According to new research from The Consumer Goods Forum (CGF) and KPMG International, retailers across the world are increasingly opting for traditional ‘back-to-basics’ strategies to drive growth, foregoing newer business trends.
The report, Consumer Executive Top of Mind Survey, released today to coincide with The Global Summit of The Consumer Goods Forum taking place in Tokyo, shows that 43 percent of businesses ranked sales growth among the top three levers for improving profitability over the next 2 years. This is followed closely by product innovation (39 percent) and cost reduction programs (36 percent). Interestingly, IT transformation – a new approach to ensuring profitability – only ranked in the top three growth levers for 19 percent of businesses, much lower than might be expected.
Key findings from the research include:
- Forty-eight percent of businesses ranked product development as the highest priority in terms of R&D and innovation investment, with marketing (44 percent) following closely behind
- When it came to marketing strategies, brand building ranked as the top strategy by 21 percent of businesses, followed by pricing (13 percent) and the new trend of consumer data analytics (13 percent), one of the only novel approaches to be ranked highly
- However, online/mobile sales (8 percent), social media (7 percent) and app development (4 percent) were all placed as much less of a priority. In all cases, traditional business tools were seen as holding the key to business growth over more trendy alternatives
This back- to-basics approach is also reflected in how retailers are maintaining and directing their focus, explicitly back towards their customers. The survey has revealed that businesses have recognized the power and influence of today’s consumer, causing them to alter their focus to work with the customer and meet their needs, rather than trying to influence them.
An increase in informed consumers is expected to be the most positive impact on profitability, with 64 percent of businesses stating this belief. In fact, one-third of retailers now expect to collaborate with consumers as a means of driving innovation. The survey suggests that for businesses, the old adage that the customer is always right is once again true.
Sabine Ritter, Executive Vice President at the CGF commented: “The world of retail is always fluid, as technology evolves and demographic trends alter. What is interesting from this research, however, is that businesses are turning to tried and tested tactics to ensure they not only survive in this new climate, but grow in it. Perhaps the main conclusion to take from this research is that while new trends such as IT transformation are important, businesses still recognize the overriding need to have good products and low costs, all delivered with an unwavering focus on the customer. It is simple business, but appealing in today’s economic climate.”
Willy Kruh, Global Chair of Consumer Markets, KPMG International, added: “Globally, consumers have increasing access to technology and information and, as a result, are demanding more of everything. These consumer expectations, coupled with rising input prices, complex supply chains, regulation and competition, make it a challenge for many consumer companies to grow or even sustain margins. The results of this important survey explore the issues that are at the top of consumer executives’ agendas, and how their companies are navigating a complex and changing environment.”
The research was conducted online and by telephone by HawkPartners on behalf of the CGF and KPMG, during March and April 2013. A total of 442 senior executives (90 percent CEO, COO and SVP) from companies headquartered in 44 countries completed the survey. Fifty-five percent of companies were manufacturers and 45 percent retailers, with almost all companies having over US$250 million in sales.
The role of the Consumer Goods Forum is to create a vision for the industry. Manufacturers and retailers have chosen the CGF to develop common positions on key strategic and practical issues affecting the retail and consumer goods industry. More information is available.
About the research
- For the past several years, KPMG and the Consumer Goods Forum (CGF) have each been conducting an annual survey of Consumer Markets executives on their top business priorities.
- In 2013, KPMG and CGF replaced their separate surveys with a single consumer executive survey.
- 442 executives from large consumer companies around the world were surveyed in early 2013.
- Respondents were defined as management or finance executives from manufacturing and retail companies with at least $250 million in revenue.
- All respondents were contributors to global strategy of company.
About KPMG International
KPMG International is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG’s Global Consumer Markets practice encompasses the Food, Drink and Consumer Goods and Retail sectors, and comprises an international network of professionals with deep industry experience. This industry-focused network enables KPMG member firm professionals to provide consistent services and thought leadership to our clients globally, while maintaining a strong knowledge of local issues and markets.
About the Consumer Goods Forum
The Consumer Goods Forum (CGF) is a global, parity-based industry network, driven by its members. It brings together the CEOs and senior management of over 400 retailers, manufacturers, service providers and other stakeholders across 70 countries and reflects the diversity of the industry in geography, size, product category and format. Forum member companies have combined sales of EUR 2.5 trillion. Their retailer and manufacturer members directly employ nearly 10 million people with a further 90 million related jobs estimated along the value chain. With its headquarters in Paris and its regional offices in Washington DC, and Tokyo, the CGF serves its members throughout the world.
For further information, contact:
Tel: +1 416 777 8491
Tel: +44 (0) 20 7067 0699
Tel: +81 3 5484 6013