Welcome to the Introducing the Consumer Products Industry course. At the end of this learning journey, you’ll be able to speak about the Consumer Products industry in the language of your customer and articulate the end-to-end solution story for the Consumer Products industry.
What Are Consumer Products Companies?
Consumer products companies produce goods (such as food, electronic devices, clothing, or books) for customers to purchase in a store, a shop, or online.
These companies create new products and manufacture, market, and sell them to consumers. They can sell them to customers directly or through retailers, wholesalers, and distributors.
The process starts with product innovation, followed by manufacturing and supply chain. Then, it goes to marketing and sales to attract consumers to their brands/products. Each stage in the process is critical for companies so that they can attract consumers to their brands.
Consumer Products at SAP
Consumer Products is the largest industry at SAP.
- 88% of the Consumer Products companies in the Forbes Global 2000 are SAP customers.
- More than 15,000 Consumer Products companies in 134 countries are innovating with SAP solutions.
- More than 2.8 billion consumer identities are managed.
- More than EUR50 billion of trade spend is managed by SAP.
In this video, you learn about the evolving landscape of Consumer Products, including how companies are adapting to meet changing consumer behaviors, the importance of flexible and personalized marketing strategies, and the complexities of modern supply chains.
In this video, we look at the challenges and opportunities in different segments of consumer goods companies, such as Fast Moving Consumer Goods (FMCG), Consumer Durables, and Fashion and Apparel.
Each segment faces different challenges.
In food and beverage, challenges include:
- Changes in marketplace and societal dynamics
- More of a consumer emphasis on healthy, ethical food
- Rising environmental, social, and corporate governance (ESG) expectations, and new regulations
- Changes in trade and supply sources due to climate change and politics
For home and personal care, challenges include:
- The medicalization of beauty and wellness and expanded self-care
- Rising direct-to-consumer (D2C) sales
- Dependence on China for supply
For the durables segment, challenges include:
- Increased production and shipping costs and delays
- Consumers delaying purchases due to macroeconomic worries
- Increased importance is placed on the circular economy and product life cycles
The following table outlines some key Consumer Products industry terminology.
Key Consumer Products Industry Terminology
| Term | Explanation |
|---|---|
| Omnichannel | Understanding consumers and inventory across all shopping channels (primarily store and e-commerce). The goal is to reach the consumer at any location. Therefore, it is important for SAP to provide a unified shopping experience and to facilitate a best-in-class consumer experience. |
| Brick and Mortar | Physical stores are where customers can view, try on, and purchase items. |
| Pop-Up Shops | This type of retail attracts attention with its limited availability. Pop-up shops are short-lived and/or sporadically occurring. |
| Pop-Up Warehouses | Temporary locations, or physical stores that are now used to ship merchandise to a customer that has purchased via the web. |
| Clicks-to-Bricks | Pure online players are adding physical "brick-and-mortar" presence either organically (for example, Wayfair, Warby-Parker) or by partnering with traditional retailers (for example, Casper Mattress in partnership with Target). |
| Order Deliver Options |
Order Deliver Options have become more popular since COVID |
Lesson Summary
- Consumer Products companies create, manufacture, and market products to be purchased by consumers directly or through retailers, wholesalers, and distributors.
- Modern Consumer Products strategies must focus on the consumer's value drivers, personalization, agility, and flexibility.
- Consumer purchasing behavior has evolved due to COVID, with an emphasis on holistic health, well-being, and sustainable products.
- The digital supply chain path of Consumer Products companies involves managing complex value networks and various challenges, including inventory management and coordinating with multiple suppliers.
- The Consumer Products industry can be segmented into Fast Moving Consumer Goods (FMCG), Consumer Durables, and Fashion and Apparel. Each faces different challenges.