Measured by return on assets (ROA), the consumer product industryâs median profitability has trended downward over the past 30 years (from 5.8 percent in 1980 versus 3.7 percent in 2013).1 While the bottom quartile of consumer product companies has suffered the most (1.9 percent ROA to a negative ROA of -5.6 percent), top performers are also slightly less profitable than they were before: Top-quartile ROA performersâ ROA fell from 9.2 percent to 8.1 percent.2 In other words: Collectively, the industry has lost steam. Please see www.deloitte.com/about to learn more about our global network of member firms. According to Tony Vernon, former CEO of Kraft Foods, âFamilies in the middle [are] in fear of moving lower. by Talenttalks. For example, packaged goods executives seem to be lagging retailer executives in technology, and retailers may not be fully appreciating the impact of the changes in consumer preferences and demographics. Several trends that the company highlighted in the report have emerged in reaction to long-term IT challenges, while others address the technological needs of large firms, Deloitte … Concurrently new marketing channels to reach consumers, the convergence of sales and marketing environments, and the growth of disruptive retail models emerge. Marianne Wilson, âWhole Foods Market to open 38 to 42 stores, refresh 200 existing units in 2015,â, Greg Bensinger, âRebuilding historyâs biggest dot-com bust; online-grocery firm Instacart farms out jobs and food, hoping to make it where Webvan failed,â. has been removed, An Article Titled Consumer product trends He routinely advises the boards, CEOs and executive teams of Consumer Product companies on topics spanning growth, business model innovation, operating models, capability building, analytics, and technology adoption. According to the Retail Indicator Branch, e-commerce sales across all retail channels (including non-CPG retail) grew by 18.7 percent annually between 2000 and 2013, while overall sales only grew by an average of 3.2 percent annually. Ellen Byron, âMore pet brands target owners who like to cook their own dog food,â. The likely consequence: More frequent shortages of natural resources, including water, will cause more supply chain disruptions. Read the latest. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. If the 2020 economy is sluggish, with greater income bifurcation between the most and least affluent consumers, the middle class may struggle to regain its pre-recession footing, consumer confidence may decline, and income growth may be muted among lower-income and middle-class consumers.4 Fewer consumers self-identify as middle class (44 percent in 2014 versus 53 percent in 2008), and more identify as lower class (40 percent in 2014 versus 25 percent in 2008).5 These dynamics likely shaped the recessionary mind-set we observed in the 2015 American Pantry Study.6 Fifty-eight percent of surveyed consumers believed that the US economy was currently in a recession in January 2015, and 94 percent said that even if the economy improved, they would remain cautious and keep spending at current levels. Established in 1908, Australian Mining continues to lead and inform the Australian mining industry of the latest innovations in mining technology and equipment. 2020 Deloitte Global Human Capital Trends. He partners with the faculty at Northwestern University's Kellogg School of Management on research and routinely lectures at leading business schools. Anupam Narula. Crop commodities in categories such as food (wheat, corn, rice, soybeans), beverages (coffee, cocoa), and cotton have trended upward over the past decade.15 The International Monetary Fund (IMF) Food Commodity Index has risen 44 percent over the past decade, and the IMF Beverage Commodity Index has increased 56 percent. The COVID-19 pandemic has disrupted mining by pushing the industry further in the path of digital and cultural development. Crowdsourcing has emerged as one popular method for doing this: Several successful campaigns, including PepsiCoâs FritoLay âDo Us a Flavorâ campaign, have been built around seeking consumer input by crowdsourcing ideas on social media.25 In this campaign, consumers suggest new product flavors, and the winning flavors are developed and launched. During in-store shopping, technology can enhance the in-store product experience and deepen the brand conversation to help consumers save time and make better decisions. Anupam, Deloitte Services LP, is the Research team leader for Deloitteâs Consumer & Industrial Products industry practice. A few examples of organizations providing last-mile delivery services are Instacart, FreshDirect, and Peapod. Yet preparing for an uncertain future in 2020 is particularly difficult. NestlÃ© Purinaâs ability to offer customized dog food provides an example of a company embracing both customization and customer interaction. The company has also, through various partnerships on projects aimed at water conservation, distribution, purification, and hygiene, provided access to safe water to more than 3 million people; it is now working to provide safe water access to 6 million people by the end of 2015.35 PepsiCoâs focus is on achieving a âpositive water balanceâ in its operations, especially in water-distressed areas. The rapid pace of change necessitates companies to move quickly and completely in a coordinated way. In India, for instance, the company achieved such a balance in 2010 and 2011; in 2011, PepsiCo restored 14.7 billion liters to the environment in India, more than the 6.3 billion liters of water that it used in its Indian operations.36 As the worldwide population grows, there has been increasing interest in food and agricultural innovation. World Economic Forum, âGlobal risks 2014, ninth edition,â 2014, http://reports.weforum.org/global-risks-2014/part-1-global-risks-2014-understanding-systemic-risks-in-a-changing-global-environment/. Consumer product companies should consider understanding and targeting lower-income and middle-class consumersâ preferences in what they consider affordable in terms of price point and what they consider desirable in terms of channel. DTTL and each of its member firms are legally separate and independent entities. But, “CIOs are already charting a promising path toward tomorrow,” the firm says. Viewed through the lens of people and business, the past decade has been one of tremendous change – with more to come. Rio Tinto has achieved record breaking results during its 2020 Argyle pink diamonds tender collection of 62 rare pink, red, blue and violet diamonds from its now-shuttered Argyle mine in Western Australia. We would also like to acknowledge the contributions of Eva Dreger (Deloitte Consulting LLP), Julie Finn (Deloitte Services LP), Susan K. Hogan (Deloitte Services LP), Aijaz Hussain (Deloitte Support Services India Pvt. Furthermore, many food and beverage companies are increasingly subject to product supply disruption due to extreme climate events. Increased supply disruptions and natural resource shortages, such as water shortages, may put the business economics of consumer product companies under stress. Social login not available on Microsoft Edge browser at this time. In an effort to display commitment to the lower-income US shopper,17 Kraft developed products along âgood-better-bestâ price points in many categories to give value-conscious consumers lower-priced access to national brands. Consumer product companies and retailers face a confluence of rapidly evolving technologies, consumer demographic shifts, changing consumer preferences, and economic uncertainty. For some companies, this may entail reshaping their brand portfolio through innovation, acquisition of new brands, and/or divestiture of traditionally strong brands. First, driving greater brand loyalty is very important to each of the three groups of executivesârevealing the ongoing tension between both consumer product brands and retailers. Despite the pandemic and an economic recession, businesses and governments continued to pursue their decarbonization plans in 2020, according to Deloitte. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Kim also serves on the Board of Directors forÂ HashedInÂ and Chairs Deloitteâs USI (DCIPL) Board. For instance, 16 percent of consumers are willing to pay more than a 10 percent premium for healthier versions of products, while 55 percent are willing to pay up to 10 percent more.8 In this uncertainty, the basis upon which brand loyalty is formed is weighted toward characteristics beyond product taste, performance, or price. Trend 4: Dynamically managing risk. A podcast by our professionals who share a sneak peek at life inside Deloitte. Trend 1: The social investor. Additionally, recent social media listening research indicated that when consumers talk about food safety in the United States, only 14 percent of the discussion is about basic food safety, while the rest is about a broader set of topics, such as health and wellness.43 Within the health and wellness and food safety discussions, a significant number of posts were about transparency (8 million posts) and sustainability (2 million posts). And finally, economic impact was the most important to consumer product manufacturers of the three groups. Emily Bryson York, âEconomy may benefit Kraft CEO: Brand offers value to consumers,â. Constant technological change and increasing reliance on digital can leave people wanting for human connection. The majority of consumers (74 percent) are paying close attention to the nutritional content of the foods they purchase and try to avoid preservatives and chemicals. Reading Time: 1min read 0. For the World Economic Forum community, water crises ranked as the third-highest concern among 31 global risks in 2014.32 According to the Global Agenda Council on Water Security, â[P]oor water quality or shortages are often blamed on business operations even when businesses comply fully with regulatory requirements.â33 Beverage companies have faced accusations that their operations are depleting groundwater on several occasions and in several countries over the years.34 PepsiCo, recognizing the importance of water scarcity as a business risk, established several specific goals around water stewardship in 2007. John Hagel III, John Seely Brown, Duleesha Kulasooriya, Craig Giffi, and Mengmeng Chen. A decade or more after online shopping became mainstream, e-commerce for consumer packaged goods is finally arriving. Deloitte Publishes Inaugural 2020 Global Marketing Trends Report: Identifies Seven Key Trends to Help C-suite Leaders Place Humans at the Center of Their Work See something interesting? Almost half of US consumers have stronger preferences for brands and products aligned with the shifting value drivers of health and wellness, safety, corporate citizenship, and transparency, and the data suggest that this preference is not isolated to Millennials and high-income segments.7 Some consumers are becoming increasingly aware of corporate values and placing more emphasis on the role of the company within the community. The COVID-19 pandemic has accelerated the move that many mining companies are making in the direction of intelligent mining, but this doesnât mean they have lost their focus on people. The social enterprise at work: Paradox as a path forward. Of course, not every consumer will necessarily embrace personal health, environmental sustainability, and social impact, but a growing portion of consumers is likely to increasingly consider these attributes when making buying decisions. Discover Deloitte and learn more about our people and culture. 0. Traditional brick-and-mortar business models may be dismantled as consumers fully embrace digital. PR Newswire, âLayâs âDo Us A Flavorâ contest returns to the U.S. with $1 million grand prize for best potato chip flavor idea,â January 20, 2015. And a majority wanted to learn more about ingredients, production processes, and where the food comes from. Consequently, attitudes toward packaged foods such as an âincreasing desire for real foodâ and âusing food as a way to attain and maintain good healthâ are highly relevant for the pet food category.26 In March 2014, NestlÃ© Purina introduced âJust Right by Purina,â a brand that allows US consumers to create a customized blend of dog food online and have it home-delivered.27 To evaluate the nutritional needs of the pet, NestlÃ© Purinaâs website asks consumers to input details such as breed, gender, age, weight, activity level, and coat condition. Her clients span the food & beverage, personal care/household goods, agriculture, and white goods segments. NestlÃ© Purina observed the intense emotional bond that exists between pets and their owners, with pets often treated as members of the family. Ltd), Michael Jeschke (Deloitte Consulting LLP), Shweta Joshi (Deloitte Support Services India Pvt. The presentation will provide insights into Deloitte's 2020 Global Human Capital Trends report. Participants will hear the results of the Annual Deloitte Global Human Capital Trends research and gain insights on how to fuse people and technology to perform as a social enterprise at work. Elisabeth Hagen, senior advisor, Food Safety, Deloitte & Touche LLP, âFood and product 2020,â presented at 2014 GMA Leadership Forum, Colorado Springs, Colorado, August 23, 2014. A number of organizations have already made strides in preparing for and addressing these major changes in the consumer product landscape. Deloitte, Deloitte executive survey for insight into the consumer, conducted August 29, 2014 to September 11, 2014, n=205. 3 Feb, 2020; Deloitte identifies 10 trends shaping global mining sector in 2020 . These dynamics have the potential to undermine not only historical sources of profitable growth but also historical sources of competitive advantage, and render traditional operating models obsolete. The Tech Trends of 2021 aim to provide insights and inspiration for … Deloitte recently released their Tech Trends report for 2020, which gives insight into the newly identified key players and driving forces behind the world’s developing business and digital landscape. The cost and cost volatility of key packaged goods inputs will likely continue to increase. In the quarter ended June 30, 2020, we observed that an increased number of companies provided non-GAAP metrics2 that included COVID-19-related adjustments. USA Today, âPurina offering personalized dog food,â November 1, 2014, http://www.usatoday.com/story/money/business/2014/11/01/purina-offering-personalized-dog-food/18317543/. Still other consumers are focusing on the well-being of their community and on their communityâs valuesâwhich, more and more, include concepts like âgreen,â âlocal,â and âback to nature.â Today, a sizable portion of consumers describe themselves as health-conscious shoppers (47 percent). Trend 3: Seize opportunity amid uncertainty. The remaining 120 executives worked in other consumer-focused industries, including commercial banking, travel, hospitality, automotive, and consumer electronics. Copy a customized link that shows your highlighted text. The undercurrents in play place stress on the consumer product companyâs traditional sources of competitive advantageâscale, brand loyalty, and retail relationshipsâand the operating model that many of these companies are built on. Barb Renner, Click here. Read Australian Mining’s analysis of this year’s trends. First, an industry that was raising the bar on climate goals now appears poised to vault that bar sooner thanks to a raised floor, as renewables abruptly acquired a higher share of electricity demand. He is the research lead and co-author of multiple articles and reports on consumer attitudes and behaviors toward brand loyalty, marketing strategies, and store brands. The risk for executives is that they may be unknowinglyÂ incrementally falling behind such that by 2020 there could be a vast performance gap. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. The likely consequence: Companies will experience greater pressure to better align offerings and activities with consumer interests and values. For example, for 87 percent of consumers, clear labeling was a very important purchase driver for a given food product. The likely consequence: Core consumer segment(s) will experience minimal income growth at best. Third, understanding consumer preferences was considered more important by consumer product and food and beverage executives than by retailers. Notably, ownership of standard mobile phones increased by … Furthermore, almost 70 percent were more likely to buy brands that were actively communicating their commitment to food safety in a broader sense. In addition to the surveys and interviews described above, this report draws on data from a May 2014 survey of 2,004 consumers surveyed as part of the Deloitte Food Safety Survey. The website also considers dietary preferences (for example, inclusion of chicken, lamb, salmon, grains, or soy) and allows consumers to personalize the package with the petâs name and picture.28 The website uses automated reminders so that consumers can conveniently reorder the customized blend before they run out of dog food.29 âJust Right by Purinaâ launched across the United States in October 2014, after an initial testing phase that began in March 2014. Prior to this role, Kim served as Consultingâs US Consumer Industry Leader. For instance, in 2012, the company met its goal to improve operational water use efficiency by more than 20 percent per unit of production over 2006 levels. Deloitte Global Marketing Trends firstname.lastname@example.org. Ltd), Junko Kaji (Deloitte Services LP), Erin Kruse (Deloitte Consulting LLP), Robert Libbey (Deloitte Services LP), Jarrod Phipps (Deloitte Consulting LLP), Anup Raju (Deloitte Support Services India Pvt. Emotional ties to national brands will likely decline due to growing consumer discontent with large companiesâ perceived values, coupled with increased consumer focus on personal health, the environment, and social impact. Because no one knows exactly how marketplace dynamics will eventually play out over the next five years, consumer product companies should be prepared to operate amid uncertainty. SlantShack Jerky allows consumers to âBuild-a-Jerkyâ online.22 The company initially allowed consumers to select either 100 percent grass-fed or USDA Choice beef.23 However, the company now offers only 100 percent grass-fed beef, and it includes customization options and subscription options for its products.24. 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