Experts from Acosta, Jacksonville, Fla., compiled its Top 20 consumer packaged goods (CPG) predictions for 2020, which includes higher demand for pet products, integration of the in-store and online shopping experience and non-traditional channel growth.
“We expect to see continued growth in many of the categories that took off in 2019 such as self-care, CBD and plant-based food,” says Colin Stewart, executive vice president of business intelligence. “Additionally, in 2020, retailers will focus on becoming more environmentally conscious, sourcing locally, keeping prices low and making the in-store shopping experience more enjoyable and tech-friendly.”
The Top 20 CPG predictions for 2020 are as follows, grouped into four categories:
Macro consumer predictions
- Focus on self-care
- Experience-based shopping. Brands building memorable experiences will cash in, thanks to Millennials.
- Emphasis on sustainability. With 73% of consumers willing to change their purchase habits to improve the environment, retailers will focus on eco-friendly initiatives.
- CBD goes mainstream. With 28% of consumers already using CBD oil and another 54% open to trying it, CBD sales are projected to grow from just under $2 billion in 2018 to $20 billion by 2024.
- Plant-based everything. Sales of plant-based food grew by double digits and at five times the rate of total food sales in the past year, with continued growth expected.
- Consumers “begging” for more pet products. Pet food will continue to be a driver for brick-and-mortar sales as well as in e-commerce, which grew by more than 50% last year.
- Comeback of premiumization. With the economy going strong, consumers will be eager to trade up to premium products to indulge or treat themselves.
- Further expansion of functional foods and beverages. With “healthfulness” becoming increasingly important to consumers — nearly two-thirds of U.S. adults agree that it has a significant impact on their food and beverage purchase decisions — sales of food and beverages with added nutritional benefits, like electrolytes, minerals, adaptogens and prebiotics, are expected to reach $275 billion by 2025.
- Rise of private brands. The private brands market, which represented almost one in five CPG dollars sold last year, will continue to grow.
- Reduced access to e-cigarettes and tobacco. Retailers’ focus on health and wellness will continue to outweigh their sales focus on non-healthy products with certain chains no longer selling tobacco-based products.
- Buying local continues. Consumers are becoming increasingly aware that locally sourced foods are fresher, support regional economies and generate fewer carbon emissions, therefore retailers will need to differentiate their assortment at the local market level to entice customers.
Shopping experience predictions
- Retailers double down on remodels. Major retailers will incorporate more fresh foods space, online order solutions like in-store kiosks and easier checkout options, including cashierless technology.
- Focus on store experience. Most consumers like a brick-and-mortar store experience that delivers sights, sounds and smells, and retailers can keep customers further engaged with events like cooking demonstrations.
- Mobile-enabled shopping in the store. An estimated 53% of all purchase decisions are digitally influenced, so a seamless integration between the store and the digital experience is imperative.
- Path to purchase is no longer linear. Loyalty will become more fragmented, with 87% of all shoppers and 94% of Gen Z/Millennial shoppers using smartphones, shoppers can move seamlessly between both physical and virtual channels to meet their household needs.
- Continued perimeter improvement. Prepared foods, which topped $12.5 billion in sales last year, will continue to be a heavy-hitter on the perimeter.
- Low price is table stakes. Retailers will continue to press for non-negotiable low prices to remain competitive.
Store operations predictions
- Supply chain focus. Retailers will focus on increasing on-shelf availability and lowering inventory costs by leveraging inventory optimization solutions and demand-based systems.
- Expanded grocery delivery and pickup options. Online grocery spending is expected to more than double by 2023, with the 21% of U.S. shoppers buying groceries online this year expected to grow significantly as retailer click and collect and same-day grocery solutions expand.
- Non-traditional channel growth. Strong sales growth is projected for small store formats and club channel retailers, which are succeeding by offering differentiated items, whether it is a focus on better-for-you, local/specialty/curated offerings or by providing value through their own brands.