Changes in consumer behavior, distribution channels shaking up the industry
So what do retail and consumer goods CEOs think might hold their companies back? For retailers, top worries are the changing behaviour of consumers and the factors that influence how much money people have to spend – higher taxes, government debt, unemployment and the like. Those worry consumer goods CEOs too, as does geopolitical uncertainty and over-regulation.
When it comes to disruptive forces, retail and consumer goods CEOs see new distribution channels as having strong potential to transform their industry over the next five years. That’s not surprising, given the growing importance of what we call ‘total retail’– as well as growing direct-to-consumer strategies.
Sights set on new and adjacent sectors
More than half of both retail and consumer goods CEOs think it likely that companies in one industry will increasingly compete in others over the next three years. But nearly three-fifth of these companies (58%) have already spread into adjacent industries themselves or are seriously considered doing so. Adjacent retail, wholesale and consumer sectors are on their radar – but so are energy, utilities and mining, as well as agriculture and healthcare and life sciences -- areas very different from those in which retail and consumer goods companies normally operate.
Treading warily down the digital path
Retail and consumer goods CEOs recognise the strategic significance of mobile technologies for engaging with customers, data analytics and cyber security tools. Surprisingly, both retail and consumer goods CEOs are less worried than their peers across the sample overall about the pace at which technology is evolving.
Most retail and consumer goods CEOs say that these investments have already started paying off. They can now make much better use of the data they collect, manage their supply chains and operations more efficiently, operate more productively and deliver a more appealing customer experience. But three features are vital to maximise the value digital technologies add: a clear idea of the competitive advantages they can bring; a robust plan with properly-defined measures of success; and a CEO who personally champions the use of such technologies.
Alliances high on the agenda
The percentage of consumer goods CEOs planning to form a new alliance has risen sharply, from 32% to 48%, this year. Most want to partner with suppliers, customers and business networks or trade organisations – largely to get access to new geographic markets or customers and to beef up their company’s ability to innovate. The percentage of retail CEOs planning to form a new alliance has also risen slightly this year, from 39% to 45%. Most are motivated by the desire to access new customers, markets or technologies.
Both retail and consumer goods CEOs are less likely to say they are planning to increase headcount this year. This may be one reason why there’s less concern about the availability of key skills from sector CEOs. Even so, only 54% have widened the search for talent, and only 52% have a diversity strategy – less than the global average and slightly less than consumer goods companies (56%). That said, 69% of consumer goods CEOs now actively search for new candidates in different countries, industries and demographic segments.