Retail & consumer

28%

of retail CEOs are looking to China for growth this year.

30%

of consumer goods CEOs are looking to China for growth this year.

China tops the list of growth markets for retail & consumer goods CEOs

 

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While many retail and consumer goods CEOs in our survey view organic growth in existing domestic markets as their main opportunity for growth in the next year (39% and 29% respectively), they are keeping a keen eye on emerging markets too - expecting operations there to expand.

Shift to emerging markets continues, but the US still a force
Consumer goods companies were some of the pioneers in emerging markets; retailers aren’t yet as entrenched, but many are headed in that direction. Countries that both retail and consumer goods CEOs see as key for growth are China, Brazil and Russia - all in the top five, with China leading the way. Retail CEOs are also looking to Indonesia and Vietnam as places where they can cash in on a growing middle class; those countries were ranked 6th and 7th by retail CEOs. Consumer goods CEOs see a similar opportunity in Colombia, which they ranked 6th.

The other two countries in the top five for both retail and consumer goods CEOs? The US and Germany.

Connecting with ‘connected’ customers
Social media, smart phones, online shopping...consumers’ spending habits and behaviours are changing rapidly, and that’s keeping many retail CEOs awake at night. In fact, 37% are ‘extremely concerned’ about such shifts, and the same number are ‘somewhat concerned’. What's more, more than four out of five retail and consumer goods CEOs say their companies will change their strategies for customer growth and retention/ loyalty over the next year. For 43% of retailers, the changes planned will be ‘major.’ ‘Enhancing customer service’ remains a top priority for 53% of them - far more than the 38% in the total sample.

At the same time, fewer retail and consumer goods CEOs see the speed of technological change as cause for concern, as compared to our overall sample. That may suggest that they see customers' use of new technology as more of an opportunity than a risk.

Using social media to connect
Many of these customers – and potential customers - are hooked on the participatory experience that social media provides. A separate PwC research study recently found that almost half of online shoppers say they’re looking at social media sites every day. Social media can help build a company’s brand and reputation, and CEOs know that creating a distinct experience pays off. So it's not surprising that 57% of consumer goods CEOs and 61% of retail CEOs say that social media users are affecting their strategy, and the large majority of these CEOs plan to increase efforts to reach out.

Raw materials shortages looming
It's no secret that prices for both raw materials and energy are on the rise, and 29% of consumer goods CEOs are ‘extremely concerned’ that these costs could hinder growth. In fact, nearly two out of five plan to increase their investment in securing natural resources over the next three years. And, for 19% of consumer goods CEOs, securing raw materials or components is one of their top investment priorities for the coming year. On the other hand, most retail CEOs (78%) plan a ‘decrease or no increase in investment’ over the next three years to secure natural resources. This suggests, wisely or unwisely, that they may be counting on supply chain partners to pick up the slack. That being said, more retail CEOs believe that their supply chain partners have a ‘significant influence’ on their business strategy (51% as opposed to 32% in the overall survey.) And 46% of those who feel that way plan for ‘some change’ in strengthening their engagement programme.

 

CEO interview quotes

"To be honest, we wouldn’t dare to predict the future. The fact is the world has been changing a lot more quickly in recent years. And looking back, we find that many forecasts of the global economy turned out to be incorrect. In our company, we just try do well everything we need to do today."


Alex C. Lo
President of Uni-President Enterprises Corporation

"Two words sum up the global economy currently for me and they are fragility and volatility. Wherever you look, things are shifting very rapidly indeed. So I think what we have to do is monitor what is happening, be prepared for that volatility and then look for the growth opportunities very carefully."


Alison Cooper
Chief Executive of Imperial Tobacco Group

"I think there are some challenges around the BRIC classifications currently. I think you’ve got to drill down to see where the growth really is. Find out which cities are generating growth, where the growth opportunities are with consumers and really go for where the growth is in every market – and there is growth in every market – but you’ve got to go granular."


Alison Cooper
Chief Executive of Imperial Tobacco Group

"If we try to compete in China based on volume, we’re not going to win. But if we compete on quality and differentiation, we have a chance to win. In China, when we offer high quality, innovative products, we can achieve good results - even if we only claim a small market share because of the absolute size of the total market."


Alex C. Lo
President of Uni-President Enterprises Corporation

"Here at Renner, we want more than just satisfied consumers. We want to delight them - to go beyond their expectations."


José Galló
Chief Executive Officer and Director of Lojas Renner

"Consumer preferences vary constantly as society changes over time. If we’re busy doing too many things, we’ll forget the most basic and fundamental things."


Alex C. Lo
President of Uni-President Enterprises Corp.

"We’re thinking about the trend five years from now in order to reshape some of our R&D. Robust, consistent, ongoing consumer understanding is vital to us, because the pace of change is accelerating."


Douglas D. Tough
Chairman and Chief Executive Officer
International Flavors & Fragrances, Inc.
These interviews contain the opinions and views of the CEOs interviewed, and do not necessarily represent the opinions and views of PwC.

 
 

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