Consumer products companies aim to increase revenues in 2022

Deniza Cristian 08/02/2022 | 12:11

The majority of consumer products multinational companies (93%) have set revenue growth as their main objective this year compared to the previous year, as a result of the bold decisions adopted in 2021 which are now paying off, according to Deloitte 2022 Consumer Products Industry Outlook. They also estimate some challenges posed by persistent supply chain disruptions, labor shortages, and rapidly rising costs. On the other hand, most respondents believe that 2022 will mark a battle for trust – 95% of them consider organizations that have high consumer trust are more resilient.

 

According to the study, at least half of the surveyed companies expect their operating margins to increase this year, despite rising costs. However, existing challenges could limit the industry’s ability to achieve expected growth. Nine out of ten respondents rate supply chain issues as the greatest threat to growth, and six in ten consider labor shortage is already threatening growth this year.

The study also shows that 90% of the consumer products companies think their input costs will increase in 2022, in the context of the rising inflation, and eight out of ten believe they will partially transfer additional costs into prices. But only half of companies (54%) believe prices can be raised without affecting consumer demand, signaling that some consumers will be unable or unwilling to pay more for the same products.

“Inflation is currently experienced by all the economies in the world, including the European one, and the phenomenon is the most visible in the consumer goods industry, which directly affects final prices paid by consumers. However, in Romania, companies in this field benefit from a strong household demand. According to the latest NBR data, the consumer goods producers, particularly non-durables, which are less hit by the crisis of the components, recorded the most favorable growth rates in the third quarter of last year. For this year, the authorities estimate private consumption on a positive trend (+4.5%), an encouraging aspect for the industry”, said Raluca Baldea, Tax Partner, Deloitte Romania, and leader of the retail and consumer goods industry.

To maintain or increase their stakeholders’ confidence, consumer goods companies intend to act in three directions – increase transparency, expand digital engagement and invest in the future of work. Consumers lose their trust especially when companies are not open and transparent (90%), don’t meet consumer environmental, social, and governance (ESG) expectations (84%), when labor shortages affect product quality (79%), or when prices increase more than justified (76%). Nine in ten participants in the study say the industry must work harder to retain trust.

Finally, the study presents five ideas with the potential to change the industry over the next ten years: increasing digital goods sales (many argue the metaverse isn’t so much a place, but a point in time when consumers start to value large components of their digital lives more than their physical ones), automated shopping (77% of respondents think consumers will auto replenish fast-moving consumer goods in ten years), ambient computing (common household goods enabled by a digital services wrapper, which could come to life automatically when consumers use them), proximity factory, reinvented as a result of interest in shorter supply chains, and the post-consumption view, according to which consumers will make more purchasing decisions based on sustainability, for environmental and resource protection reasons or because of rising prices.

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Deniza Cristian | 20/06/2022 | 13:44

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