A complex present, a murky future

PwC’s 21st CEO Survey: Key findings from the consumer markets industry

A complex present

A complex present

CEOs of consumer goods manufacturers and retailers—the two ends of the consumer goods pipeline—might be feeling a bit beleaguered these days. Growth is hard to come by, especially for the larger, more established players; investment budgets are stretched thin; consumer preferences and shopping habits are in rapid flux; and investors are waiting impatiently for near-term improvements. These circumstances help explain why consumer goods CEOs aren’t as bullish as the average CEO about growth prospects for the economy and their own organisations.

With consumer markets in unprecedented upheaval, CEOs in the sector appear to be more focused on the here and now than on ambitious long-term undertakings. Operating as they are in an environment of dramatic change, the long view may be a luxury they can’t afford.

Growth expectations shape acquisition strategies 

CEOs of consumer goods companies, on both the manufacturing and retailing sides, are somewhat less sanguine about overall growth than the average CEO, with 52% of manufacturing CEOs and 49% of retailing CEOs believing that the global economy will grow in the coming 12 months, compared with the global average of all CEOs at 57%. Similarly, 38% of manufacturers and 33% of retailing CEOs said they were very confident of their own companies’ growth prospects over the next 12 months, against a global average of 42%.

Consumer market CEOs are cautious about growth
Digital worries abound

Digital worries abound

One third (33%) of retailing CEOs say that they’re extremely concerned that cyber threats could upend their growth plans. Those findings suggest that while retailers have taken note of the widely publicised thefts of consumers’ data, they still do not feel that they have adequately hardened systems against such intrusions. That may stem, in part, from a lack of available funding for investment in digital security. By contrast, only 16% of consumer goods manufacturing CEOs say they’re extremely concerned about cyber threats, an indication that most CEOs in the sector believe their organisations managed cyber risk effectively. However, with 40% of global CEOs reporting that they are extremely concerned about cyber threats, one wonders if consumer markets CEOs are concerned enough.

Concern over rising competition 

Digital prowess may soon emerge as a key competitive advantage. Both retailers (75%) and, to a lesser extent, consumer products manufacturers (50%) say they expect direct and indirect competition from traditional players and new entrants will be very disruptive or somewhat disruptive to their businesses in the next five years. And much of that disruption will be digital in nature. Indeed, “new micro, digital-only companies are flooding the market, riding on mobile consumer channels and the proliferation of social media,” according to a Strategy& study.

Many new competitors have a formidable array of digital skills that incumbents may be hard-pressed to counter—on that score, it’s telling that only 34% of retail CEOs and 41% of consumer goods manufacturing CEOs say they have a clear understanding of how artificial intelligence and robotics can improve the customer experience. And 93% of retail CEOs and 88% of consumer goods manufacturing CEOs admit they need to strengthen their employees’ softer skills such as teamwork and communication, which are necessary complements to digital expertise.

Cyber threats top retail CEOs' worries

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Michael Cheng
Asia Pacific & Hong Kong/China Consumer Markets Leader
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