The CPG sector is mature—a difficult arena in which to maintain healthy profit margins.

1. It is currently generating more than $750 billion dollars in annual revenue
2. Trade promotion expenditures represent, on average, 16% of gross manufacturer revenue eclipsing $129 billion per year
3. It is the #2 expense to CPG manufacturers in cost of goods
4. Industry research shows that less than 50% of this significant investment actually influences consumer spending

Traditional brand advertising via electronic media has become fragmented and cost prohibitive. CPG manufacturers are increasingly turning towards in-store marketing to reach the consumer with their brand-building messages.

Nearly three-quarters of CPG categories experienced a reduction in the average lift achieved through merchandising. As “prime” merchandising opportunities become more limited, manufacturers more actively experiment with new in-store marketing vehicles, such as digital signage and in-store TV, and will step up merchandising testing and monitoring to counter this trend.

Merchandising must evolve to become more strategic than tactical with tight collaboration between manufacturers and retailers; expect to see more sophisticated trip-based and educational merchandising solutions.
Manufacturers are moving towards investing in more pre-rollout testing of merchandising programs and will more closely track retail execution and consumer response.

Retailers and manufacturers are recognizing the power of leveraging merchandising to offer solutions to consumers, not just individual product promotion or price points.  Cross merchandising related products drives incremental sales—whether it’s meal ingredients, aids for cold symptoms, or spring cleaning items.