The Future of KAM and the Origami Model

KAM Radarscreen: Emerging Trends in Retail

Trends have been shaking up the retail sector for some time now. According to McKinsey & Company, one such trend is structural changes in channels, embodied by the growth in hard-discount formats (e.g., Amazon) and e-commerce. This trend is causing retailers to lower their prices and reduce their gross margins. In Western Europe, the average retail gross profit margin is five percentage points lower than in the United States. E-commerce, which enables price transparency, has made these pressures worse. It’s therefore not surprising that retailers have been trying to protect their dwindling margins by negotiating more aggressively. Margin pressure is prompting more retailers to offer private label products, often at the expense of the biggest CPG brands. Online retailers and discounters represent new types of customers in the CPG industry. These customers’ strategies, operations, and partnerships differ from traditional retail stores, requiring significant changes in how CPG companies serve and handle their accounts.

The second trend is that the top CPG brands are not contributing significantly to category growth anymore. The largest manufacturers account for 45 percent of sales but just three percent of the food and beverage industry growth. Growth today mainly comes from small…