Not very long ago, double-digit volume growth had nearly become a sine qua non for consumer companies.
But for the past couple of quarters, they have been struggling with mid-single-digit growth as economic uncertainties grew.
There’s a big opportunity wrapped inside this problem, say Abheek Singhi, Amitabh Mall and Karishma Bhalla of the Boston Consulting Group.
The predicament proffers a chance for consumer firms to introspect, review practices, embrace change and reinvent themselves, they suggest in a report brought out along with the Confederation of Indian Industry (CII) on Wednesday.
The altering macroeconomic environment and cyclical fluctuations can morph into game-changers, the trio believes.
The report said 90% of the consumer companies surveyed believe all this means there will be a change in the top three pecking order in the organised space over the next five years.
Therefore, companies need to make their value chain more agile by leveraging local sourcing, Singhi, Mall and Bhalla advise.
For instance, by tying up with tomato farmers in Karnataka and Punjab for its ketchup range, Hindustan Lever has brought down the share of imported tomatoes from 100% to less than 20% in four years.
Similarly, PepsiCo has tied up with farmers in Punjab for potato supplies, reducing uncertainty in its supply chain.
Companies also need to work on improving brand recall, they said.
Jayant Singh, executive vice-president - marketing, GlaxoSmithKline Consumer Healthcare, concurs. “If you have a strong brand recall, then consumers will gravitate to your brand in uncertain times. Also, it will prove to be bang for the buck and thus can really help the company,” he said.
Experts say typically, in a tough environment, companies get more conservative and abandon all attempts to change.
But this is the time for retailers to experiment with store formats, assortment mix, shopping experience and discount strategy to find out what consumers want, they suggest.
The report said going ahead, the ‘Gen I’ – consumers who have grown up after the 1990s – will be the growth driver for FMCGs as they will constitute about 72% of the working population by 2020.
Mall said companies that thrive are typically the ones that can use these uncertain times to reinvent.
“Globally, we have seen players like Chrysler, General Motors, GE and IBM have done that.”
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}