The winning retail formula includes four key ingredients:
- Increased investments in digital technologies and e-commerce, with more than 70% of winners investing more than 10% of their income
- More mature technology stacks, heavily employing third-party e-commerce platforms
- Many more ambitious e-commerce initiatives, including promotions, assortment, pricing and disruptive technologies
- Teams that work more agile, cross-functional, and autonomously: 64% of winners have fully agile teams, compared to just 30% of laggards.
The winning CPG formula primarily revolves around three key ingredients:
- More mature technology stacks than laggards, including more advanced digital and data platforms
- An organizational structure that strongly supports e-commerce, with winners onboarding more people into their e-commerce teams and integrating them fully into the wider organization.
- Greater agility: more than 50% of winners say they demonstrate great team agility, compared to only 20% of laggards.
The gap is not insurmountable
At a time retail and CPG, the gap between winners and laggards is marked. However, it is not impassable. Winners and laggards already appear to be evenly matched in some areas, such as visibility and senior management alignment with the e-commerce team. This is a necessary, albeit insufficient, prerequisite for enabling laggards to catch up, as these areas promote the establishment of appropriate priorities and strategies.
Additionally, gaps in the technology stack and broader digital investments are, by definition, fillable. The challenge lies in the business case and speed of execution, which are usually discussed specifically, as each company has its own set of strategic priorities, market dynamics and existing systems to manage. To some extent, this also applies to how companies should seek autonomy and agility in their e-commerce teams, taking into account their own organizational and strategic specificities. The complexity of breaking down silos and improving cross-functional working varies widely, for example between companies with a narrower geographic reach or business model (e.g. food retail) and multi-continent CPG players and multi-divisions, even within e-commerce. there are several distinct levels, ranging from direct to indirect.
Winners also have the opportunity to further improve their leadership.
The winners in the retail sector are already well organized and have an impressive number of ambitious projects. Yet they continue to identify technology and strategic initiatives on which to redouble efforts. In particular, more than 40% of these winners still need to work on adding or revamping critical technology components, such as product information management or digital asset management software or their monetization stack, the optionally. Although they are already significantly ahead of laggards in strategic initiatives such as e-commerce business and communications planning or testing disruptive technologies, they still have a long way to go. Some winners have not yet revamped their e-commerce communications plan, and the majority have not yet started testing disruptive technologies.
For winning consumer goods companies, there are also crucial initiatives that have yet to be launched. While supply chain topics such as better e-commerce demand forecasting and better operations planning are distinctive “winner” traits; Most CPG respondents have still not embarked on these initiatives. Likewise, even if the winners and losers adopted digital marketing At similar levels, winners still need to launch advanced digital media initiatives, such as online retail media tactics, retailer search optimization, and retailer media monitoring.
Retail and FMCG companies should view e-commerce in the medium term with confidence and plan accordingly. Many markets and categories are still far from full e-commerce maturity, with tailwinds strong enough to warrant investing greater capital and resources into winning capabilities and organizations.
BCG’s global e-commerce survey took place in the second quarter of 2023 and reached 410 retail companies and 415 FMCG companies across the world. Of the retailers surveyed, 56% were part of the C-suite, while 32% were part of an e-commerce team and 12% were part of a digital marketing team. Among CPG respondents, 49% were part of the C-suite, 31% were part of an e-commerce team, and 20% were part of a digital marketing team. (See the exhibition.)
The companies surveyed ranged from $50 million to more than $10 billion in revenue, with more than 40% of companies having revenues greater than $1 billion. The survey aimed to explore e-commerce trends from the start of the pandemic until today.
Note that we have supplemented the results of our survey with a set of consumer data from Foxintelligence in order to allow a more detailed reading of the evolution by consumer segment as the pandemic progresses.
The authors would like to thank Arnaud Bassoulet and Guillaume Triclot for their contributions to this article.