Two recent pieces of consumer goods companies—Kuerig Dr. Pepper and Target—outline how digital transformation is changing the way they operate and seek to expand margins and make profit.
Kuerig installed data tracking capabilities on some in-home coffee machines three years ago, and data is relayed in real-time, enabling better distribution and inventory management, according to the company. It also gathers data via its direct-to-consumer distribution network as employees stock shelves in grocery stores, gas stations and convenience stores to better understand supply and demand in real-time.
Unlike many consumer companies, Kuerig Dr. Pepper reaffirmed is guidance for the year during its Q2 earnings announcement.
Target is being trumpeted as a major winner of the pandemic thus far due to its e-commerce sales growth. This is helping the company offset the decrease in in-store sales as it uses its store network as fulfillment centers for digital customers.
Kuerig Dr. Pepper and Target are both succeeding where many competitors are falling short with their digital transformation strategies amid COVID‑19. Both stories illustrate why companies that are executing well on digital strategies entering the pandemic, as evidenced by strong cyber governance performance, have outperformed lesser ranked peers by a wide margin YTD.
But this didn’t just happen in the past few months. Both companies have been laying the groundwork for these strategies and executing against their plans for years. As the Kuering article notes, the company initiated its data tracking system three years ago. Target has been investing for years in its e-commerce strategy, including an overhaul of the website and improved fulfillment capabilities. This has helped the company not only compete with Amazon and Walmart, but it has positioned the company to seize market share from struggling retailers like Macy’s that have not executed well on a digital strategy and is now fighting for its survival.
The pandemic has disrupted all sectors, but the consumer goods sector has been disrupted more than most. It has placed a greater premium on digital technology, bringing the future forward by at least three years. These two companies are harnessing the power of digital technology to improve operations, reduce costs, increase sales and grow market share better than most of their peers. The market performance of both companies this year is proof of this fact, just as strong cyber governance is rewarded with outperformance. This is also why it is a strong predictor of future performance.