Retail and consumer companies are losing out on over US$345 billion dollars a year due to their lack of agility, according to new data from a survey of 270 C-suite executives of some of the world’s leading global consumer goods companies.
This was the main insight from “Consumer Centric: From Idle to Agile”, a whitepaper released by global management consulting firm A.T. Kearney.
Analysing how retail and consumer companies are adapting to the changing consumer world, A.T. Kearney interviewed thousands of consumers and 270 of the leading CEOs/CFO/COOs in the industry, all from companies with over US$2 billion in revenue.
Collectively the companies earn US$1.5 trillion in annual revenue, representing over a third of the world’s retail and consumer industry.
The report was released at a special session conducted by A.T. Kearney for C-suite executives at the global summit of the Consumer Goods Forum, taking place in Singapore from the 12 – 15 June.
The summit brings together the CEOs of 400 of the world’s most successful companies to discuss future business trends, discuss industry challenges and how they can drive positive change across the value chain of the consumer goods industry.
Insights from the A.T. Kearney survey revealed that the main barrier to agility cited by respondents was culture, with 37% of the CEOs/CFO/COOs declaring it as the largest hindrance to adapting to the new consumer.
Despite this, over 50% of the industry leaders said that by 2026, cultural fit would be the main priority in the recruitment of top talent.
Greg Portell, Lead Partner, Consumer Industries and Retail Practice, A.T. Kearney, commented “Our report showed that the retail and consumer industry needs to adapt to the preferences of Gen Z and Millennials consumers, who will dominate consumer spend in coming decades.
“The relationship with consumers is becoming more relationship based than transaction based, and Gen Z and Millennials require personal tailored marketing as opposed to the mass traditional model. “
The industry leaders surveyed acknowledge that their companies need to become more agile and adapt to the consumer world, one that is changing from one defined by affluence to one shaped by influence.
Despite this, companies are struggling to adapt. In fact, 79% of those surveyed said their companies rely on discount, loyalty programs and gift cards to motivate consumers to share their personal data.
However, A.T. Kearney’s research showed that these are stale methods and Gen Z and Millennials require a more creative approach.
For companies to adapt and capture the Gen Z and Millennial consumer, loyalty programmes need to be less about paying customers for their data and require a refocus on demonstrating a company’s loyalty to their customers.
“If companies want to significantly elevate their financial performance, they need to get more agile in how they attract and engage with consumers. Agile means a company being able and willing to nimbly shift priorities in sync with what today’s consumers really want and need,” Greg Portell added.
The whitepaper had four steps that retail and consumer companies can take in order to become more agile and unlock the potential US$345 billion:
– Move away from traditional practices of data collecting and prioritise action and engagement with consumers.
– Shift focus from broadcasting to consumers to listening to consumers.
– Push power and accountability closer to the consumer.
– Adopt a creative approach that moves beyond following trends, companies need to shape trends with offers that can create new kinds of consumer demand.