Consumer goods retailers and manufacturers transforming to maintain competitive advantage

Consumer goods retailers & manufacturers transform

Joint research from KPMG International and The Consumer Goods Forum reports a need for a deeper, multidimensional understanding of customers.

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A survey of 400 consumer goods retail and manufacturing executives from 27 countries reveals that companies who want to keep in front of change and secure competitive advantage are transforming themselves into fully integrated omni businesses—able to respond to the needs of customers across all channels and at any point during their shopping.

By 2018, 32 percent of the executives responding to the Global Consumer Executive Top of Mind survey conducted by KPMG International and The Consumer Goods Forum say they plan to evolve beyond their current single-, multi- or omni-channel retail operations into “omni businesses”. This means completely a digitally integrated business —including not just sales channels, but also manufacturing, inventory, marketing, sales, payments and distribution. 42 percent of executives say their customers already expect a seamless experience across sales channels—especially the influential millennial generation.

Willy Kruh, Global Chair of Consumer Markets, KPMG International comments: “The customer is the new point of sale. To compete in a global marketplace with shifting demographics, even today’s best-in-class consumer goods retailers and manufacturers require a deeper, multidimensional understanding of their customers. Hyper customer-centricity brings the customer into sharper focus through the use of advanced data analytics and smart technologies to track and anticipate consumer behavior in near-real time and deliver personalized products and experiences when, where, and how the customer wants them.”

Investing in customer analytics…

The executives surveyed say they are investing significantly in smarter analytics and technologies. While 29 percent say they are currently using data analytics, that proportion will double to 58 percent in the next two years. Usage of techniques such as predictive analytics, customer path to purchase analytics, and artificial intelligence are also expected to double over the next two years, to 59 percent, 54 percent and 43 percent, respectively. Other analytical technologies that executives think will grow fast include real-time tracking systems, scenario modeling and stress testing, and micro targeting.

“Companies need to gather and analyze as much circumstantial, situational, and demonstrated behavior data as possible so they can start to understand the motivation for why, when, and how a consumer makes a purchase decision at any given time. However, this shouldn’t be at the expense of the fundamentals of good customer service,” says Kruh.

… but underestimating more fundamental customer expectations

Despite the investments in sophisticated analytical technologies, research with 7,100 consumers across 19 countries suggests that a majority of retailers and manufacturers may not be paying enough attention to more basic customer expectations. According to the survey, consumers rank return policies and payment options as two of their top three considerations when choosing which brand or retailer to buy from (number one was competitive pricing). But industry executives thought these would be the two least important considerations for their customers.

Dean Wallace, Lead Partner for Consumer Markets at KPMG in South Africa, comments: “The report highlights the pace of disruption that the industry is experiencing from the prevalent influence of millennial consumers, social media and omni-channel business models. Customers are demanding an enhanced overall experience from organisations, spurred by the role of technology. According to the report, one of the top immediate priorities for local companies is increasing their use of social media in order to effectively reach their millennial audiences.”

He continues, “The customer now has more discretionary control over their purchases and has the power to increase competition amongst organisations. In South Africa’s case, though digital maturity is at a beginner stage, the growth of consumer spending in emerging markets and the influence of millennials is a very important external trend for the country. The changing landscape can be the biggest opportunity or hindrance, based on how an organisation chooses to see it.”

Please visit our Top of Mind survey page to download the full report.

Methodology

KPMG International and The Consumer Goods Forum have commissioned this survey for four years in a row to help consumer industry executives better understand the ever-changing impact of industry disruptors, competition and the economy on their companies’ strategic priorities.

The executive survey was conducted online and by telephone interviews by Roubini Thoughtlab during January and February 2016. A total of 400 executives from companies headquartered in 27 countries participated in the survey. In addition, for the first time this year, 7,100 consumers from 19 countries were surveyed online by Intuit Research Consultants in March 2016. 

About The Consumer Goods Forum

The Consumer Goods Forum (CGF) is a global, parity-based industry network that is driven by its members to encourage the global adoption of practices and standards that serves the consumer goods industry worldwide. It brings together the CEOs and senior management of some 400 retailers, manufacturers, service providers, and other stakeholders across 70 countries, and it reflects the diversity of the industry in geography, size, product category and format. Its member companies have combined sales of EUR 2.5 trillion and directly employ nearly 10 million people, with a further 90 million related jobs estimated along the value chain. It is governed by its Board of Directors, which comprises 50 manufacturer and retailer CEOs.

For more information, please visit: www.theconsumergoodsforum.com

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. KPMG operates in 155 countries and has 174,000 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.

For more information please contact:

Zethu Mthethwa

External Communications Specialist

KPMG in South Africa

M:  +27 60 997 5027E:

Zethu.Mthethwa@kpmg.co.za

© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The views and opinions expressed herein are the personal opinions of the interviewees and authors based on their personal experience working as Auditors in the industry and do not necessarily represent the views or opinions of KPMG International or any KPMG member firm.

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