Consumer spending will likely shift toward customized products and experiences across a broad range of consumer products. Yet preparing for an uncertain future in 2020 is particularly difficult. We begin Tech Trends 2020 with a timely update on the nine macro technology forces we examined in last year’s report. These dynamics have the potential to undermine not only historical sources of profitable growth but also historical sources of competitive advantage, and render traditional operating models obsolete. Slantshackjerky.com, âJerky of the Month Club,â http://www.slantshackjerky.com/about, accessed January 15, 2014. A substantial majority of consumers were very concerned about what they are buying and eating, as well as where their food is coming from. Eighty-five of the 205 executives and senior managers surveyed from AugustâSeptember 2013 worked in retail, consumer product manufacturing, or food and beverage. One way to address commodity price volatility, higher commodity costs, and resource shortage is the application of food technology. Anupam Narula. Reading Time: 1min read 0. Additionally, 35 percent of consumers described themselves as âingredient sensitiveâ in 2015, up from 29 percent in 2010. Crowdsourcing has emerged as one popular method for doing this: Several successful campaigns, including PepsiCoâs FritoLay âDo Us a Flavorâ campaign, have been built around seeking consumer input by crowdsourcing ideas on social media.25 In this campaign, consumers suggest new product flavors, and the winning flavors are developed and launched. The shift toward new, as-yet-unproven digital marketing vehiclesâby consumers and companies alikeâcould heighten the need to discover how to develop a better end-to-end consumer experience. The risk for many packaged goods companies is that they may be slowly proceeding to address two or three of these areas, and their approaches may be incomplete. For example, Vinod Khosla of Khosla Ventures has invested in Hampton Creek, which develops products with plant-based proteins, such as egg-free Just Mayo.37 Food technology start-ups are important to investors like Khosla because âwe must invest in humane foods that avoid the industrial food chain, like Hampton Creek, which can achieve five times greater improvement in efficiency through innovation without compromising taste.â38 Together, these undercurrents and navigation aids may require new ways of working and a higher level of enterprise-wise coordination. Other consumers are placing greater emphasis on a productâs impact on health, the absence of all things artificial in a product, or a productâs cradle-to-grave environmental footprint. Ltd), and Neelakantan Subramanian (Deloitte Support Services India Pvt. Several trends that the company highlighted in the report have emerged in reaction to long-term IT challenges, while others address the technological needs of large firms, Deloitte … What challenges could the consumer product industry be facing five years from now? Instacart is a grocery delivery service that provides consumers with a third-party personal shopper that picks up and delivers groceries to them.9 Instacart shoppers pick up groceries at national retailers, as well as at local retailers, in 16 metro areas across the United States. has been removed, An Article Titled Consumer product trends NestlÃ© Purina observed the intense emotional bond that exists between pets and their owners, with pets often treated as members of the family. World Economic Forum, âGlobal risks 2014, ninth edition,â 2014, http://reports.weforum.org/global-risks-2014/part-1-global-risks-2014-understanding-systemic-risks-in-a-changing-global-environment/. Rich has significant experience in guiding clients through strategy-led transformation to achieve profitable growth. Kim Porter, The likely consequence: Core consumer segment(s) will experience minimal income growth at best. NestlÃ© S.A.,âNestlÃ© Purina launches personalised dog food in US,â October 28, 2014, http://www.nestle.com/media/newsandfeatures/purina-personalised-dog-food-us. In the quarter ended June 30, 2020, we observed that an increased number of companies provided non-GAAP metrics2 that included COVID-19-related adjustments. To thrive in an environment that can shift from moment to moment, organizations must become distinctly human at the core. These potential undercurrents are not mutually exclusive. 5 Introduction. The next couple of years will define professional services, and consulting in particular. As Deloitte points out in its Tech Trends report, the future will be vastly different from the state of the world in January 2020. Traditional brick-and-mortar business models may be dismantled as consumers fully embrace digital. When it comes to food safety and food companies, a majority of consumers were concerned about aspects such as safe packaging (75 percent) and accurate labeling (66 percent).42 Not surprisingly, a substantial consumer segment also associated characteristics such as natural (33 percent) and organic (31 percent) with food safety. Under this uncertainty, national brands that do not reinvent themselves and reformulate their products along these attributes risk losing brand loyalty. Through social media listening, key issues identified within transparency were genetically modified foods (49 percent of total discussions), clear labeling in general (22 percent), and greater transparency about food additives (21 percent). We look forward to your participation. Certain services may not be available to attest clients under the rules and regulations of public accounting. to receive more business insights, analysis, and perspectives from Deloitte Insights, Telecommunications, Media & Entertainment. And finally, economic impact was the most important to consumer product manufacturers of the three groups. Still other consumers are focusing on the well-being of their community and on their communityâs valuesâwhich, more and more, include concepts like âgreen,â âlocal,â and âback to nature.â Today, a sizable portion of consumers describe themselves as health-conscious shoppers (47 percent). Rio Tinto Rio Tinto has achieved record-breaking results during its 2020 Argyle pink diamonds tender collection. Challenge to current model:Â Tremendous shifts are likely in brand portfolio, innovation strategy and capabilities, and ecosystem partnersÂ as companies move toward a health and wellness platform. Rich is passionate about the relationship between brands, their retailer partners and the consumer. Taryn Luntz, âAlready facing supply crises, corporations craft resource plans,â, Timothy Hay and Evelyn M. Rusli, âFood startup Hampton Creek raises $90 million led by Horizons, Khosla,â, Hay and Rusli, âFood startup Hampton Creek raises $90 million led by Horizons, Khosla.â. “The 2021 Deloitte Global Human Capital Trends survey showed that the proportion of HR executives who were very confident in HR’s ability to navigate future changes doubled, from one in eight in 2019 to nearly one in four in 2020. The social enterprise at work: Paradox as a path forward. According to Brian Lester, director of Marketing for Just Right by Purina: âSo far, people have responded well to it . For instance, a focus on resource preservation can mean partnering with local farmers to deploy improved farming techniques, or it can mean supporting conservation projects such as water-related initiatives. The cost and cost volatility of key packaged goods inputs will likely continue to increase. Deloitte’s 2020 Global Human Capital Trends survey of over 9,000 business and HR executives in 119 countries revealed that leaders are moving boldly to activate the social enterprise—an enterprise whose mission combines revenue growth and profitmaking with the need to respect and support its environment and stakeholder network. Discover Deloitte and learn more about our people and culture. This finding is of particular concern to many packaged goods companies, which traditionally target a consumer base composed primarily of lower-income and middle-class consumers. Companies may undergo a major shift in their brand management approaches, their relationships with suppliers and retailers, and their business practices along the entire value chain. Click here. The drive towards social value is no longer limited to environmental activists. Challenge to current model: Channel strategy and product portfolio shift to meet new price points. Just as sailors canât infallibly predict the weather, no one knows for certain what the future holds. Second, retailers seemed more focused on technology-related areas, such as social influence and digital marketing, than the consumer product respondents were. VIEWS. According to Deloitte, holiday retail sales this year should rise between 1% and 1.5%, amounting to between $1.147 trillion and $1.152 trillion during … The undercurrents in play place stress on the consumer product companyâs traditional sources of competitive advantageâscale, brand loyalty, and retail relationshipsâand the operating model that many of these companies are built on. Rakesh Kochhar and Rich Morin, âDespite recovery, fewer Americans identify as middle class,â Pew Research Center, January 27, 2014, http://www.pewresearch.org/fact-tank/2014/01/27/despite-recovery-fewer-americans-identify-as-middle-class/. âWe canât ignore structural changes in advertising and marketing. Organizations are emerging from the pandemic to more fully become social enterprises, promising workers greater belonging without compromising individuality, job security through reinvention, and new opportunities from uncertainty.. Drenched in a paradox that combines technology with the human experience, these were three major findings from the 2020 Deloitte Global Human Capital Trends … Deloitte is a leading presence in the consumer products industry, providing audit, consulting, risk management, financial advisory, and tax services to more than 90 percent of the Fortune 500 consumer product companies. As you look at the many other categories that consumers are in, there are more and more customized features that are being offered every day.â30 The company is currently working to enhance the productâs personalization possibilities (for example, package sizes, flavors) and ordering features (for example, automatic replenishment); it is also testing a similar solution for cat food.31. Deloitte Global Marketing Trends firstname.lastname@example.org. 2020 Vision: Deloitte Digital’s Memorable Moments. In addition to the surveys and interviews described above, this report draws on data from a May 2014 survey of 2,004 consumers surveyed as part of the Deloitte Food Safety Survey. Deloitteâs 12th edition of the Tracking the Trends report explores trends for mining companies in their ongoing pursuit of productivity, financial discipline, operational excellence and sustainable growth. Emily Bryson York, âEconomy may benefit Kraft CEO: Brand offers value to consumers,â. The COVID-19 pandemic has accelerated the move that many mining companies are making in the direction of intelligent mining, but this doesnât mean they have lost their focus on people. The rapid pace of change necessitates companies to move quickly and completely in a coordinated way. Deloitte highlight device usage Smartphone ownership in Ireland saw a slight decrease for the second year in a row at 90% (compared to 91% in 2019 and 94% in 2018). Her clients span the food & beverage, personal care/household goods, agriculture, and white goods segments. Viewed through the lens of people and business, the past decade has been one of tremendous change – with more to come. The seven executives interviewed had experience in marketing, sales, operations, and/or information technology at consumer product companies. 2020 Global Marketing Trends Constant technological change and increasing reliance on digital can leave people wanting for human connection. While some differences in perspective are to be expected among these groups of executives, these differences reveal potential blind spots. You need additional differentiation: good for you, good for the environment, and supporting a shared social cause.ââPackaged goods sales executive âHealth and wellness can clearly differentiate our brands and drive brand loyalty.ââPackaged goods marketing executive The second uncertainty envisions a decline in emotional ties to national brands, growing discontent with the perceived values of large companies, and a shift in consumer focus toward personal health, environmental sustainability, and social impact. And a majority wanted to learn more about ingredients, production processes, and where the food comes from. Constant technological change and increasing reliance on digital can leave people wanting for human connection. SHARES. The resource in question is water. We have an obligation to financially strapped low- and middle-income families that drive Americaâs grocery sales.â18 Kraft has also recognized the steady growth in popularity of dollar stores and drugstores among lower-income consumers as part of their overall grocery shopping routine.19 The company has partnered with a dollar retailer in a promotional partnership to improve signage around and placement of the Kraft brand, and it has designed productsâsuch as more affordable snack packsâspecifically for the dollar and convenience channels.20, For many consumers, perceptions of health and wellness seem to be increasingly important influencers of buying decisions at the shelf. To help executives plan and act amid these undercurrents, we have developed five sets of specific steps that may help address each of the five potential uncertainties described on page 5 (figure 2). Trend 4: Dynamically managing risk. For example, packaged goods executives seem to be lagging retailer executives in technology, and retailers may not be fully appreciating the impact of the changes in consumer preferences and demographics. The company has also, through various partnerships on projects aimed at water conservation, distribution, purification, and hygiene, provided access to safe water to more than 3 million people; it is now working to provide safe water access to 6 million people by the end of 2015.35 PepsiCoâs focus is on achieving a âpositive water balanceâ in its operations, especially in water-distressed areas. Josh Sosland, âKraft faces barbell burden,â, Kraft Foods Group, Inc., âThe New Kraft Foods Group Investor Day,â presented at SeaPort Boston World Trade Center, Boston, Massachusetts, September 7, 2012, http://ir.kraftfoodsgroup.com/events.cfm; Kate MacArthur, âWhy Kraft changed its innovation strategy and what happened next,â. If changes are not made in the near term to enhance and fully scale up the capabilities of both your organization and your people, you may reach a point where both your ship and your crew will be irrelevantâprecluding the possibility of smooth sailing into 2020 and beyond. But, “CIOs are already charting a promising path toward tomorrow,” the firm says. We need to move beyond experimenting with direct-to-consumer storefronts, and develop a working online business model to drive growth.ââPackaged goods marketing executive Our third uncertainty posits an environment in which consumers completely immerse themselves within a digital world, and the traditional brick-and-mortar business model becomes less viableâor perhaps even irrelevant. The historical profitability of the consumer products industry indicates headwinds impeding performance in a difficult environment. In a world where customized products and personalized, targeted marketing experiences win companies market share, technologies like digital commerce, additive manufacturing, and artificial intelligence can give a company an edge by allowing it to create customized product offerings. But, as any good sailor knows, forethought and preparation are critical to a safe and successful journey.Â In this rapidly evolving, low-growth, and margin-compressed environment, clear strategic direction and coordinated efforts are not all that should be pursued. To help consumer product executives prepare for change and uncertainty, this article presents five potential âundercurrentsâ that may impact the consumer product industry in 2020âmarketplace undercurrents whose exact direction and pace, while still unknown, can be broadly identified todayâthat companies should keep in mind as they try to chart a clear path to 2020 and beyond. Challenge to current model: Traditional marketing and channel economies of scale dissipate, with many more paths to the consumer and many more convenient options for consumers to make initial and recurring purchases. Consumers have expanded the definition of food and product safety to include attributes typically associated with health and wellness.41 Elisabeth Hagen, senior advisor on food safety, Deloitte & Touche LLP (former undersecretary for food safety at the US Department of Agriculture), recently presented findings from consumer and social media listening research on food safety. The outlook for three trends identified by Deloitte at the beginning of 2020 seems to have markedly changed. A majority of the 205 executives and senior managers surveyed (56 percent) worked for companies with annual revenue greater than $10 billion. The authors would like to thank Glenn Goldman (Deloitte Consulting LLP), Jacob Bruun-Jensen (Deloitte Consulting LLP) and Bernardo Silva (Deloitte Consulting LLP) for their significant contributions to the research and writing. These commodity indices represent the price paid by consumer product companies to farmers for crop commodities. Digital marketing is an imperative to be successful. Challenge to current model: Traditional commodity management strategies are increasingly insufficient to guarantee supply, harness innovation, and align with social responsibility. Here are the 10 key trends for 2020 (source: Deloitte): The social investor. Deloitte, Deloitte executive survey for insight into the consumer, conducted August 29, 2014 to September 11, 2014, n=205. Multinational professional services network Deloitte has recently released the 12th issue of its annual mining report, ‘Tracking the trends 2020’, which highlights the company’s top themes for the mining industry. Brand and product portfolios designed for traditional economies of scale may no longer seem relevant. already exists in Saved items. Measured by return on assets (ROA), the consumer product industryâs median profitability has trended downward over the past 30 years (from 5.8 percent in 1980 versus 3.7 percent in 2013).1 While the bottom quartile of consumer product companies has suffered the most (1.9 percent ROA to a negative ROA of -5.6 percent), top performers are also slightly less profitable than they were before: Top-quartile ROA performersâ ROA fell from 9.2 percent to 8.1 percent.2 In other words: Collectively, the industry has lost steam. October 30, 2020. in People Planning, Zero Fee Content. 6 2020 Global Marketing Trends: Bringing authenticity to our digital age. Taking action against systemic bias, racism, and unequal treatment, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. John Hagel III, John Seely Brown, Duleesha Kulasooriya, Craig Giffi, and Mengmeng Chen. Rich resides in Chicago during in his personal time Rich enjoys wine, cooking, reading, travel, and is an enthusiastic fan of Chicago's professional sports teams (Go Cubs Go).Georgia. He sits on the Grocery Manufacturers Association Sales Committee and frequently speaks at industry and professional conferences. Because no one knows exactly how marketplace dynamics will eventually play out over the next five years, consumer product companies should be prepared to operate amid uncertainty. Deloitte Publishes Inaugural 2020 Global Marketing Trends Report: Identifies Seven Key Trends to Help C-suite Leaders Place Humans at the Center of Their Work A confluence of marketplace changes (figure 2) means that, for consumer product companies, the traditional levers for building loyalty are likely becoming less and less effective. Kim also serves on the Board of Directors forÂ HashedInÂ and Chairs Deloitteâs USI (DCIPL) Board. A number of organizations have already made strides in preparing for and addressing these major changes in the consumer product landscape. Trend 5: The path to … It's fascinating to look at the emerging trends in Deloitte's 2020 North America Technology Fast 500 Rankings as leading predictors of innovation. Tech Trends 2020 identifies the trends Deloitte believes will disrupt businesses in the next 18 to 24 months. Disaster eventsâwhere overall damages reached or exceeded $1 billion (including CPI adjustment to 2014)âresulted in a total cost of over $1 trillion between 1980 and 2014. The Tech Trends of 2021 aim to provide insights and inspiration for … Rich earned his undergraduate degree in engineering from Kettering University and his MBA from Columbia Business School. Many consumer product companies risk being outpaced by these uncertainties because they are merely piloting projects as a proof of concept, and not rapidly moving the entire organization forward. Ltd). Other last-mile delivery services are also emerging in the grocery and general retail space.10 Of note to consumer product companies is that some retailers have reported incremental sales through the online delivery channel.11 Preparing for this undercurrent is important: Recent research suggests that many packaged goods companies may be less prepared to capitalize on digital commerce than they should beâor than many consumer product executives would like to be.12 In a 2013 study comparing consumersâ and CPG executivesâ views on e-commerce, 92 percent of CPG executive respondents agreed with the statement, âThe e-commerce channel is a strategic sales channel for CPG companies.â Yet only 43 percent of these same executives thought that their company had a clear, well-understood digital commerce strategy, indicating a substantial gap between e-commerceâs perceived importance and consumer product companiesâ readiness to execute. 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