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Lessons from change - Seeds of transformation in consumer products - EY - Global

Lessons from changeSeeds of transformation
in consumer products

Sharper, leaner, fitter consumer products companies are placing bigger bets on innovation and growth.

The consumer products industry has fared better than many sectors during the course of the global economic slump. But as Marvinder Singh Banga, President of Unilever’s Foods, Home & Personal Care businesses notes, “a different world will emerge from recession.”1

Delivering value

The consumer landscape has changed irrevocably, at least in mature markets. Value is now in the forefront of almost all consumers’ minds.

The recession has heralded a further shift in the relationship between manufacturer and retailer, with the balance of power tipping even further toward the latter. This is driven by retailers’ moves to rationalize ranges, seek even leaner inventories and increase sustainability demands. Some retailers have even stepped up their capacity to negotiate across international borders.

Accelerating change

The recession has also marked the start of a significant shift in the culture and behavior of many consumer products companies. Most have used the recession to become sharper, leaner and fitter, accelerating prerecession efficiency and simplification programs.

But the downturn has reinforced the case for more fundamental change. For some consumer products companies, this has meant confronting underlying operating challenges — which has forced hard choices around global operating models.

Consumer products companies have been given license to act more boldly than ever before. Companies are placing bigger bets on innovation and exploring new market segments with greater urgency. There are even murmurs of bypassing the retailer and selling directly to the consumer.

Consumer products organizations are also instilling a more rigorous approach across the business — reassessing risk management frameworks, intensely scrutinizing brand portfolios and challenging conventional growth assumptions in emerging markets.

1. “A different world will emerge from recession,” The Economic Times, 11 June 2009, via Dow Jones Factiva.


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