Retailers across the world are increasingly opting for traditional back-to-basics strategies to drive growth, foregoing newer business trends, according to new research from The Consumer Goods Forum (CGF) and KPMG International.
The report, Consumer Executive Top of Mind Survey, released to coincide with the recent Global Summit of The Consumer Goods Forum in Tokyo, shows 43% of businesses ranked sales growth among the top three levers for improving profitability over the next two years. This is followed closely by product innovation (39%) and cost reduction programmes (36%). Interestingly, IT transformation – a new approach to ensuring profitability – only ranked in the top three growth levers for 19% of businesses, much lower than might be expected.
Key findings from the research include:
- 48% of businesses ranked product development as the highest priority in terms of R&D and innovation investment, with marketing (44%) following closely behind
- When it came to marketing strategies, brand building ranked as the top strategy by 21% of businesses, followed by pricing (13%) and the new trend of consumer data analytics (13%), one of the only novel approaches to be ranked highly
- However, online/mobile sales (8%), social media (7%) and app development (4%) were all placed as much less of a priority. In all cases, traditional business tools were seen as holding the key to business growth over more trendy alternatives
This back-to-basics approach is also reflected in how retailers are maintaining and directing their focus, explicitly back towards their customers. The survey has revealed businesses have recognised the power and influence of today’s consumer, causing them to alter their focus to work with the customer and meet their needs, rather than trying to influence them.
An increase in informed consumers is expected to be the most positive impact on profitability, with 64% of businesses stating this belief. In fact, one-third of retailers now expect to collaborate with consumers as a means of driving innovation. The survey suggests that for businesses, the old adage that the customer is always right is once again true.
Sabine Ritter, executive vice president at the CGF, said: “The world of retail is always fluid, as technology evolves and demographic trends alter. What is interesting from this research, however, is that businesses are turning to tried and tested tactics to ensure they not only survive in this new climate, but grow in it. Perhaps the main conclusion to take from this research is that while new trends such as IT transformation are important, businesses still recognize the overriding need to have good products and low costs, all delivered with an unwavering focus on the customer. It is simple business, but appealing in today’s economic climate.”
Willy Kruh, global chair of consumer markets, KPMG International, said: “Globally, consumers have increasing access to technology and information and, as a result, are demanding more of everything. These consumer expectations, coupled with rising input prices, complex supply chains, regulation and competition, make it a challenge for many consumer companies to grow or even sustain margins. The results of this important survey explore the issues that are at the top of consumer executives’ agendas, and how their companies are navigating a complex and changing environment.”