foundation: investing in intelligent data technology and foundational tools can expedite accessibility and coherence for data. This contributes to an overall encouragement for unified data culture and data-driven business strategies. 
  4. Advanced Analytics: Invest in advanced analytics tools and platforms to make sense of the vast amounts of data. Machine learning and artificial intelligence can help in forecasting demand, optimizing pricing, and personalizing marketing efforts.
  5. Data Governance: Establish robust data governance practices to ensure data quality, consistency, and security. This can be done by implementing data management strategies, including data cleansing, validation, and master data management.
  6. Cloud Computing: Cloud platforms offer scalability and flexibility, enabling companies to handle increasing data volumes and perform real-time analytics. Cloud-based solutions should be used to manage, store, and analyze data. 
  7. Customer-Centric Strategies: Personalized marketing and product recommendations can increase customer loyalty and boost sales thus developing data-driven customer-centric strategies by collecting and analyzing consumer data ethically can be useful in increasing sales. 

Leveraging data use in the CPG industry is essential for the future growth and flourishment of CPG products. Therefore, it is critical that these companies embrace this digital age for an overall improvement in their operations. 

By embracing advanced analytics, strengthening data governance, utilizing cloud computing, enhancing supply chain visibility, adopting customer-centric strategies, and complying with data privacy regulations, CPG companies can harness the power of data to thrive in this highly competitive industry. Successfully addressing these challenges will not only lead to improved operational efficiency but also enhance customer satisfaction, driving growth and innovation in the CPG sector. As the CPG industry continues to evolve, companies that effectively utilize data will be better positioned to adapt and succeed in a dynamic marketplace.

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