Now that we are starting a new year, hopefully one that will see some global health and business stabilization, it is time to reflect on what we learned in 2020. For packaging, one of the lessons taught by 2020 was that responding quickly to changing market needs is critical. For consumers, that immediacy was addressed through online purchasing in place of in store, but what if the product isn’t there to order? FMCG (Fast Moving Consumer Goods) manufacturers and/or brands were caught backfooted as they needed to shift their production from supplying the wholesale sizes and volumes of commercial users to consumer retail sizes and brands as a result of the limiting or closing of many of the commercial establishments.

From a purely practical standpoint, it isn’t as if there was a population explosion and that’s why your favorite product wasn’t available. Granted, some of the product shortages were a result of consumers squirreling away some product (think toilet paper), but the bulk of the problem was a result of shifting consumer behavior, according to Rodney McMullen Chairman and CEO of Kroger, the second largest retailer in the US. In the case of food, consumers went from dining out, to purchasing frozen foods, to purchasing ingredients and making their own. Kroger recognized a 92% bump in revenues in Q1 2020 as a result of the consumer behavior shift. According to McMullen, the “basket sizes of customers were bigger, and Kroger saw three years’ worth of growth in two weeks.” This shift happened so fast and the FMCGs and supporting supply chain were not ready. According to McMullen, while the pandemic sped up an existing trend, “retail keeps getting faster and faster.” He does expect that the current growth rate will subside a bit as thing start to stabilize, but consumer behavior has changed and will continue to change. So, what needs be done to prepare for FMCS (Fast Moving Consumer Shifts)?

While the supply chain needs to reconfigure to handle the increased rate of change, it really does need to start with the FMCG and brands. Historically, they have been very conservative in their thinking and, more importantly, how they do business. The product marketing groups spend an inordinate amount of time getting the product and packaging “just right” so that it has shelf appeal. However, the procurement groups look at packaging as a commodity. This difference of focus ultimately creates constraints on speed to market for new products and shifts in demand. On the other hand, it has opened up opportunities for new brands and products.