New Study from the Economist Intelligence Unit Details Executive Viewpoint on CPG & Retail Industry Growth Trends and Opportunities
CHICAGO, September 28, 2005 – Competition will be fierce over the coming years and to remain competitive, companies in the consumer packaged goods (CPG) and retail sectors will need to create brands that strike a lifestyle chord, revitalize product lines, and lower supply chain costs, according to Courting the Consumer, a report written by the Economist Intelligence Unit and sponsored by Information Resources, Inc. (IRI), the leading global provider of enterprise market information solutions for the CPG, retail and healthcare industries.
"Today’s CPG manufacturers and retailers are fighting competition on multiple fronts, each requiring unique and highly-differentiated strategies to be successful and grow in today’s complex marketplace," said IRI President and Chief Executive Officer Scott W. Klein. "Courting the Consumer provides real-world perspective from some of the industry’s foremost executives and leaders, combined with detailed and action-oriented analysis other companies can immediately use to begin improving their business."
The report, based on a global survey of 123 retail and CPG executives, concludes that retailers and CPG manufacturers must significantly increase collaboration to meet rising consumer expectations.
Key Growth Strategies for CPG and Retail
Source: The Economist Intelligence Unit, 2005
| Growth Strategies | % respondents rating option as critical |
| Brand building | 44% |
| Loyalty building/increasing share of wallet | 41% |
| New product development | 38% |
| Improved operational efficiencies | 37% |
| Geographical expansion | 23% |
| Improved collaboration with suppliers | 22% |
| Range/brand extensions | 18% |
| Sales channel expansion | 18% |
| Retail outlet expansion | 14% |
The survey indicates that CPG manufacturers and retailers will focus on three inter-related growth strategies. First, they will strengthen brands so they resonate on a multinational scale and make them relevant enough to break through the noise of advertising that consumers face. Second, they will introduce frequent new products that reinforce and extend the brand concept, as well as respond to the accelerating pace of change in consumer demand. Finally, manufacturers and retailers will reduce cost in order to both fund the investment needed for brand and new product development, as well as to respond to heightened competition from hard discounters.
Other key findings include the following:
Brand as competitive weapon. CPG companies and retailers will increasingly rely on the power and importance of their brand to attract and retain customers. Eighty-four percent of manufacturers and 60 percent of retailers rate brand building as a crucial marketing strategy. Three-quarters of all respondents said that brands will be a highly significant or significant source of competitive advantage during the next three years. Brand-building strategies will focus on making a lifestyle connection with the consumer.
Responding rapidly to new customer needs. Retailers and consumer goods companies will mine data to ensure they are at the leading edge of change in consumer lifestyles and the values that underlie them. In order to nurture the consumer’s emotional bond to the brand, manufacturers will frequently renew the product line, and retailers will deepen loyalty programs and constantly refresh in-store promotions. As product lifecycles continue to shorten, speed to market will increasingly differentiate competitors.
Supply chain optimization. When presented with 11 challenges, 62 percent of retailers and 43 percent of manufacturers chose "reducing costs and maximizing efficiencies" as their single greatest concern. The clear target for cost reduction is waste and inefficiency in the supply chain. Fifty-seven percent of companies said that supply chain and inventory management solutions will be among the top two most critical technologies that will support their business goals during the next three years.
"As this research emphasizes, competition for the consumer has never been more intense," said Daniel Franklin, editorial director of the Economist Intelligence Unit. "To survive, retailers and consumer goods companies will need to work closely together to create powerful brands and speed innovative products to the market."
For a complete copy of the study findings download the PDF here
The Economist Intelligence Unit conducted a global online survey of 123 retail and consumer packaged goods companies in August 2005. Approximately half of the respondents came from the retail and consumer packaged goods sectors respectively. A mix of small and large companies participated, with 54 percent of respondents coming from companies with over $500m in annual sales revenues. Over a fifth of the respondents were CEOs, company presidents or managing directors.
About Information Resources, Inc.
Information Resources, Inc. (IRI) is the world’s leading provider of enterprise market information solutions and services, empowering its clients to grow their business profitably in a complex marketplace. Driving the transformation of the consumer packaged goods (CPG), retail, and healthcare industries, only IRI provides a unique combination of real-time market content, advanced analytics, enterprise performance management software, and professional services. The company’s portfolio of services, solutions, and technology enable leading retailers and their suppliers around the globe to see what they are missing, act faster with greater confidence and win at the shelf. Ninety-five percent of the Global FORTUNE 500 in CPG and retail leverage IRI to power their business. For more information, visit http://www.infores.com/