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Our latest consumer products industry overview provides a closer look at the trends that are disrupting the industry and changing the way they go to market.
Consumer products industry overview
The consumer products (CP) industry’s thirst for defying “business as usual” and creating disruption is far from quenched. Around every corner is an innovative idea that brings convenience and control back to the customer and pacesetters have only just begun to scratch the surface. In this type of environment, consumer products companies must remain nimble and one step ahead of the curve.
Deloitte’s Center for the Edge publication, Patterns of disruption, identified five catalysts that drive disruption: The economy, enabling technology, platforms, consumer mindsets, and public policy. The first step to creating a strategy to navigate these disruptors is understanding both the significant challenges and opportunities these catalysts possess for consumer packaged goods (CPG) companies. In this latest consumer products industry analysis, we will focus on the four disruptors that most directly affect our industry: The economy, enabling technologies, platforms, and consumer mindset.
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The economy: Will the economy support growth in the CP industry?
Capture the momentum of potentially strong consumer spending in 2017, but be prepared to pivot as fundamentals may face headwinds from policy uncertainty.
The economic fundamentals for consumer spending appear to be solid going into 2017. The labor market continues to strengthen, disposable personal income is edging up, and average hourly earnings have started to accelerate. As the labor market tightens further, income growth is likely to edge up in the short- to medium-term. Income growth for consumers has come at a time of rising asset prices. House prices have crossed their pre-2008 peaks and key equity indices hit all-time highs in November. This has boosted household wealth, thereby aiding consumer spending. And consumer confidence remains elevated, even after the 2016 election cycle.
- Consumer confidence is high, but policy uncertainty may create economic headwinds.
- Be prepared to adjust their strategies in the face of economic uncertainty.
Enabling technology: How can CPG companies harness the potential of enabling technologies?
Enabling technologies such as digital technologies, cloud, and in-memory computing can benefit CPG companies in three ways:
- Companies are faster, able to quickly amass data, analyze it, and pivot as necessary
- They can operate with more granularity, attaining access to more detailed consumer behavior and retail activity than ever before
- They help companies stay more connected, leading to two-way and real-time communication with customers and consumers.
CPG companies need to be cognizant of the fact that enabling technologies also facilitate new ways of doing business. Existing companies may be slow to recognize or embrace this, preferring the most comfortable position of applying new technologies to more efficiently execute existing business processes. Enabling technologies also help create a more informed, empowered consumer who has more visibility into options than in the past.
- Engage and influence consumers at every stage of the process, from research to the final purchase decision.
- Develop solutions to support the latest trends in brand personalization.
Platforms: Are CPG companies optimizing the potential of platforms?
Platforms are closely linked to enabling technologies. Just as CPG companies were late to the party on deploying enabling technologies compared to the retail and travel industries, they are behind the curve on creating platforms specifically for consumer products. As mentioned earlier, one challenge faced by CPG companies is to maintain relevancy in the digital world. This might be achieved through a focused effort on platform development specifically for consumer products.
- Create digital product platforms that engage consumers rather than simply promote a product.
- Digital platforms also help to build off of the success of what’s happening in the retail and travel industries.
Consumer mindset: What consumer trends influence CPG companies?
Consumer behavior and trends are continually developing as the drivers of purchase decisions evolve. Consumers are also becoming increasingly immersed in the digital world. In addition, the composition of the US consumer population is changing and is no longer one homogenous group. Consumers also have growing expectations of being treated as individuals and likely won’t settle for mass produced products in the future. In addition, CPG companies must prepare for a shift to a global marketplace that’s heavily influenced by Asia Pacific.
- Develop contemporary messages delivered through cutting-edge, digital platforms.
- Leverage these advancements to form lasting bonds with younger, connected consumers in all aspects of marketing.
In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.
Source : www.deloitte.com