Lines Are Blurring Between Europe’s Retailers and CPG Firms

Changing consumer behavior, technology and market dynamics have combined to blur the distinction between Europe’s retail and consumer packaged goods (CPG) firms, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ Retail & CPG Services report for Europe finds one of the lasting legacies of the COVID pandemic has been the digital transformation of both retailers and CPG companies, driven by the expectations of consumers who have grown accustomed to a more enhanced and personalized customer experience. As is often the case when faced with new challenges, the answer lies in the clouds.

“Cloud-first is becoming the new normal for Europe’s retailers and CPG firms,” said Andreas Fahr, partner and managing director, ISG DACH. “Service providers can play a key role in helping these companies by managing transformations and operating the resultant infrastructures.”

During the pandemic, many of Europe’s CPG firms got a tantalizing taste of the retail customer experience and have since sought to widen their reach by adopting a direct-to-consumer (D2C) sales approach through own-brand stores and online channels, the ISG report says. In fact, according to the report, some of the major CPG brands aim to achieve more than half of their sales through D2C channels. Even CPG companies that don’t currently have plans for D2C sales are seeking to strengthen their relationships with consumers through loyalty programs, highly personalized marketing and offers redeemable through stores, ISG says.

Just as some CPG companies are starting to resemble retailers, some retailers are behaving more like CPG firms by developing their own private-label brands that they promote and sell both in store and online. Many traditional brick-and-mortar stores that were able to remain open during the pandemic implemented technologies such as contactless payment systems, self-checkout options and in-store pickup solutions, ISG says.

These advances have raised customer expectations both in-store and online. As a result, retail and CPG companies are increasingly relying on IT services to digitize and optimize their new customer-facing and supply-chain processes, the ISG report says.

“Whether your firm is a CPG company or a traditional retailer, your best course is essentially the same,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “New IT technologies, such as headless commerce [an e-commerce architecture where the front end is decoupled from back end] based on a microservices architecture, are paving the way forward.”

The report also examines how AI and machine learning models are driving better customer support through automated support services and more personalized responses.

The 2023 ISG Provider Lens™ Retail & CPG Services report for Europe evaluates the capabilities of 27 providers across four quadrants: Business Transformation Services, Digital Innovation Services, Platform Modernization Services and Managed Services.

The report names Accenture, Capgemini, Cognizant, HCLTech, Infosys, TCS and Wipro as Leaders in all four quadrants, while IBM is named as a Leader in two quadrants. Kyndryl and LTIMindtree are named as Leaders in one quadrant each.

In addition, Genpact, Hitachi Vantara, LTIMindtree and Tech Mahindra are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.

Customized versions of the report are available from Cigniti and Infosys.

The 2023 ISG Provider Lens™ Retail & CPG Services report for Europe is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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Contact information

Press:
Will Thoretz, ISG
+1 203 517 3119
will.thoretz@isg-one.com

Kate Hartley, Carrot Communications for ISG
+44 (0)20 3457 6403
kate.hartley@carrotcomms.co.uk