Consumer packaged goods companies have a relatively bright outlook for the immediate future, especially in light of the impending end of the pandemic, according to a survey by Deloitte.
The report, Deloitte’s Consumer Products Industry Outlook, notes that while the U.S. economy contracted by 3.6% in 2020, almost all estimates look forward to an expansion this year, fueled by increased consumer activity as pandemic restrictions are lifted. In addition, “a pandemic-damaged economy can still be a good one for many CPG companies,” the report notes.
It named five strategic moves as possibilities for CPG companies in the near future:
Resetting go-to-market strategies. Four out of five respondents said that resetting this strategy is critical, but only half rated their company’s current maturity in this regard as “high.” Respondents were asked to choose among various strategies, and Deloitte separated the responses into companies that had increased revenue during the second quarter of 2020, and companies that had decreased revenue. There was a significant gap, with the companies with decreased revenue more likely to say they were going to try the strategies. The gap ranged from 14 percentage points for “design new product offerings” to 20 points for “reduce SKUs.” In the latter case, 60% of revenue-negative companies said they would do so, while only 40% of revenue-positive ones would.
Accelerating the shift to digital. This takes two basic forms. Among respondents who are making investments in digital, 80% are allocating resources to improving e-commerce and digital platforms. Internally, three in five executives say they will invest further in their work-from-home platforms during the coming year.
Building supply chain resilience. One of the biggest challenges in the pandemic was switching between sales channels. “Simply put, resilience is how companies keep their supply chains from breaking and restore them quickly when they do,” the report says. Better data and analytics are key: three out of four executives say they will make more use of external data in predicting demand, and slightly more than half see artificial intelligence beginning to replace historical statistical forecasting this year.
Investing in tomorrow’s business foundations. This takes various forms, including investing in the in-company workforce. When asked how they would invest a blank check, one executive said, “I would spend it on the employee experience. We need to retain our talent and, given the influx of remote work, that will be harder to do.”
Connecting purpose to profit. The report cited research that brands that consumers perceive to have a strong “sense of purpose” draw more sales, loyalty and recommendations. This sense of purpose includes aspects like social justice, sustainability and environmental consciousness. Three in four respondents said that “purpose” will be important to achieving their strategic objectives this year.