Digital advances are transforming the consumer sector – and there's potential for greater change and revenue growth if participants manage technology and data platforms effectively.
Data and technology are top priorities for the consumer sector and are rapidly transforming business models, according to KPMG’s 2014 Top of Mind survey. This shift in focus is imperative. The rapid proliferation of social and digital media has empowered customers as never before, prompting a retail industry that must be open to serve customers anytime, anywhere, and in any way they choose to shop.
At the same time, these new media channels allow for direct engagement with customers, enabling organisations not only to better serve them, but to generate massive amounts of data. This wealth of information holds the potential to drive real frontline differentiation and bottom-line growth.
To fully realise this potential, consumer sector participants need to focus on managing security and customer trust issues. The more data and information companies have to leverage, the greater the risks and costs associated with cyber-theft or misuse become.
Our survey found that 'data security and privacy' was identified as a very or critical strategic area for only 47 percent of respondents. This appears low given the increasing occurrence of highly publicised data security breaches in the industry, and the potential downside risk.
One of the biggest concerns is that consumer companies will lose the confidence of their customers. The misuse of data – or being vulnerable to piracy or hacking – can have enormous consequences, harming the reputation of manufacturers and retailers and eroding customer trust. However, organisations can capably manage these risks – and effective risk management can end up delivering reputational advantage I the marketplace.
Big data presents a huge opportunity to refine strategies around products, solutions and channels. And those who manage the data best will be in the best position to translate this information into competitive advantage. More than half of respondents cited data analytics as being 'very' or 'critically' important to their strategy over the next 12 months. Yet we believe the majority of retailers do not know how to get their arms around the volumes of data, or the new innovations in the analytics space.
The key fundamental of data and analytics should not be about spending more on technology. The driving forces to collating and collecting this data is investing in meaningful insight and defining how this insight can help businesses differentiate the services they provide to their customers. This is the heart of the opportunity for consumer sector participants.
Our survey reveals a number of companies have highly optimistic growth projections. To actually achieve these targets, companies need to focus on boosting key capabilities such as digital strategy, supply chain and talent.
While 65 percent said their strategies exploited key consumer trends, only 56 percent believe they have the right portfolio mix to achieve their growth targets, and only 50 percent the appropriate resource allocation and necessary competitive advantage. With some recalibration of the portfolio and refining of resource allocation, consumer organisations will be in a better position to see real bottom-line growth.
A longer-term outlook would also create more opportunity for sustainable growth. Many companies are leaning towards shorter-term growth strategies such as promotion and pricing, but focusing on longer-term strategies, such as multi-channel effectiveness, would reap real rewards in the future.
It is not surprising that supply chain was the number one area where respondents said they would increase investment the most over the next 12 months. This reflects the fact that consumer companies are now expected to deliver anytime, anywhere.
As supply chains continue to become even more complex due to expansion and new business models, greater collaboration between suppliers and retailers and deeper integration of data analytics into supply chain management will help with agility, visibility, flexibility and planning.