As consumers increasingly shift their preferences from the center aisles of grocery stores to the perimeter, CPG brands are seizing various opportunities to capture consumer interest. In recent years, the growth of CPG has decelerated due to factors such as deflation, the rise of e-commerce, and the fragmentation of retail channels. This marketing strategy appears to target the coveted millennial demographic. With a significant portion of brand marketing now driven by social media, CPG stores and specialty food and beverage offerings are well-positioned for Instagram and Snapchat-friendly content.
The Pure Leaf Tea House showcases a lengthy bar surrounded by vibrant greenery, where the store’s “mixologist” crafts specialty teas. This venue offers a sensory experience, complete with soft lighting, comfortable seating, and decor that pays homage to the history of tea. Adding to the excitement, celebrity chef Marcus Samuelsson served as the mixologist earlier this week. Whether these pop-up stores can generate substantial buzz to become effective revenue or publicity sources for struggling CPG companies is still uncertain.
As more customers seek healthy options, CPG companies have the potential to attract a wider audience by introducing new products featuring nutritious ingredients, such as food rich in calcium citrate or plant-based proteins, along with added fruits and vegetables. While launching new products can be costly, their profit potential may prove to be more effective than investing in expensive retail spaces in major urban areas. However, this approach aligns more closely with Big Food’s marketing strategies, as larger companies tend to focus on updating existing products rather than developing innovative ones. Research from CircleUp reveals that 61% of innovation among large CPGs is directed toward minor modifications of existing products, while only 39% is allocated to new product development.
These retail spaces capitalize on well-known products, presenting them in ways that differ from typical consumer usage at home. In the food industry, some of the largest CPGs allocate up to six times more resources to marketing and advertising established products than to innovation, which may include promoting items like food rich in calcium citrate. As they navigate the costs of trendy city storefronts, the challenge remains for these companies to balance innovation with the proven profitability of their existing products.