Growth is a mindset. I've spent the last 20 years helping consumer goods companies (Goliaths and Underdogs) develop the chops to fight it out in the most competitive retail theatres in the world. Over the last 5 I’ve been working mostly exclusively with the leadership teams at the top 10; Coca Cola, Unilever, Novartis, Nestle, Tyson Foods, PepsiCo, Pharmavite, Danone, Mars, Carlsberg and a few others, all >$10 Billion in size, mostly between London, New York, Paris, Amsterdam, California, Johannesburg, Dubai and a few others. Helping them adapt to the flash bangs and the chaos of the last few years. Applying tech with data science and analytics to leapfrog (or more truthfully, in most cases, gobble up) the competition.
Before the pandemic, Western* markets were running flat out, looking hard to offset negative growth with price changes, productivity gains and swtiches in the mix and assortment of goods sold. (smaller pack sizes generate higher profits, as a general rule)
Since 2014, more than two thirds of revenue growth and an even bigger share of profit growth - among the top 50 global CPG (consumer packaged goods) firms - has come from pricing and mix rather than volume. Covid was a sucker punch for many.
Before this the forces of economic power and gravity were switching from West to East. (Factfulness, Hans Rosling; Bill Gates paid him and this book close attention) Africa and Asia were heading for unprecedented explosive economic growth and upsides. This event creates significant advantage for some, and significant disadvantage for others. Individuals, groups, even nations.
Those who have doubled down on their power, expect individuals to make sacrifices for the environment, the economy, public health and safety, even the very furloughs and bailouts came at the expense of taxpayers. Whether they got bailouts or not. 18 months of shutdown. Many of these elites don’t deserve to be in existence anymore. They were fragile 10 years ago. And yet they manage to connive, corrupt and conspire to hold onto power a bit longer. Only a bit.
What can you expect as a consumer post-pandemic?
1. Inflation (input costs for commodities has risen, making it harder to get that product to your home without passing on these extra costs to the consumer) And of course Brexit anarchy. No drivers, no staff, no goods, food shortages already appearing across the island.
2. Unprecedented changes in consumer behaviour, shopping habits, and channel dynamics (where you can buy from) in the last 18 months, will be felt across all product categories for years to come. Declining brand loyalty, increased 'at-home' needs, and a K-shaped recovery (inequitable; zero sum, win-lose, competitive, not cooperative). 25-40% of consumers across global markets have tried different brands since the pandemic started. Expect more promotions to fuel brand switching.
3. The K-shaped recovery. Let's talk about the inequality that is driving this. Thanks to the US and UK stimulus packages that reached a few but not all, the 'stimulated' or fluffed up recovery is asymmetrical, and ‘growth’ is now going to come from high-income government supported households, whilst there will be a slower consumption recovery for low-income households; their incomes have been affected disproportionately by this attack. Sad but this is how these fiscal packages - on the other side of a national ‘we’re in it together’ war cry - has created such devastating inequality. Leaving a dangerous vacuum of health and safety. With much thanks to US/ UK banks and the uncivil service fragilista's.
4. In Europe, extensive government support (fragilistas again) has limited the impact of employment (for some), and therefore disposable income. Any sign of recovery is skewed heavily to higher income households who received handouts, bailouts and furloughs, whilst the outlook for low-income households who were discriminated against by G7 governments after making existential sacrifices, will be negatively impacted by the decaying labour market. In Asia, the largest drivers of growth will be in line with Hans Roslings predictions (Factfulness) ie increasing incomes and spend of low-to-mid households.
5. Shopping habits have changed. ie basket sizes, fewer trips to the store, and evolving consumer preferences. Less impulse purchasing, more stock-up and fill-in buying. If you're in Britain, Brexit has necessitated this even further.
6. Pricing is a key issue. Historically it has trailed behind inflation creating inevitable pressures on margins for consumer goods companies. Brands have over-traded (discounted or promoted) creating margin pressure, and the impact of this latest attack is going to make things worse for consumers.
What can you do?
Caveat emptor. Let the buyer beware.
Become more mindful (eksipnos in Greek or alert, awake) of where you shop for your basket of goods. Consider buying local, private label, even German (the anti-dote to Brexit) at Lidl, who have, ironically, managed to out-compete many UK players in the brutal game of retail, quietly going their way to become a prominent, humble, trusted brand on every high street in the land.
Support fresh and local. Economies of scale are still being piloted for new industries and sectors (ie lab grown food) which has yet to be proven on measures of health, safety, and environmental impact.
Support your butcher, fishmonger, farmers and any private family run businesses. The reason there are so many fragilista’s in business and government today is because of monopolised, centralised, legacy-heavy slow moving unresponsive dead wood companies, and the people who run them.
Hold these arrogant businesses to account on prices and remaining competitive.
Natural products are still the feast in a world of increasing famine. Get rid of your dodgy government. Build bottom up ecosystems for trade, support, equitable growth and progress. In a zero sum game we have to shake the trees and earn even grab our share of the fruits.
*The US, UK, Western Europe
Sources:
As cofounder in tech startups I’ve learnt from and also contributed to various industry sources, publications and seminars including McKinsey, US Federal Reserve & Economic Data, Bloomberg, The Financial Times, Bain, BCG. I’m an author of US Consumer Goods And Technology webinars and keynotes delivered in London & New York, speaker at the Price Optimisation Institute (Geneva and Budapest), and panel member and keynote at the AI/ Big Data and Smart Cities Expo (Amsterdam)
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