KPMG: growth among consumer goods companies continues to slow

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Organic growth for consumer packaged goods (CPG) businesses is slowing, according to the latest analysis by KPMG in the UK. Perhaps not surprising given that in a separate KPMG survey of senior consumer-focussed executives globally, many said that they were struggling to adapt to the rapidly changing environment.

KPMG’s latest Organic Growth Barometer 2018 report found that over the past financial year, the median annual growth rate among CPG businesses has decreased from 3.0% in 2016, to 2.5% in 2017. The research also highlighted that the businesses bucking the trend were mainly offering luxury, premium products across food and beverage, as well as beauty.

Commenting on the findings, Linda Ellett, UK head of consumer markets at KPMG, said: “Consumer businesses are having to grapple with multiple challenges at once, whether it is the emergence of new disruptive competitors; technological shifts which are redefining consumer behaviour and rising customer expectations, or the economic pressures squeezing margins. Against such a backdrop, it is perhaps unsurprising that growth has become harder to achieve, but the strongest performers, and their approach, offer the clues to unlocking growth.

“Looking at the common themes among the strongest performers, it is clear that these businesses understand the impact that strong leadership; the right business environment, and experience of their employees and customers, has on sales growth. These businesses also make digital the lifeblood of their organisation, to create and deliver innovative consumer products and experiences that resonate with today’s consumers.”

In the global senior executive KPMG research – the Global Consumer Executive Top of Mind survey launched in association with the Consumer Goods Forum – 530 consumer-focussed senior executives were polled globally. It revealed that while 65% of CEOs believe their organisation fosters a culture of innovation and disruption, 40% believe they are not adapting successfully.

The poll also pointed to widespread agreement among CEOs that historical and current business models will not survive. Pointing to a significant industry reinvention, 58% of companies are developing new – or rethinking existing – business models.

Furthermore, 55% of respondents agreed that by 2020 physical stores that do not reinvent themselves will not survive, and 53% said that many stores existing today will close due to underperformance, as e-commerce and direct-to-consumer channel grow in prominence.

Commenting on the findings of KPMG’s Global Consumer Executive Top of Mind survey, Paul Martin, UK head of retail at KPMG, added: “The UK has been awash with retailers struggling to remain relevant to increasingly fleeting customers, with this process heightened by the growing prominence of online retail and consumers buying directly from brands through their own distribution channels. We’re seeing clear winners and losers right now, and it’s vital that businesses position themselves firmly on the consumer’s radar.”