The consumer industry shift from resilience to growth | EY - US

In this Consumer OnDemand video, EY Consumer leaders explore how consumer industry brands and retailers can move beyond survival and enable growth.

Please join our panel of consumer industry leaders for a timely discussion on the evolving challenges and opportunities for consumer products and other consumer industry companies.

Cost management was paramount for consumer industry businesses as they navigated a business landscape characterized by unprecedented inflation and uncertainty. Today, the economic outlook is markedly different. As inflationary pressures ease, consumer industry brands must use the resilience gained in recent years as a strategic investment engine for growth and value creation.

It's time for brands and retailers to look beyond survival. To navigate the new consumer industry landscape, we gathered EY Consumer leaders with knowledge of tech, finance and supply chain to explore consumer industry-specific opportunities and share strategies for enabling growth.

Tune in to gain insight on:

How retailers and brands can evolve their strategy to meet changing consumer needs and market expectations
What new commercial models are imperative to adopt
The relationship between supply chain efficiencies and promoting growth strategy
Funding new areas for value creation
And how consumer companies can leverage technology like artificial intelligence and generative artificial intelligence to enable growth

Moderator

Lokesh Ohri, EY Americas Consumer Consulting Leader

Presenters

Mariah Romão - EY Americas Consumer Finance Leader
Cordry Johns - EY Americas Consumer Technology Leader
Ashutosh Dekhne - EY Americas Supply Chain & Operations Practice Leader

00;00;00;22 - 00;00;26;24
The consumer industry is at a crossroads. After years of unprecedented inflation and economic uncertainty, cost management has become the paramount focus for most consumer businesses, offering abundance of opportunities for brands and retailers to innovate around resilience. As inflationary pressures ease, the challenge now is to utilize these learnings not just for resilience, but as a strategic investment engine for growth and value creation.
00;00;26;27 - 00;00;52;19
Now is the time to think beyond survival and double down on growth. Findings from our EY research have told us a large majority of industry executives today are still concerned with keeping pace with the shifts of consumer preferences and behaviors. To do that, over 90% of those executives are looking at investments in technologies like AI, GenAI to drive growth, efficiency and productivity.
00;00;52;21 - 00;01;14;23
In this discussion today, we will explore how consumer companies can reimagine their business strategies, invest in new commercial models, and leverage technology and emerging technology to get there.
00;01;14;26 - 00;01;52;09
Hello everyone. I’m Lokesh Ohri, Americas Consumer Consulting Leader at EY, and I’m happy to be joined by a panel of my fellow Consumer leaders from the business: Mariah Romão, who leads at EY Americas Consumer Finance team; Cordry Johns, who leads the EY Consumer Technology team; and Ashutosh Dekhne, who leads EY Americas Supply Chain & Operations team. Given the consumer and dynamically changing economic environment, there’s clearly a need for brands and retailers to evolve their strategy for the changing needs of the consumer and markets expectations.
00;01;52;11 - 00;02;09;21
So today, we’ll dive into some of the learnings that we have. And let’s start with talking about what are the learnings we have that we can share with our clients to enable this shift. So, I would say that for the CFO, Lokesh, it is balancing short-term goals and long-term goals. So, it’s all about a self-funded journey, right?
00;02;09;25 - 00;02;39;15
So, ,what we have been seeing is how they can release the savings rapidly, reapply to the business, and through technology and some other capabilities enable growth within the organization. So key aspects of that or how you’re going to do the sequencing, as well as monitoring the results and benefits tracking. So, I would call out one key example that we have from consumer health, where we are already having a positive ROI in the very first year of this transformation journey.
00;02;39;18 - 00;03;07;27
And to achieve that, I would highlight three main levers. The first one being GBS and all the digital transformation that we apply through Global Business Services. The second one is operating model, so making sure that we have a streamlined organization across business units, segments and regions. And last but not least, we are reapplying that into the FP&A function to make sure that we have data insights and provide more insightful information from a business standpoint.
00;03;07;29 - 00;03;27;06
Well, I love how you said balancing the short-term need with the long-term goals of the company. Cordry, let’s shift to you. Share a little more about your learnings and how this — how technology can be an enabler here. You talked about resiliency and growth. And when I think about that in the technology lens, maybe I can do it through a client example as well.
00;03;27;06 - 00;03;50;05
And so, work with the food client over the last few years to really standardize their technology. And really this technology standardization was in service of getting to one set of processes, one way of working, shared services. So, they’ve kind of cleaned out the core. They’ve made it very, very centralized from an activity standpoint, from how they serve their customer and how they go to market.
00;03;50;12 - 00;04;15;04
So how does that translate to growth? For them, they’re now prepared to be able to enter new markets, look at new product assortment, engage with new customers, manage their inventory differently. So having that technology opened up has really enabled them for new markets, for growth, new acquisitions and new routes for them. So that’s how we see tech playing a role. That’s really helpful, Cordry.
00;04;15;06 - 00;04;45;23
Ashutosh, what’s happening in supply chain, and what learnings can our clients apply? So, the last couple of years, supply chain organizations of consumer companies and retailers have been focused on delivering to cost and margin initiatives, and they’ve done quite well. But now is the time to pivot their thinking from purely a cost and margin play to a growth enablement sales increase play.
00;04;45;25 - 00;05;27;13
There are many examples where supply chains are helping. One is demand-driven ops. In the context of omnichannel fulfillment, for example, consumers are basically changing their preferences, their demand patterns. And that is happening in a very dynamic way. So, supply chains are now having to respond to that very quickly, right? And adjust their operating models so that they’re able to deliver to those changed preferences and needs, whether it be supporting promos, whether it be supporting multiple channel fulfillment and so on, right?
00;05;27;15 - 00;06;04;23
Consumers are also demanding a lot of traceability and, you know, for their products, for what they’re buying. Supply chains are playing a big role in that — in tracking, tracing and doing all of the compliance checks, but also validating where everything is coming from, from the source to the shelf. Net net, as you look at this, supply chains are not just helping to deliver to the expectations — new expectations of the new consumers in the new segment.
00;06;04;29 - 00;06;33;19
But they are also now, you know, contributing to the sales growth of the end of the company. So, supply chain is going through a pivotal shift as businesses shift to serving these new consumer needs and the move from cost management to volume and revenue growth as well. And additionally, I’ll also add consumer companies are looking to diversify their commercial models and increase value creation, drive growth and fortify the core businesses.
00;06;33;21 - 00;07;02;11
Our research indicates that consumer executives are planning significant investments in alternative revenue streams driven and resulting in industry convergence. For example, retailers are building and scaling the retail media businesses. Consumer companies continue to invest in loyalty and direct to consumer. While all of this being done with a focus on category, brand and geographic expansion, both sectors are looking at health services and life sciences as alternative investment areas to fortify their core businesses.
00;07;02;14 - 00;07;30;19
You know, tried-and-tested method is to deeply understand consumer and customer explicit needs is the first thing that I think companies need to do. The second being a relentless focus on the basics: improving efficiency; productivity of the core business; utilizing tech, data and AI across the functions that we’ve been talking about. And then finally, the third thing, investing in growth that diversifies the margin mix of the business and really building on the existing competitive advantages of a business.
00;07;30;23 - 00;07;55;13
For example, for retailers, it’s about how they connect with consumers and what they can offer. For CPG companies, how can they improve manufacturing, product design? How could they improve getting the right product to the right customer at the right place? Let’s discuss this a little bit more and dive deeper into how consumer brands and retailers need to balance these strategic big bets they need to make to fortify the business for the future and balance strengthening the business today.
00;07;55;15 - 00;08;43;04
So, Ash, I want to start with you today. What are some of the ways supply chain companies are unlocking value and getting prepared for the commercial model of the future consumer? Consumer companies, brands and retailers are seeing that omnichannel is getting absolutely accelerated now more than ever before. And it is also driven by consumer changes in preferences and demand patterns and so on. Supply chain is helping grow by bringing pricing promotion strategies together, along with segmentation of the supply chain, all the way from what products are required by what consumers and then to what channels. That is then overlaid with
00;08;43;11 - 00;09;03;00
what time do you want those things, and how do you deliver those products to them? So, this becomes a very important thing. An example of a retailer client of ours is leveraging their supply chains that they’ve set up for number of years and have almost perfected now, right, for efficiency. But there’s a lot of available capacity.
00;09;03;02 - 00;09;30;08
They are now asking consumer companies, CPGs to come on to their supply chain. And rather than having two different supply chains focusing on the same set of consumers, they are now leveraging the supply chains that already exist, thereby sharing the benefits, the capital investments, you know, between both of those. But more importantly, now you are able to respond.
00;09;30;10 - 00;09;52;11
The CPG companies that are on that platform are able to respond to the retailers, consumers much more efficiently. Another example is a CPG client of ours where they are leveraging their underutilized capacity and offering them to brands, other brands to say, we have everything in there. Why don’t you come and innovate and produce on our lines?
00;09;52;14 - 00;10;15;28
That is allowing brands to innovate faster, meet the needs of them, the needs of their consumers faster, and retailers are actually loving it because they’re getting a lot of innovation fast out to the market, to the consumers that need them the most. The examples you have given really bring this change to life, Ash. But what comes to mind is the significant capital required to make this happen.
00;10;15;28 - 00;10;44;11
So maybe we’ll shift to Mariah now and talk about, you know, when we think about funding these new areas and we think about value creation. Could you talk a little more about how are companies organically growing and funding some of these investments, as well as looking at inorganic opportunities to grow as well? Absolutely. So I would say that companies going down on the organic path, they are really focusing on matching the digital levels in terms of the front office vs. the back office, right?
00;10;44;14 - 00;11;12;26
So, the majority of them are going through next-gen ERP transformation. So, they are truly taking this opportunity to completely reframe and reimagine the finance function. So, we are seeing a lot of changing that, in terms of having a truly business-led, technology-enabled kind of transformation going through many areas, right? So, from finance data lake, through the ERP, through off-the-shelf solutions, as well as the last mile which comprises GenAI and AI as well.
00;11;13;03 - 00;11;35;05
So that’s for the organic one. I would say that for the inorganic, the focus is on having a fit-for-purpose kind of organization. So, the focus is on rightsizing and right placement of work, making sure that we are activating the key levers. And again, GBS is a transformation engine in that sense. So, it’s really, really impacted.
00;11;35;07 - 00;11;56;03
That’s helpful. So, optimizing the operating model, as well as looking at other investment areas which you can sort of pull back to release capital, so create fuel for growth. Yes. You know, Cordry, technology comes to mind. Technology’s largely been an enabler for efficiency and productivity. What is the role of technology in the future for the consumer business. Well, as a tech leader,
00;11;56;03 - 00;12;16;01
I always like it when technology comes to the front, technology gets the spotlight, and I feel like we’re at that moment again. Every one of our consumer and retail companies are thinking about how do I put tech out in front, how do I act more like a technology company? Instead of technology being in the background as it has been,
00;12;16;04 - 00;12;45;06
technology is now, and maybe more specifically, proprietary technology is coming out in front as a competitive differentiator. We haven’t said that before, so I think it’s worth repeating that proprietary technology is becoming a competitive differentiator. Example helps: Working with a quick-serve restaurant to reimagine how they serve their customer, how they manage their inventory, how they work with their operators and really that overall experience.
00;12;45;08 - 00;13;05;23
You can’t get that from out-of-the-box or off-the-shelf. So, they really needed to think around digital engineering, create an entirely new platform that is part of their brand. That’s how they represent to customers, that’s how they represent to the market. So that’s a big shift. That’s a new way of thinking. It’s different from what we’ve done before, and I couldn’t be more excited.
00;13;05;25 - 00;13;34;14
That’s really exciting to hear. So, customer captivity was important initially. Scale delivered through finance and funding and propriety technology now being the big differentiator. Well, we’ve touched a lot about different aspects of the business. And we’ve also spoken about AI and GenAI, which is top of mind for everyone out there. So, let’s dive in a little bit deeper on how AI and GenAI are driving growth, efficiency and productivity and helping reinvent businesses, especially in consumer.
00;13;34;17 - 00;13;56;00
I’m a believer that the believers of AI today will be the leaders of tomorrow. So, starting with that, let’s jump in. And Cordry, why don’t you start us off with, what’s the role of AI, GenAI for technology in consumer companies? AI and technology continuing to drive this disruption, this innovation that you mentioned tied to growth. We’re seeing it every day.
00;13;56;05 - 00;14;24;18
If I look at fashion and retail companies and clients really rethinking how they go to product, design, how they interact with a customer. We used to think of product design as being a long journey. We created a product. We created a brand that was fit for everybody at once. And now the ability to use AI to take all of that customer data, all of my shopping history and personalize that for me in this moment,
00;14;24;26 - 00;14;43;19
the brand is a brand for me. It’s a brand for you. That’s a real change that has impacts on manufacturing, that has impacts on supply chain. That’s going to be a change. It’s disruptive, and I think it’s healthy and driving new growth. So, we’re finally at a point where technology can deliver the personalization that we all want.
00;14;43;19 - 00;15;01;10
You see my excitement. Yes. Yes, absolutely. Why don’t we shift over and we talk about, maybe Mariah, from you as well, what is happening in finance? And I hear many of our clients ask, how do I sort of change the way I run my finance business as well? So, tell us a little bit more about AI, GenAI in finance.
00;15;01;13 - 00;15;25;19
So, from a CFO lens, what we have been seeing is that there’s usually two types of strategies. The first one is when you apply GenAI in AI for more transactional process, such as for analysis. So that could take the process down from a couple of weeks to a couple of hours. So that’s really significant and really positioned the finance function as a business partner and providing insights, right?
00;15;25;21 - 00;15;47;12
The second one is that, when the CFOs are trying to resolve or to solve for complex problems. So, when we are seeing or are the most interesting applications that we are seeing is a blind GenAI to have a persona-based analysis based out of data and reports. So, we have all the insights that an analyst could provide in a couple of minutes.
00;15;47;18 - 00;16;06;27
That’s exciting. Imagine that, you know, somebody sitting in finance and being able to query what’s going to happen and be able to get the forecast in minutes. Correct. Wouldn’t most CFOs love that today to give that power to their teams? Let’s talk about supply chain, a tremendous area of spend for consumer companies. What can AI and GenAI do for these businesses?
00;16;06;29 - 00;16;37;10
Well, there’s many use cases out there. And literally every function, subfunction within supply chain, there’s a dozen — minimum a dozen of use cases per function. There’s three or four that I’ll call out, which are more prominent and explain why those are important. First one is on demand planning, forecasting along with commercial. It’s what I talked about earlier, responding quickly to the changes in the needs.
00;16;37;10 - 00;17;01;24
What you talked about now personalization, that means offerings that are different for different customers, unique consumers, right? GenAI, AI is able to take all of that information and process that throughout the supply chain really quickly, which used to take about three to four weeks for us. Now it’s coming up very quickly. So now the supply chain is able to adapt, react very quickly to that.
00;17;01;27 - 00;17;25;10
Second one is on predictive and autonomous maintenance. Those concepts have been there for a while. It’s been out there in the media a lot, but AI and now GenAI is allowing that technology in the hands of the users, the decision-makers of supply chain, allowing them to predict when a machine will fail and act before it does.
00;17;25;12 - 00;17;50;10
That’s where, for the CFO, capex goes further. You don’t want to waste capital equipment when it’s downtime, right, for them, right, and stuff running. So, there’s that. What is really exciting about this, though, is how AI, GenAI is coming together between supply chain, commercial and finance at that intersection. That’s where the real power of AI and GenAI is, right?
00;17;50;11 - 00;18;15;08
It is getting democratized. It is getting used by organizations, by clients of ours. And that’s where we will see the most impact in delivering not just the margin and the cost initiatives that you’ve seen, but as a true propeller of growth for consumer companies. Now, this gets me so excited, because if you think about the front office in marketing, something we haven’t spoken about as much today, it’s been completely disrupted.
00;18;15;08 - 00;18;43;10
Businesses are now able to build competitive advantages in places like content management, content generation, personalization, which were just not possible before. You see that sort of fold into commercial and sales, across price, product, promo, as well as trade and what you could do with the commercial function of sales, service and marketing coming together. I also get excited about thinking about the different facets of technology being reinvented, code being written by itself for the needs that we have for the business today.
00;18;43;18 - 00;19;07;11
So many opportunities to reimagine how businesses run today. One stat for all of us: Most of our clients are looking at taking out at least 30% or in that range of cost using these new technologies, reimagining people as businesses, and thinking about a new way of running their core business. So, with that, thank you for joining this really informative Consumer OnDemand session.
00;19;07;16 - 00;19;19;04
I’d like to thank our panelists, Mariah Cordry as well as Ashutosh, for their fantastic insights. We hope you will continue this discussion between yourselves and your organization and beyond that. Thank you.

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