- A post-pandemic return to growth despite geopolitical and economic uncertainty
- Six disruptive forces are shaping the CPR sector
- CPR companies need to reinvent themselves to serve the consumer in the future
Bangkok, 19 Apr 2023. Having emerged from the COVID-19 pandemic, consumer products and retail (CPR) businesses need to address current volatility and build relevance for the future consumers. According to EY analysis, while many CPR companies are seeing healthier growth, pricing rather than volume has been the major growth driver.
Additionally, the EY analysis highlight that the near-term performance of the CPR sector will be hampered by the impact of inflation on costs, as well as slowing economic growth and geopolitical uncertainty.
Narisara Phatanaphibul, Consulting Leader, EY Thailand says:
“According to the Thai Retailers Association (TRA), Thailand’s retail industry is expected to grow by 6-8% in 2023, helped by the rebound of consumer spending and the recovery of tourism. Although consumers have resumed their normal lifestyles, a shift in consumer behavior is also a key challenge for CPR companies. Live commerce and grocery deliveries are expected to grow further in Thailand.”
Interdependent disruptive forces creating new challenges and opportunities
EY highlights six interdependent disruptive forces that are creating new challenges and opportunities for CPR companies:
1. Evolving consumer priorities: A desire to consume “better” rather than “more” is shaping new buying behaviors. This is driving interest in tailored and immersive experiences and rising expectations of personalization in products, services or communications.
2. Rapid technological change: From improving consumer experience through the use of data and analytics and emerging technologies, through to new digital channels and the emergence of the metaverse, technological advancements are taking place across the value chain, enabling new products and services as well as more efficient processes.
3. Increasing tax and regulatory complexity: Shifting business landscapes, growing regulatory diversity and political tensions across countries are leading to more complex governance requirements. Companies will need to monitor and keep pace with regulatory changes for local and global compliance.
4. Accelerating interest in sustainability: As consumers become more aware of the social and environmental impact of their purchases they are adopting new behaviors such as recycling, re-using and reselling as well as increasingly scrutinizing the activities of brands to frame their purchase decisions. Hence, more CPR companies are striving to achieve net-zero emissions and providing sustainable solutions in the form of recyclable products, sustainable packaging, or ethically sourced raw materials.
5. Geopolitical and economic uncertainty: In a period of economic and geopolitical disruption, businesses are faced with new global challenges and priorities. Companies need to create resilient and agile business models streamlining portfolios, consolidating supply chains, taking out costs and rebalancing their geographic presence.
6. Sector convergence: Changing consumer and business needs, together with technological innovation, present untapped opportunities for sector convergence. Expanding category presence, integrating vertically, diversifying into new sectors, and shifting to lifestyle services are potential strategies that could drive growth and deliver value for stakeholders.
Narisara adds:
“The disruptive forces are causing the rapid transformation of the industry. In order to be a competitive player to compete and grow, retailers should focus on leveraging technology rather than price wars. For example, data and analytics technology enables to get insights and create omnichannel marketing to deliver and uplift the values that customers really want.”
CPR companies must reinvent themselves to serve the emerging needs
There are four critical priorities for CPR companies to meet the needs of the future consumer:
- Consumers will experience buying and shopping as divergent activities: “Buying” of everyday products will become mundane, task-oriented and increasingly curated and completed by intermediary technologies. "Shopping" for the few products and services that help consumers express who they are will become increasingly conscious and experiential. Consumers will focus on brands that can provide differentiated products, service and experiences in distinctive virtual or physical spaces.
- Consumers will choose to own less and subscribe to lifestyles: Consumers will own fewer things. Instead, they will pay to use or access whatever they want, whenever they need it. Lifestyles and services will increasingly replace products. On-demand services will increasingly meet consumers’ new needs in real-time. A progressive transition will take place from products to services to offer solutions to what the consumer might need.
- Consumers will require products to deliver quantifiable outcomes transparently: Consumers will know everything about where the products they buy come from, how they made the way to their homes and what they do to people and to the planet. As radical transparency shapes new choices, consumers will seek products that satisfy their precise and unique needs and values. Shorter supply chains enabled by new manufacturing processes such as urban farming and 3D-printing will bring products that are tailored and transparent in impact to consumers.
- Consumers will encounter continuous but invisible interactions with healthcare: Consumers will maximize their health with minimal effort. From nutrition to exercise to well-being, they will connect to a sophisticated infrastructure of technologies that monitor their lifestyles and nudge them to improve.
Narisara says:
“New customer preferences require CPR companies to evaluate their business model to innovate and deliver differentiated experiences. Different user journeys are key to attracting customers. Some retailers offer customers with live content and virtual product trials to stimulate an impulse purchase.”
“Innovations such as technology-based platforms, artificial intelligence, supply chains, digital twins, and blockchain will help CPR companies offer versatile products, on-demand subscriptions and services, experiences that meet future consumers’ needs seamlessly across digital and physical platforms.”
Narisara concludes:
“To stay relevant and grow amid ongoing changes, retailers need to implement a holistic strategy. To cope with the challenging economic and market conditions, companies are required to monitor and keep pace with regulatory changes and ensure local and global compliance. To respond with fast-changing customer behaviors, retailers need to tap into the lifestyle, being more connected and creating trustworthy relationship through immersive, engaging and interactive experiences.”
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