The fast moving consumer goods industry has never been more fast moving. While there are some concerns about the state of the economy, most believe that sustaining competitive advantage in a dynamic retail environment is the biggest issue of the day. Longer term, it’s likely that the big retail fish will get bigger.
At IRI’s most recent ‘Re-inventing FMCG’ seminar held in October, we asked delegates to tell us their thoughts on what the future holds for the FMCG industry.
The economy
There is a general level of gloom around. Only 7% of respondents said that the economy would improve in the next 12 months, with most suggesting that prospects would stay the same as this year. However, company circumstances were more positive, with 56% saying that business in their firm would improve.
Issues facing the industry
Retailers are often heralded as today’s agents of change – for good or bad. To determine whether this was really the case, we asked a simple question: what are the most important issues facing the FMCG and retail industries today? Sure enough, retailer pricing and promotion activities were cited as the most crucial issue, by more than two out of five respondents. This was followed by margin slide, reflecting the increasing price pressures manufacturers are under from retailers. Out of stock issues and slow or no growth also scored highly.
Sales and marketing issues
Given the pressures today’s companies are under, we wanted to isolate the most important sales and marketing issues currently facing their company. The top response was sustaining competitive advantage with 37% of votes. Then came marketing planning and control (29%) and return on information investment (27%).
The future
Looking towards a long term picture, we asked how the retail industry would change in the next three to five years. Not surprisingly, many thought that there would be more consolidation in the industry with bigger players continuing to expand into the convenience sector. This reflected other views that the strong would become stronger and further downward squeezing of supplier margins and prices.
In addition, many people thought that retailers would continue to increase their non-food ranges, possibly at the expense of grocery sales space. The internet was cited as an opportunity for growth while possibly causing more intense competition and lower prices.
There’s no doubt that sustaining competitive advantage, the most eminent sales and marketing issue, is going to get harder. Retailer activities, such as pricing and promotional strategies, can only make things tougher for manufacturers, particularly if the economy does not improve as suggested. Keeping at the forefront of these trends is going to be even more important to keep pace with the fast moving consumer goods industry.
For more information contact:
E-mail: ukmarcomms@infores.com
Phone: +44 (0)1344 746000