Retail and consumer product (R&C) companies face many challenges in today’s competitive climate. In mature markets, R&C companies are constrained in their ability to grow and maintain profit margins as a result of a deflationary operating environment, market saturation, slowing population growth, and more discerning but less loyal consumers. Adding to the pressure is the emergence of alternative sales channels, a blurring of roles between suppliers and retailers, and a shift in the balance of power to retailers.
This has shifted the strategic focus of the sector toward the expanding consumer markets of China and India in particular - which offer new opportunities for growth through global sourcing, off-shoring and the development of modern retailing.
In addition, due to stakeholder demands and the resultant Sarbanes-Oxley legislation, the R&C industry is also experiencing heightened regulatory pressures. These imply greater accountability and accuracy in the reporting of financial results under IFRS and US GAAP, increased levels of corporate governance and Board involvement, stronger internal control documentation and a greater need for stronger risk management practices across the enterprise.
Retail & Consumer challenges