Customer centricity is the key driver of success according to global CEOs
3 July 2018 – While more than 65 percent of CEOs agree their organization fosters a culture of innovation and disruption, 40 percent are not adapting successfully, according to the Global Consumer Executive Top of Mind survey, No Normal is the New Normal: Make disruption work for your business, conducted by KPMG International and The Consumer Goods Forum (CGF). The results of the sixth annual survey reveal a consumer industry at the point of radical change and that CEOs need to make changes on a similar scale to stay competitive.
“Today’s consumer and retail market is beyond disruption – we are disrupted – and CEOs need to listen to the market, look outward and focus on changing their business,” said Willy Kruh, KPMG Global Chair, Consumer & Retail. “It’s an increasingly difficult tightrope to walk between dealing with both internal and external continuous disruption, but both are key to creating customer centric organizations. Those companies that cannot authentically connect to customers will get left behind.”
The survey results suggest that in 2 short years, by 2020, the industry landscape could look very different:
“One of the business model transformations we’re seeing is putting social purpose at the forefront of strategy,” said Peter Freedman, Managing Director, The Consumer Goods Forum. “Consumers, especially the millennials responsible for USD 2.75trn of consumer spending, want to know what a company stands for. Financial returns are no longer enough and consumers are choosing to put their money where there are environmental, social and community benefits.”
In Asia Pacific, top 3 Consumer & Retail challenges are shifting demographics and expectations (34 percent), competitors with disruptive models (31 percent) and retailers creating own products (26 percent). According to Anson Bailey, Head of Consumer & Retail, Asia Pacific, KPMG in China, 58 percent of the world’s Millennials live in Asia Pacific and, on current trends that proportion is only going to increase.
“Today’s consumers are looking, above all, for value, convenience and a unique experience. These trends are driving disruption to existing markets and business models on an unprecedented scale. To compete with disruptive competitors, retailers need to disrupt themselves to compete with the growth of platform companies and start-ups. Innovation and partnerships could be key to do this,” said Nittaya Chetchotiros, Head of Consumer Markets, KPMG in Thailand. “Retailers creating their own branded products are sometimes a response to the actions of manufacturers. For example, if they create a product priced too high, customers may want a substitute. Or if they step up their direct sales to the consumer, retailers might compensate by creating their own product or adjusting their prices to compensate.”
How will CEOs prioritize changes to stay competitive? Leading digital organizations offer a blueprint for growth:
The need for radical transformation is not unique to the consumer and retail industry, as evidenced by KPMG’s recent CEO Outlook which found that 71 percent of CEOs are prepared to lead their organization through a radical transformation of its operating model.
“The recent KPMG CEO Outlook survey shows that 60-70 percent of CEOs believe the next 2 to 3 years are going to be more transformational than the last 50,” adds Kruh. “We are in the midst of three revolutions – geographic and geopolitical, demographic and technological – that are colliding with each other and turning the world upside down. And companies throughout the world are faced with a landscape that they’re not used to.”
Freedman added, “To succeed in a world of such intense disruption the survey also suggests we need to think about collaboration in new ways. That’s epitomized by the growth of platform companies of course. But in many other ways what used to be a competitive battleground may now provide scope for collaboration and companies that used to be your competitors may now be your potential partners.”
Please visit www.kpmg.com/topofmind to download the full report.
Now in its sixth year, this annual survey was conducted by telephone and online between March and April 2018. A total of 530 senior executives from companies headquartered in 28 countries participated in the survey. The respondents were senior executives at global companies from the food, drink or consumer goods, manufacturing and/or retail sectors, 87 percent of which had at least USD 500 million in annual revenues. The companies in the survey represent over USD 3.2trn in consumer sales.
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 3.5 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 more than 50 manufacturer and retailer CEOs. For more information, please visit: The Consumer Goods Forum
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 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.
KPMG in Thailand, with more than 1,700 professionals offering audit, tax, and advisory services, is a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.