Key Steps to Modernizing
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“Consumers have been choiceful across many factors. We have witnessed consumers shifting to everyday value channels [mass, club, and dollar], but also online for convenience.”
— Sally Lyons Wyatt, Global EVP & Chief Advisor, Consumer Goods and Foodservice Insights, Circana
Grocery shoppers who reported being “very concerned” or “extremely concerned” with retail food inflation.
Source: FMI
69%
Marketers who say their organization empowers customers to take control of their data.
Source: Gartner
78%
Economic pressure continues to dominate how consumers are shopping, and brands are still navigating the needs of more “choiceful” shoppers. Consumers might be feeling more optimistic about the economy, according to recent McKinsey research, but this increase in confidence is not yet being reflected in their intent to spend.
Garbage in, garbage out is a commonly heard refrain these days as companies are laser-focused on getting their data cleaned up and ready for artificial intelligence — and its related tools and technologies. As AI increasingly helps companies tap more efficiently and rapidly into consumer data, the pressure to sift the gold from the so-called “garbage” becomes even more pronounced.
What does this mean for CPG brands? The impetus has never been so strong to get more granular and incremental about personalization, to make consumer data-informed decisions around products and services, and to up the ante on the quality of insights they’re able to glean about the shoppers they’re trying to draw in.
Hindsight, Insight, Foresight: Where Does Your Data Truly Sit?
Key areas of data and analytics focus for consumer goods:
Consumer
Insights
Demand
Forecasting
Promotion
Effectiveness
New Product
Development
Inventory
Planning
Logistics
Optimization
Markting Mix
Optimization
Pricing
47%
29%
24%
24%
24%
18%
44%
32%
Source: CGT, 2024 Retail and Consumer Goods Analytics Study
While the phrase “the benefit of hindsight” might be one we’re very familiar with, CPGs looking to innovate around consumer data are more often than not interested in the benefits of real-time tracking and predictive analytics. CGT’s 2024 Retail and Consumer Goods Analytics Study shows demand forecasting is the second-most important area of data and analytics focus for CPGs, for example.
However, this might not always be the most impactful approach. As Ash Patel, Circana’s chief technology and transformation officer, explains to CGT, “most [CPGs] might think they’re delivering insight, but in reality, they’re just reporting the news.” What this means, Patel said, is that hindsight dominates the consumer data space.
Circana estimates 77% of analyses performed on consumer data are devoted to tracking alone. True insight — understanding the why behind consumer behavior — makes up only 16% of efforts. Foresight, the ability to look ahead and develop a predictive, actionable strategy, represents just 7%.
“The promise of AI, particularly for CPGs, lies in its ability to efficiently handle hindsight — tracking and summarizing past data without hallucination or subjectivity.” — Ash Patel, Chief Technology and Transformation Officer, Circana
In this sense, by automating low-risk, fact-based reporting, AI can free up resources, allowing organizations to shift their focus from simply understanding the past to crafting strategies for the future. “If you're looking at the big opportunities, it's to flip those numbers. If you want value, start where most time is actually spent — on tracking and reporting — and work your way toward foresight,” he says.
The trick, then, lies in quickly leveraging past consumer data, laying the foundation for a greater understanding of what is to come, and unlocking incremental value and insights.
L’Oreal is just one brand using generative AI as a bridge to the future — or at least as a way to get there faster. The beauty leader recently revealed it is using generative AI models to fuel discoveries in particular chemical formulations, run tests on how to best use renewable ingredients, and train the models with a view to personalizing products and tailoring them closer to consumers’ needs and wants.
“As part of our digital transformation program, this [generative AI] partnership will extend the speed and scale of our innovation and reformulation pipeline, with products always reaching higher standards of inclusivity, sustainability, and personalization.” — Stéphane Ortiz, Head of Innovation Métiers and Product Development, L'Oreal Research and Innovation
True Personalization Requires Authentic Connection
Brands incorporating personalization as a core experience strategy have risen 50% since 2022.
– Deloitte
Where personalization was once about offering consumers well-educated guesses — think serving up ads for other hair care options after a single box-dye purchase — shoppers today are more attuned to authentic, context-aware personalization.
Increasingly, shoppers are indicating they expect smarter, data-driven recommendations that fit seamlessly into the story of their larger shopping journeys. According to Deloitte, nearly 3 in 4 consumers say they are more likely to purchase from brands that deliver personalized experiences, and they are prone to spend 37% more with those brands as well.
Case Study:
PepsiCo Gets Granular on Shopper Snacking Habits
As one of the world’s largest consumer goods companies, PepsiCo has the clout and capabilities to get incredibly close to its consumers, and it is tapping into data to anticipate and meet their needs. In recent years, the company expanded to specialize its delivery services and digital reach, building out its partnerships with third-party vendors and marketplace aggregators to localize and meet consumer needs as part of its Perfect Digital Store (PDS) initiative.
In place for two years now, the PDS initiative works to make sure assortments are available to hybrid shoppers wherever the mood takes them — tapping any gaps and meeting specific snacking desires. It has particularly fruitful partnerships with DoorDash and Uber Eats, which have determined that most sales with these partners take place at night — specifically, after 8 p.m.
Armed with this insight, PepsiCo has implemented a late-night activation with DoorDash to home in on shoppers based on their purchase history and present product pairings. In addition to time, weather also plays a role. When temperatures reach a certain point in select markets, for example, shoppers will be prompted to buy a thirst-quenching bottle of Gatorade from a store close by.
“We have seen strong results when we meet consumers with contextually relevant messaging in these moments,” Bryan Santee, PepsiCo’s chief commercial officer for PepsiCo Beverages North America, previously shared.
Estée Lauder Unpacks Insights With Precision, Powered by Consumer Data
Nowhere is the need for personalization more pronounced than in the beauty category, where self-expression reigns and consumers’ purchasing decisions are driven, in large part, by personal taste and creativity. Cosmetics giant Estée Lauder knows just how important personalization is and in response has crafted novel, data-driven ways to appeal to their consumers’ creative sense of self-expression through makeup and beauty products.
In many cases, successful personalization in beauty involves going straight to the source — sifting through daily customer conversations across review and ratings platforms, social media platforms, blogs, and other sources of first-party data insights.
In a recent podcast conversation with CGT, Estée Lauder’s SVP of foresight and growth intelligence, Raheel Khan, shared how the beauty giant has spent the last seven or eight years doing just this — keeping an ear to the ground on consumer insights across a variety of sources.
“We've been really capturing these consumer conversations and trying to really parse out and understand what are the signals that can help us with trends and consumer needs — so across benefits, forms, finishes, textures, subcategories, looks, but also culture,” Khan said.
Where things get really innovative is through Estée Lauder’s Beauty Trends platform, which is accelerated by the help of generative AI and optimizes the company’s ability to rapidly formulate concepts from gathered insights. In turn, this trickles down to everything from marketing to inventory, creating a powerful ecosystem of value that starts with raw consumer data. “[The Beauty Trends platform] is able to match our best assets, our product assets, or even some of our creative assets, claims assets,” Khan said. “It's able to match it to those trends that are happening in real time in the market. It's actually also able to tell us if we have enough inventory sitting or not.”
How Retail Media Gets Brands Closer to Consumer Needs
Interest in retail media continues to grow as data-hungry CPGs look to reach consumers in new ways and gather valuable first-party insights. The 2024 CGT Sales & Marketing Study shows 55% of consumer goods leaders expected to increase their retail media spend, compared to just 49% who said the same in 2023.
From rewards and loyalty to gamification and in-store media innovations, some of the world’s leading brands are experimenting with how to incorporate retail media processes most usefully in their data strategies.
It’s this ability to provide a closed-loop, self-contained space that makes retail media networks so compelling, particularly to brands that are tasked with trying to squeeze the most value from their marketing spends.
Potential Retail Media Consumer Data Wins
↳ Access to retailers' first-party data allows consumer goods companies to better understand customer preferences and behaviors.
↳ Strengthening existing relationships with retail partners enables brands to enhance collaboration and create more impactful joint campaigns.
↳ Tapping into the growth of e-commerce sales provides brands with new opportunities to reach consumers and expand their digital footprint.
↳ Opening up new revenue streams through retail media partnerships allows CPGs to diversify their strategies and maximize ROI beyond the usual sales channels.
“At any given time, 50% of your media isn’t working — you just don’t know which half,” shares Circana’s Patel. “That’s what makes retail media so compelling: its closed-loop system proves impact. … Retail media gets precise, targeting specific shopper bases and showing whether it worked. However, optimizing spend and avoiding redundancy is key to fully unlocking retail media’s potential for measurable, impactful campaigns.”
More is not always more when it comes to selling, a fact that Reckitt’s director of performance marketing, Imteaz Ahamed, knows all too well. Heading up the CPG’s infant nutrition unit presents a unique set of opportunities and challenges around consumer data, particularly when the customers are largely newborn babies and their parents.
“Every day, 10,000 babies are born and 10,000 leave the category,” Ahamed explained on a recent podcast. “With only about 1%-2% growth in birth rates, there’s not much volume to extract. To drive category growth, there are three levers: win market share against competitors, get families to buy more formulas or extend usage, and trade consumers up to more premium brands within the portfolio.” That’s where consumer data comes in — along with the data services and enrichment opportunities that exist to leverage them. Retail media networks provide end-to-end, closed-loop attribution, Ahamed said. “If we can capture data like the expected date of birth of a baby, we can build weekly cohorts and deliver the right ad at the right time. That’s incredibly powerful.”
Case Study:
How Reckitt Knows When to Stop — or Redirect — Marketing Efforts
“People are exposed to hundreds of ads a day, and the vast majority of them are not relevant. It’s about getting much more relevancy through effective personalization, done well over time with the right guidelines and controls.”
— Ash Patel, Chief Technology and Transformation Officer, Circana
Dealing With Data Through Clean Rooms
Ahamed also highlights the value of incremental growth and harnessing data clean rooms to get a more 360-degree view of the consumer. When discussing incrementality, Ahamed employs a strategic process of elimination, of sorts, taking people searching for competitor or category keywords, then excluding and targeting those who have purchased in the category in recent months.
“With data clean rooms, we can see the full customer journey and their total basket,” he added.
In this way, instead of just optimizing for the two SKUs in a campaign, Ahamed said, Reckitt is able to optimize for total portfolio sales, sorting the useful data from the less relevant insights. “As long as they’re buying my brand, I don’t mind which SKU it is,” he explained.
Other CPGs using similar approaches include Kenvue, which has explored the use of data clean rooms as part of its data strategy designed to boost sustainability efforts. In a recent conversation with CGT, the company’s chief technology and data officer, Bernardo Tavares, shared that this approach requires more collaboration across the board, working toward a common goal. “As we sit with customers, we see more of our data scientists coming together from both ends and co-innovating, as opposed to being very protective or guarded about sharing their data,” he said. “There's more of an open mind of responsibly creating clean rooms and collaborating with our customers, and sustainability is one of the areas that we could partner more.”
While enthusiastic about retail media’s potential to transform approaches to consumer data, the world’s biggest brands are now growing increasingly strategic and mindful not to overload the circuitry and plunge in too fast without measurable KPIs. Ram Krishnan, PepsiCo’s CEO of North America beverages, said at Groceryshop last year that retail media networks are useful but must “meet a certain threshold at other media bought.”
56%
52%
North American marketers who say in-depth analytics drives their data clean room strategies.
North American marketers who say ease of data integration drives their data clean room strategies.
Source: EMarketer
How PepsiCo Measures Retail Media ROI
↳ How much can the retail media networks target?
↳ Are measurements clear across every touchpoint?
↳ What is the creative flexibility with search and video?
↳ Is there an API?
40%
The percentage of CPG respondents planning a major loyalty marketing upgrade in the next 12-18 months or have recently started a major upgrade.
Source: CGT, 2024 Sales & Marketing Report
Lean Into Loyalty
If done correctly, loyalty programs stand to be a win-win for consumers and brands alike. By rewarding frequent purchases with exclusive offers and perks, CPGs can build a more complete picture of particular consumer preferences while also securing their business in the longer term.
There are also signs that enthusiasm for loyalty programs — and their ROI — is steadily on the ascent. A recent BCG survey found that since 2022, the number of programs the average U.S. consumer belongs to has increased by approximately 10% to a total of more than 15.
But personalization doesn’t just apply to consumer demands. Loyalty programs must also be distinctive, differentiated, context-specific, and empathetic to the precise needs of their members. To drive results, consumer goods companies can’t rely on a cookie-cutter approach or simply try to replicate others' initiatives. Strategies must get granular and address focused objectives while accounting for factors like rapidly evolving consumer preferences and choiceful shopper demands.
E.l.f. Beauty’s marketing strategy has been built, in large part, by listening to their customers through loyalty, with the company’s 5-million-member Beauty Squad providing ample insights into what makes their audience tick.
“We listen to our community — and once we get a signal, we lean in,” the company’s chief digital officer, Ekta Chopra, recently told CGT.
A couple of fresh and creative initiatives have emerged from tracking these signals. In one case, E.l.f. found that 80% of single people felt their "get-ready routine" affected their first-date nerves. In response, the company rolled out a makeup line intended to give these consumers a confidence boost. Another study found 75% of women view music and makeup as tools of self-expression. In response, the company launched “Get Ready With Music, The Album” in partnership with clothing brand Madewell. The beauty brand is also investing in generative AI models such as ChatGPT and DALL-E to sharpen up these personalization and marketing initiatives. It’s by digging into data and getting a layer deeper into the consumer psyche that brands can foster true loyalty. If consumers feel they are being listened to and their favorite brands are responding in appealing, creative ways, they are far more likely to continue purchasing from them.
3 Key Takeaways for Understanding the ‘Choiceful’ Consumer – and their Data
1
2
3
Personalization
Is Non-Negotiable
Today’s shoppers are choiceful and harder to impress. As a fair exchange for parting with their data, they expect brands to show they get them with smart, context-aware suggestions that feel tailored, not cookie-cutter. Personalization done right drives loyalty, and people are willing to spend more when brands get it right.
Value Is Only As Good
As Your Insights
Most companies are stuck reporting on the past instead of predicting the future. By letting AI handle the menial work of tracking and summarizing data, businesses can focus on uncovering the “why” behind consumer behavior and shaping smarter strategies that actually make a difference.
Make Convenience
Meet Context
Brands like PepsiCo are winning by meeting consumers where they are — whether it’s pairing late-night snacks with delivery services or offering weather-triggered promos. Success comes from leveraging the right tools to know your audience’s habits and showing up with what they need and when and where they need it.
Sigmoid enables CPGs to navigate macroeconomic shifts and changing consumer demands, equipping them with data-driven insights. Through deep expertise in data engineering and AI, the world’s largest enterprises trust Sigmoid to modernize their data strategy and solve complex challenges using Machine Learning, Generative AI and Advanced Analytics.
By Maia Jenkins
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Meeting the Needs of the ‘Choiceful’ Consumer
Learn how brands like PepsiCo, Reckitt, Estée Lauder, L’Oreal, and more are modernizing their consumer data strategies with generative AI, data clean rooms, and loyalty programs, as well as exploring the potential of retail media as a way to leverage first-party data.