How disruptive is Alexa to CPG brands?
Through a special arrangement, what follows is an excerpt of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.
“Alexa, order a 12-pack of toilet paper, a case of bottled water and a bag of tortilla chips.”
Welcome to the new moment of truth.
If you’re the brand manager of a CPG product, this existential threat should shake you to your brand-loving, MBA-trained core. The in-store marketing model that has ruled the consumer products industry for more than a century is being replaced by a talking cylinder.
Artificial intelligence and the generation of smartphone shopping assistants, from Siri to chatbots, are upending the traditional path to purchase, but they are all brand agnostic. Those ephemeral intangibles long considered the essence of a brand don’t matter. Price and delivery time are more likely to drive preference and selection in this new AI-driven store.
Beefing up slotting fees won’t make this threat go away. There are no endcaps here. No packaging. No in-store signage. No fancy floor graphics to put your beloved brand top of mind before a dozen other competing SKUs. There is only the abyss of the talking algorithm sheathed in the metal grid of a hidden speaker.
Can a brand mean anything to an algorithm? Harder still, if there is no longer an actual physical place where a brand might exist and come to life to consumers, how do brands connect with shoppers?
A similar crisis confronted brands more than a decade ago. Lifestyle brands like Nike and Coach became retailers themselves rather than leave their fate to retailers alone. They went direct to the consumer. Of course, a toilet paper store or a soda pop store is an absurd notion, but adopting the mentality of a retailer is not.
The moment of truth will increasingly happen outside the walls of a traditional retail store. And the one thing brands have done everything possible to avoid is now a necessity. There is no other choice: Brands must find a way to go direct to the consumer, either through their own portals or through radically improved formats operated by their existing retail partners.
This is a new moment of truth for brands, too.
DISCUSSION QUESTIONS: How should CPG brands adjust now that the “moment of truth” often occurs outside traditional retail stores? What new strategies can brands devise with their retail partners and on their own?