Issues confronting the US retail and consumer industry sectors

Here are some of the issues confronting the retail and consumer sectors. To learn more about our perspective and how we can help, select the desired issue.

Revenue growth & margin improvement
How can I continue to generate growth in this challenging environment?
As retail & consumer products companies continue to navigate through the downturn, it becomes critical to successfully manage margins. Margins are being squeezed from rising input costs (commodity and energy) and an inability to pass these costs along due to low inflation, consolidation in the industry which is driving greater operational efficiencies, and private-label competition displacing national branded products. In this environment, companies need to formulate and execute strategically aligned cost initiatives across the entire organization, to include HR, Finance, Operations, IT and Sales & Marketing. It is becoming increasing imperative to mitigate pricing pressure with reformulations, product innovation, supply agreements, changing product mix, and distribution channel collaboration. Proper planning and the implementation of effective cost reduction programs can help companies achieve competitive advantage and maintain profitable growth.

Cost management
How do I develop a cost management strategy that maximizes efficiency without compromising growth potential?
Traditional cost reduction methods typically fail to achieve the targeted reduction, take longer, and are more expensive than expected. Often, costs are allowed to creep back to historical levels. In working with clients to address cost concerns, PwC has found that there are two foundational elements that should be addressed to help ensure business improvement efforts are well positioned for success. The first element is to focus on costs that can be reduced by understanding what money is spent and why on a functional basis, and by ensuring these functional costs have sound alignment to company financial plans and budgets. The second fundamental element is to change the way money is spent, making these cost reductions sustainable, and creating a culture of cost consciousness that will promote further cost reductions.

Reporting, risk, compliance, and control
How do I safeguard my company from risk in this world of change?
For all companies, value is maximized when management sets its strategy and direction to effectively balance growth goals with risks, and then effectively deploys resources in pursuit of this objective. Effective risk management looks beyond specific vulnerabilities to the events that are the source of both risk and opportunity, providing a process for balancing growth, risk and return. The recent wave of business scandals and its impact on corporate reputations has heightened public, press, and investor scrutiny on R&C companies in particular, and as a result, management and boards are increasingly compelled to ensure that risk is properly managed across the enterprise to protect corporate reputation, brand image, and shareholder value.

Adding to these challenges, Standard & Poor's will now apply enterprise risk analysis before issuing corporate credit ratings. Now, more than ever, retail and consumer companies must establish strategic risk management policies and foster an effective risk-management culture.