How Consumer-goods Companies Can Prepare For The Next
Consumer Packaged Goods PracticeHow consumer-goodscompanies can preparefor the next normalConsumer-packaged-goods manufacturers must anticipatechanges in consumer behavior and set up plan-ahead teams toguide and accelerate decision making.by Raphael Buck, Tracy Francis, Eldon Little, Jessica Moulton, and Samantha Phillips PeopleImages/Getty ImagesApril 2020
As the coronavirus pandemic spreads acrossthe globe, threatening both lives and livelihoods,consumer-packaged-goods (CPG) manufacturerscontinue to play an important role: producingessential items we all rely on for our health and wellbeing. CPG leaders have focused on meeting thisdemand while guarding the safety of employeesand customers.At the same time, forward-thinking CPG companieshave begun to think about the “next normal”—whatthe world may look like after strong virus-controlmeasures are lifted. The measures in placeare expected to lead to the largest quarterlydecline in economic activity since World War II.An unprecedented 40 to 50 percent decline indiscretionary spending will translate to a roughly 8to 13 percent drop in GDP. (For our macroeconomicscenarios and latest insights, see McKinsey.com/coronavirus.) While many CPG companies havewithstood the initial economic shock, all will needto prepare for the longer-lasting effects, includingan erosion in consumer confidence that will driverecessionary behavior.In this article, we describe five trends in theconsumer and retail landscape that have emergedduring the crisis and, we believe, will persist in theaftermath. We then recommend the creation ofa plan-ahead team to equip CPG companies forwhatever the next normal may turn out to be.Consumer trends and channel shiftsWe map four horizons of the crisis and beyond(Exhibit 1). At the time of this writing, most countriesaround the world—with notable exceptions in Asia—are still navigating the crisis. The questions manyare now grappling with include: What will the nextnormal look like? And how long will the interveningperiod of partial restrictions last?It’s increasingly clear that the intervening periodwill be lengthy. Consumers and retailers will need1to adjust to ongoing physical distancing and travelrestrictions. Outlets and venues where physicaldistancing cannot be achieved will be among thelast to reopen.Current sentiment, the trends we are seeing inAsia, and lessons from the last recession leadus to anticipate at least five behaviors to “stick”through the prolonged recovery and the nextnormal: increased price sensitivity, higher digitalengagement, rise in attention to wellness andhygiene, “nesting” at home, and a redefinition ofbrand purpose. We also expect to see importantchannel shifts: a smaller food-service sector,retailer consolidation, the rise of value retailers, andAmazon’s growth in grocery (a sector in which thee-commerce giant has historically had lower share).Economic insecurity, leading to price sensitivityAlready, two-thirds of consumers are pessimistic orunsure about the pandemic’s lasting effect (Exhibit 2).Despite their comparative optimism for economicrecovery, 46 percent of US consumers and 28percent of Chinese consumers said they plan toreduce spending in the coming weeks.1 (For our latestsurveys, see “Global surveys of consumer sentimentduring the coronavirus crisis,” on McKinsey.com.)The 2008 recession is an imperfect analog tothe COVID-19 crisis—which is more of a shock,with many governments introducing bold,unprecedented fiscal measures—but we believeit offers valuable lessons about how consumersbehave under financial stress. That recession had alasting effect on consumer confidence, which didn’treturn to prerecession levels until 2011 in Germany,2014 in the United Kingdom and the United States,and 2017 in China.2 Consumers reduced theirspending in several ways:— Refocusing on home occasions. Manyconsumers spent less outside the home;55 percent of Germans and 63 percent ofAmericans said they ate out less.3McKinsey Consumer Sentiment Survey in China and United States, March 30 to April 6, 2020.Consumer Confidence Index, OECD, oecd-ilibrary.org.3McKinsey US Consumer Sentiment Survey, February 2009; McKinsey Global Institute Europe Consumer Insights Survey, December 2008.22How consumer-goods companies can prepare for the next normal
Exhibit 1Most markets—with exceptions in Asia—are navigating the crisis.HorizonPreparing for the crisisNavigating the crisisComing outof the crisisManaging thenext normalSafeguard livesCase countSafeguard livelihoodsGDP–8% to –13%economic shockRegulatory Closing down massmeasures gatherings andClosure of allnonessential retail;stay-at-home anddistancing rulesStaggered easing ofsocial distancing by riskgroup and reopening ofretail with “safe stores”Most likely full openingwith risk of repeatedmeasures if the virusrecursConsumershifts High demand for freshfood and ingredients,as well as continuedneed for hygiene Big shift to onlinegrocery whereavailable E-commerce onlyfor nongrocery Lower spending, moresaving Cautious returnto retail with highhygiene and distancingexpectations Continued increase inonline orderingPotential consumer shifts: Price sensitivity Higher digitalengagement Attention to wellnessand hygiene “Nesting” at home Redefinition of purposefood service Pantry loading ofpackaged goods Beginning to shiftonlineSource: McKinsey analysis, in partnership with Oxford Economics— Cutting back on nonessentials. Two-thirds of USshoppers said they cut back on high-end luxurygoods; one-third cut back on cosmetics.4— Deal seeking. Shoppers became increasinglypromotion conscious. In the United Kingdom,the percentage of products sold on discountclimbed from 26 percent in 2002–06 to36 percent in 2011.5— Trading down. Consumers switched to cheaperbrands or private labels. UK private-label salesincreased by 10 percentage points from 2008to 2010.6— Shifting channels. Many consumers beganshopping at value retailers. Discounters nowaccount for 10 percent of grocery sales in the UKmarket, up from 3 percent in 2006.7A seismic shift in digital engagementPhysical-distancing rules have increasedconsumption of online media and significantlyaccelerated e-commerce, particularly in markets4McKinsey US Consumer Sentiment Survey, February 2009.State of the nation 2012: A review of UK consumers and the grocery industry in 2011, Nielsen, 2012; National Consumer Panel data on total purchasing.6Euromonitor International data from 2008 to 2010.7Euromonitor International data from 2006 to 2018.5How consumer-goods companies can prepare for the next normal3
Exhibit 2In most markets navigating the crisis, the majority of consumers are pessimisticor unsure about the economic recovery.Confidence in own country’s recovery in after-COVID-19 economy,1 % of respondentsIndiaOptimistic The economy willrebound within 2–3 months andgrow as strong as or strongerthan before COVID-1956Unsure The economy will beaffected for 6–12 months orlonger and will stagnate or showslow growth thereafter33Pessimistic COVID-19 will havea long-lasting impact on theeconomy and show regression/fall into lengthy recession111China5344USSouthAfrica3747South Germany BrazilKorea282528234961645923111219UK15Spain FranceItaly1514145845515427403532215Note: Figures may not sum to 100%, because of rounding.Question: How is your overall confidence level on economic conditions after the COVID-19 situation?Source: McKinsey COVID-19 Consumer Pulse Survey, 2020; Brazil (March 28–30) n 1,311; China (April 1–4) n 1,048 including Hubeiprovince; France (April 2–5) n 1,003; Germany (April 2–5) n 1,002; India (April 3–6) n 582; Italy (April 2–5) n 1,005; South Africa(March 24–26) n 535; South Korea (April 3–6) n 600; Spain (April 2–5) n 1,003; UK (April 2–5) n 1,000; US (March 30– April 5) n 1,119that already had a head start. In the United Kingdom,for example, where online’s share of groceryshopping was 7 percent before the crisis, grocersare furiously increasing capacity to meet demand:the three largest grocers have added more than500,000 new delivery slots—an increase of morethan 30 percent.8 For many discretionary categories,e-commerce has become the channel as storeshave closed.We expect this channel shift to endure to someextent, especially in countries where retailers hadenough preexisting capability to offer a positiveonline experience. Early lessons from China suggestthat three to six percentage points of online marketshare will be “sticky,”9 driven by older generationsnewly comfortable with digital channels and by newconsumer segments who have overcome barriers8to trial (such as account setup). Also, in the mediumterm, we expect shoppers to prefer the “safe”experience of shopping online to the prospect ofshopping in crowded stores.Amazon is likely to build momentum in fresh foodand packaged goods, especially in markets wherethe major grocers lack e-commerce “legs.” Inthe month leading up to March 14—even beforegovernments issued shelter-in-place guidance—Amazon US saw year-on-year growth of 41 percentin household goods, 25 percent in health products,and 23 percent in groceries.10Rise in attention to wellness and hygieneThe wellness trend has endured—and even gainedstrength—during the outbreak. “Healthy eating”has remained the highest priority of food shoppersGlobaldata 2019 Food & Grocery; press searches.McKinsey Consumer Sentiment Survey in China (mobile), February 2020.10Stackline data from February 15 to March 14, 2020.94How consumer-goods companies can prepare for the next normal
across Europe: net sentiment (positive responsesless negative) was 55 percent, rising to 82 percentin Italy.11 Consumers are also investing in at-homeexercise: in Germany and the United Kingdom,Amazon’s fitness-equipment sales spiked byapproximately 60 percent each week in March.12We expect this upward trajectory to continueinto the next normal. Hygiene will become a coreelement of wellness. The speed of the virus’sspread has highlighted the level of connectednessin society—and the associated risk. Brandsshould consider the implications for their strategyand communications (for instance, reassessingmanufacturing processes and packaging, as wellas emphasizing health and cleanliness in marketingmessages). The battle to eradicate COVID-19 willbe a long one, and CPG manufacturers will need toprove their safety and trust credentials.Nesting at homeStaying in is the new going out. Once restrictions arelifted, we expect consumers to continue spendingmore time at home, driven by a desire to savemoney, persistent safety concerns, and a newfoundpleasure in nesting. Through the crisis period, manyhave invested in upgrading their homes and gardensor bought equipment for new hobbies and routines.Next to groceries, the category that saw the highestgrowth in US e-commerce in recent weeks hasbeen breadmakers (652 percent growth). Othernonessentials, such as weight-training gear (307percent), computer monitors (179 percent), and craftkits (117 percent) also made the top-100 list.13Redefinition of purposeLarge CPG companies have prioritized crisisrelated communications (such as announcementsof new safety protocols and charitable donations).Digital-native brands have nimbly connected withtheir social-media communities about how they’rehelping people affected by COVID-19. Consumersmay expect companies to continue this heightenedemphasis on social responsibility after the crisisends. In the previous recession, more than 75percent of consumers agreed that “corporationsshould operate in a way that aligns with society’sinterests, even if that means sacrificing shareholdervalue.”14 That said, brands must be careful to strikethe right tone. During this pandemic, 77 percent ofconsumers said they appreciate CPG companiescommunicating how their brands can be helpfulin daily life, but an almost equal percentagesaid brands shouldn’t “exploit” COVID-19 as acommercial opportunity.15It will be essential for companies to balanceexisting focus areas with emerging consumerconcerns. Sustainability, for instance, continuesto be important to consumers in many markets(60 percent of UK consumers cited it as a topconsideration when food shopping).16 Yetconsumers who have become more price sensitiveor more concerned about hygiene may favor singleuse packaging.17CPG companies should examine the potentialimpact of these trends on the categories in whichthey play. Besides these, we are also monitoringtwo other trends, whose longevity is less clear:deurbanization and big-brand growth. With citiesbecoming COVID-19 epicenters, urbanites maymove to the suburbs, or cities could see a significantreduction in traffic as people stay local. Big brandsmay benefit over the longer term, as retailers’current focus on high-volume SKUs will change theconsumer decision set. (In the United States, forinstance, large and midsize brands captured 60percent of recent growth, compared with only 20percent in previous years).Channel shiftsThese consumer trends will have channelimplications, each of which will have varyingimpact on different countries and categories.11McKinsey Consumer Sentiment Survey in France, Germany, Italy, Spain, and United Kingdom, March 27 to March 29, 2020.Stackline data for month leading up to March 28, 2020.13Stackline data on United States for March 2020 versus March 2019.142011 Edelman Trust Barometer, Daniel J. Edelman Holdings, August 30, 2011, edelman.com.15“Brands in a pandemic world: Insights from Kantar’s COVID-19 Barometer,” WARC, March 27, 2020, warc.com.16McKinsey UK Consumer Survey 2020 (part of The Rise of Conscious Eating, forthcoming summer 2020).17Nielsen and McKinsey analysis of the last three weeks of March 2020 versus 2015–18.12How consumer-goods companies can prepare for the next normal5
Most significantly, food-service operators—particularly independents—will experiencesubstantial contraction and consolidation as aresult of physical-distancing restrictions and therecessionary environment. Food-service closureshave accounted for 10 to 20 percent grocery growthin Western markets; when the food-service sectorreopens, we expect a few percentage points toremain in grocery.a plan-ahead team tasked with planning acrossmultiple time horizons. As our colleagues explainin a recent article, “Getting ahead of the nextstage of the coronavirus crisis,” the plan-aheadteam should work through five frames: a realisticstarting position, scenarios, a broad direction oftravel, strategic moves, and trigger points.20 In theremainder of this article, we discuss CPG-specificconsiderations for each of these frames.We also expect to see significant retailerconsolidation, especially in sectors that were lesswell capitalized and struggling before the outbreak,such as small US quick-service restaurants. Somedistributors will go out of business, creatingroute-to-market challenges for some CPG players,especially in the fragmented trade.1. Gain a realistic view of your starting positionThe plan-ahead team should review the company’sfinancial assumptions, ongoing initiatives, andstrategic choices, and sort them into three buckets:“still about right,” “wrong,” and “unsure.” CPGcompanies should reevaluate their 2020 growthexpectations and key drivers, including the markets,categories, and customers that will deliver growth;the role of planned product launches and campaignsin light of store closures and recessionary pressure;and the allocation of resources, including talent. Thisexercise will clarify your starting point and provide aclear picture of the challenges you need to address.Amazon and other e-marketplaces were alreadygrowing by 25 percent a year from 2013 to 201818but had previously struggled with the supply-chaincomplexity of fresh food and the economics ofdelivering CPG products. During the crisis, however,these players are likely to capture an outsize shareof core grocery.In offline grocery, discounters and other valueretailers will benefit from the downturn, as theydid in 2009. Major grocers will rationalize theirassortments based on learnings during the crisis.They will also likely invest more in neighborhoodproximity formats: in China, for instance,convenience-store sales were 8 percent higher inMarch than in January.19 And grocers will ask CPGcompanies for support in making the economics ofe-commerce work.Getting ahead of the next phaseBy now, most CPG companies have well-establishedcrisis-response teams monitoring the situationand reacting accordingly. Preparing for the nextnormal, however, calls for a distinct working group:18192062. Develop scenarios for multiple versions ofyour futureScenario planning for the next normal is a dauntingtask, with many macroeconomic possibilities,vast differences in markets (and even regions orcities), and only an early view of the consumptionimplications. “Bound the uncertainty” byconsidering at least four discrete scenarios—eachcovering country, category, and channel outcomes—underpinned by clearly stated assumptions aboutcontainment measures and financial aid.3. Establish your posture and broad directionof travelAfter a detailed scenario-planning exercise, itmay seem odd to make macro choices—but theyhelp to align companies on the direction of travel.CPG companies might consider their stances onthe following:Data for 2013 to 2018 from analyst reports, Euromonitor International, Kantar, Planet Retail, and S&P Capital IQ.MIYA payment data for the four weeks after March 8, 2020, versus the four weeks before January 29, 2020.Yuval Atsmon, Chris Bradley, Martin Hirt, Mihir Mysore, Nicholas Northcote, Sven Smit, and Robert Uhlaner, “Getting ahead of the next stageof the coronavirus crisis,” April 2020, McKinsey.com.How consumer-goods companies can prepare for the next normal
With customer decision journeysencompassing more digital touchpointsand increasing in complexity, shopperswill expect CPG companies to have aconsistent presence online and offline.— Global business. Will you focus on yourprevious priority growth markets or review yoursegmentation based on new behaviors andeconomic outlook?— Portfolio. Will you continue to prioritize at-homeessentials or invest in rebuilding demand forproducts that consumers largely held off buying?— Value proposition. Will you reposition premiumofferings or prioritize cheaper brands?— Discretionary categories. Is your primary aim torestart operations and manage your bottom line,or will you invest—for example, in marketing ordirect to consumer (DTC)—to capture share?— Essential categories. Will you focus ontraditional retail partners or on growth channels,such as e-marketplaces?— Challenger brands. Will you wait to bounceback or create a marketing and promotionalgrowth plan?Think about how to align your operating model withthese stances and about which new “muscles” youmight have to build. Establishing your posture andbroad direction of travel will help you decide onstrategic moves.4. Determine actions and strategic moves thatare robust across scenariosThe plan-ahead team can then draft and pressuretest action plans for each scenario. CPG playersHow consumer-goods companies can prepare for the next normalhave a range of commercial, operational, andstrategic areas to cover.Accelerate e-commerce and digital marketingThe specific actions will depend partly on yourposture and business model, but all CPG companiesshould deepen their relationships with third-partye-commerce partners and work with them in new ways,such as category captaincy, deeper data exchange,or shared warehousing. At the same time, avoidoverreliance on the e-marketplace giants—strengthenyour relationships with second-tier e-tailers andowned e-commerce (such as DTC websites, ownedmarketplaces or ecosystems, or partnerships inwhich you control your brand presence and own theconsumer relationships and data.)With customer decision journeys encompassingmore digital touchpoints and increasing incomplexity, shoppers will expect CPG companiesto have
2 Consumer Confidence Index, OECD, oecd-ilibrary.org. 3 McKinsey US Consumer Sentiment Survey, February 2009; McKinsey Global Institute Europe Consumer Insights Survey, December 2008. 2 How consumer-goods
Subject matter of contract of sale-Goods. Goods may be classified as :-2. Existing Goods- a) specific goods, b) ascertained goods, c) unascertained goods. 3. Future goods- which do not exist with the seller at the time of sale. the contract thus is an agreement to sell. 4. Contingent goods - a type of future goods, the acquisition of which .
The Consumer Protection (Consumer Goods Safety Requirements) Regulations 2011 (CGSR) were introduced on 1 April 2011 to enhance consumer protection against unsafe general consumer goods. The CGSR covers general consumer goods which are not under the purview of other regulations or regulatory agencies in Singapore.
Sep 14, 2021 · Examine the Salesforce view of strategy, product innovation, and partner relationships to enable B2B and B2C business processes on an integrated platform in the consumer goods industry. Reference Architecture for Consumer Goods Map specific Salesforce products to the functional capabilities and operational activities of consumer goods .
Sale of Goods Act 1979 c. 54 3 (3) Where by a contract of sale the seller purports to effect a PART U present sale of future goods, the contract operates as an agree- ment to sell the goods. 6. Where there is a contract for the sale of specific goods, and Goods the goods without the knowledge of the seller have perished at which have the time when the contract is made, the contract is void.
3 LIST OF CONSUMER REPORTING COMPANIES Introduction Below is a list of consumer reporting companies updated for 2020 . 1. Consumer reporting companies collect information and p rovide reports to other companies about you.
industry, once-optional moves have become imperatives. Foreword by Greg Kelly 12 A new value-creation model for consumer goods The industry's historical value-creation model is faltering. Here's how to reinvent it. 22 Agility@Scale: Capturing growth in the US consumer-goods sector To compete more effectively in the US market, consumer-
for the Food, Beverage & Consumer Goods industry. The supporting Matrix provides additional ideas and examples submitted by companies (it is not intended to be an exhaustive list). FOOD, BEVERAGE AND CONSUMER GOODS INDUSTRY FOCUS HIGHLIGHTS SDG INDUSTRY MATRIX - FOOD, BEVERAGE AND CONSUMER GOODS 7
another language. A “Secondary Section” is a named appendix or a front-matter section of the Docu-ment that deals exclusively with the relationship of the publishers or authors of the Document to the Document’s overall subject (or to related matters) and contains noth-ing that could fall directly within that overall subject. (For example .
