Deloitte cb predictions seminar 2013 deloitte perspective on growth
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Transcript of Deloitte cb predictions seminar 2013 deloitte perspective on growth
Consumer Business Predictions & Priorities Seminar 2013
Rotterdam, May 28th 2013
New Foundations for Growth
Randy Jagt
Director Consumer Business
© 2013 Deloitte The Netherlands
Bio
@ Deloitte since 2003
Leads Deloitte’s Food & Beverage Industry and
responsible Director for our Emerging Markets Taskforce
Focused on Realizing Strategic Business
Transformations
Combining Functional, Industry and Functional
knowledge
Responsible director for FrieslandCampina, Nike,
D.E MasterBlenders 1753 and Heinz
Consumer Business Predictions & Priorities Seminar 2013 1
Where are we now?
© 2013 Deloitte The Netherlands
A whirlwind of disruptive forces is in play in today’s marketplace
Rapid Technological Adoption and
Changing Channels
Increased mobility, enhanced usability,
and increased connectivity
Increasing Competition
Lower barriers of entry, new business
models, vertical and horizontal
integration
Changing Consumer Behavior
Overall, consumers spend less time,
want value for money, are comfortable
buying online and are less loyal
Challenging macro economic trends
Unsecure economy, shift to Emerging
Markets, low consumer confidence in
Europe
Consumer Business Predictions & Priorities Seminar 2013 3
© 2013 Deloitte The Netherlands
Retail and consumer products companies face challenging global macro
economic trends
Europe
‒ Things get worse but do
so more slowly
‒ Imports fall as people
have less cash to spend
‒ Exports rise thanks to
improved competitiveness
United States
– US budget deficit is falling fast:
• Healthier economy
• Higher tax revenues
• Lower federal spending
– Unemployment expected to
stay high
Japan
– Partial economic
recovery in 2012 due
to tsunami 2011
– Stimulus by Bank of
Japan is boosting
consumer
confidence
China
– Slowing growth from
tightened monetary
policy
– Shift toward upscale
as income
distribution skews
– Shift toward
consumer led
growth
Africa
– High growth rates
expected
– Emerging middle
class
– Increased
spending power
SE Asia
– High growth
– Emerging middle
class
– Increased
consumption of
goods and services
South America
– Strong growth
– Thriving middle
class
– Raising service
sector
Consumer Business Predictions & Priorities Seminar 2013 4
© 2013 Deloitte The Netherlands
Proliferation of choice, coupled with disruptive retail models, has resulted in
a consumer that is harder to “win” and retain than ever before
“With so many brands out there, why limit
myself to one or two?”
I keep my options open
“With so few brands to choose from, it’s
easy to decide which one fits my needs.”
I identify with brands
“If a store isn’t nearby, I can always buy its
products online...or through its app.”
I can buy anything, anytime, from anywhere
“I frequent stores that are near my home,
my work, or my local mall.”
A store can win me based on location alone
“I like to compare prices on my
smartphone before buying.”
I always know if I’m getting the best deal
“I like getting a great deal, but I don’t have
time to shop everywhere.”
I’ll shop around…to a degree
N O W… T H E N…
Consumer are connected, well-informed, demanding and self-aware Consumer Business Predictions & Priorities Seminar 2013 5
© 2013 Deloitte The Netherlands
Established players need to defend market share against new
competitors
Consumer Business Predictions & Priorities Seminar 2013
Vertical or horizontal
expansion
Players expanding their
roles in the value chain
Technology disrupters
Left field competitors with
different business models
Emerging market players
Emerging market giants
entering western markets
Typical advantages:
1. Strong position in existing
space
2. Increases control
Typical advantages:
1. Proprietary technologies
2. No legacy costs, Leaner
organization
3. High valuations
4. Attractive to top talent
Typical advantages:
1. Low cost experience
2. Strong position in home
markets
3. Access to large talent
pools
4. Inherent flexibility
6
Where are we going?
© 2013 Deloitte The Netherlands
In the long term there are four key predictions that provide growth
opportunities for the Consumer Business Industry
Increasing wealth in
emerging markets
We’re only at the verge of the
data revolution
Companies that best understand
the customer of tomorrow will
win
Only companies that manage to
remain fit for the future will
survive
Consumer Business Predictions & Priorities Seminar 2013 8
© 2013 Deloitte The Netherlands
Prediction #1: In three years time multinationals need to obtain more
than 30% of global revenues from emerging markets
Emerging Advantage
• Emerging markets play an increasingly big
role in the strategic plans of multinationals
• Companies which already have a foothold are
expanding and many who haven’t made the
move plan to do so soon
• Nearly 60% of the global GDP growth in
2030 is forecast to come from emerging
markets
• Companies are increasingly shifting focus
towards 2nd and 3rd tier emerging markets in
Asia, Middle East and Africa
• Growth in these markets has surpassed that
of the BRICs, driving consumer demand and
spawning competitive local businesses
Broaden scope of
investments in
Emerging Markets
In three years time:
Most companies will realize more than 30%
of their revenue from Emerging Markets
20%37%
37%
35%35%
15%
14%71% or more
31% - 70%
Expected in 3 Years
10% - 30%
Less than 10%
Last 12 Months
8%
Successful growth stories
• Today 55% revenues
come from EMs (85% of
its growth)
• Revenues from EMs to
increase to 75% by 2020
• 43% of its revenues from
EMs in 2012
• Sales mounted 9,7% in
Africa and the Middle East,
and 7,5 % in Asia Pacific
• 51% of revenues come
from EMs
• High growth in Asia,
LATAM, CIS, Middle East
and Africa offset poor W
European performance
• 40% revenues from EMs
• Planning to triple its sales
in Asia, Oceania and
Africa over the next
decade
% Global revenues from EMs
Consumer Business Predictions & Priorities Seminar 2013 9
© 2013 Deloitte The Netherlands
Prediction #2: Omni-channel will become the new standard for shopping,
requiring insight through all consumer devices to enable customer centricity
Leveraging insight from digital devices
• The use of digital touchpoints will enable the best
companies to reach a higher level of customer centricity
• Companies will engage in better customer dialogue,
delivering improved customer experiences
More sales and increased brand loyalty
• Retailers can increase customer loyalty by ensuring
testing and improving their assortment ratings
Product feedback
• Early adopters are more critical about products than
consumers in general
Operational improvement
• To achieve excellence in brand loyalty, customer
service complaints must be driven to below 1% of total
customer feedback
Individually customised offers increase sales,
drive higher brand loyalty and companies flex to
customer needs faster than ever.
* Based on CEO survey (sample size 234 covering CB, automotive, tourism, hospitality and leisure)
Source: Deloitte Fortresses and Footholds Study; IMF; WB
Consumer Business Predictions & Priorities Seminar 2013 10
© 2013 Deloitte The Netherlands
Key opportunities fuelled by Analytics
• Better tailored “next generation“ products and services
based on detailed analysis of customer behavior and
needs
• Optimized supply chain and process efficiency by using
sophisticated analytics
• New unprecedented opportunities by analyzing web
behavior, voice/video, sensor data etc.
Customer data is exploding
• This decade the global information set is growing at a
factor of 44 — from 0.8 zettabytes in 2009 and is
expected to reach 35.2 zettabytes in 2020
• A leading global retailer collects more than 2.5 petabytes
of customer transaction data every hour
• This data comes from the growing volume of existing data
(e.g., POS, shopper profile, etc.) as well as emerging
forms of data fueled by technological and digital
innovations (e.g., mobile eCoupons, sensor tags, video,
text, photos, audio).
Start building
big data
capabilities
A strong data and analytical maturity is the key
differentiator to successfully navigate through this
new era of innovation and exponential pace of change.
Prediction #3: The exponential pace of Big Data & Analytics
innovation will cause a disruption in the competitive landscape
Industry’s perceived “Change” pace
Consumer Business Predictions & Priorities Seminar 2013 11
© 2013 Deloitte The Netherlands
Prediction #4: Companies will shift from “localized” operating models towards globally
integrated operating models to meet both their cost as well as their growth objectives
External drivers
• Increased market pressure (decline in organic growth)
• Differentiated consumer demand
• Increased consumer insight and
external data
• Shifting channel dynamics
• Competitor consolidation
Drivers for Operating Model changes
Consumer Business Predictions & Priorities Seminar 2013
Internal drivers
• Growth into suboptimal large scale businesses
• Numerous local autonomous organizations
• Struggle to reap scale benefits...
• ...and at same time being faced with scale challenges
• How to remain fit for purpose through
balancing global scale and local
relevance?
• Global companies are facing changing
industry dynamics and scale challenges,
driving a balancing act between global
scale and local relevance
Key Challenge
Key Question
Companies will shift from “localized”
operating models towards globally
integrated operating models to meet
both their cost as well as their
growth objectives
12
What are our priorities?
© 2013 Deloitte The Netherlands
As a result of these developments we identify four key priorities for the
Consumer Business Industry to realize long term growth
Growth &
Emerging Markets Digital
& Cloud
Analytics Future
Operating Model
1 2
3 4
New Foundations
for growth
Consumer Business Predictions & Priorities Seminar 2013 14
© 2013 Deloitte The Netherlands
Define your Strategic Path to Growth, supported by a well balanced
portfolio of strategic initiatives
What is our
Growth
strategy?
Where will we
play?
How will we win
in chosen
markets?
What priority
initiatives and
investments?
How will we
configure?
The Strategy Cascade™
Consumer Business Predictions & Priorities Seminar 2013 15
Developing New Foundations for Growth following a structured approach
Primary Growth Levers (business of today)
Identify new uses
or users
Create new
markets
Extend to new
markets,
segments
Expand the
value chain
Change the
basis of
competition
Retain, acquire
customers,
optimize
pricing, improve
existing
products and
services
Extend
products
and services
Cu
sto
mers
/ M
ark
ets
No
n-c
on
su
me
rs
Ne
w t
o y
ou
E
xis
tin
g
Products / Business Models
New to you New to the world Existing
New Adjacent Core
© 2013 Deloitte The Netherlands
Companies should deploy wider capabilities to pull, convert and retain
new consumers for repeat sales
Social
• Social interaction
• Product discovery
• Price-checking
• Online payments
• Mobile payments
• Self-checkout in-store
• Order management
• Fulfilment
• Service and loyalty
Data-driven
Insight
• Quick, convenient and
personal service
• “Frictionless” digital
loyalty system
• Personalise promotions
• Consumer-typed propensity
models (next best offers)
• In-house data & analytics
talent pool
• Secure storage and data
compliance
• Socially-driven product
discovery paths
• Improved SEO
• Centre of excellence for
online engagement
• Multiple product fulfilment
options
• Location independent
payment
• Optimised supply chain
• New in-store services
Pre-purchase Purchase Post-purchase
Pull consumers Increase conversion Keep them coming back
Omni-channel
shopping Digital Loyalty
Mobile devices are a central driver in the revitalization of customer shopping experiences
Consumer Business Predictions & Priorities Seminar 2013 16
© 2013 Deloitte The Netherlands
Unlock the power of available data: Move from reporting historic facts
to anticipating consumer and business behavior
Traditional
Business
Intelligence
Increasing business value Transactional
An
aly
tical
Matu
rity
Strategic
• Data integrity & quality
• Basic employee lists & extracts
• Understanding business
parameters
• Visualizing transactions
• Integrated analytics
• Multiple sources of data
• Forecasting and
predicting future
outcomes
• Modeling and
understanding
correlations and
causalities
• Simulate and
experiment with
possible scenarios
What is happening?
Why is it happening?
What might be happening?
Basic KPI
Reporting
Visual data exploration
Segmentation
Predictive Modelling
Simulation & Optimization
• Understand groups and
outliers
• Discover white spots
Consumer Business Predictions & Priorities Seminar 2013 17
© 2013 Deloitte The Netherlands
CPG companies need to move from “localized” models towards globally
integrated operating models to remain fit for purpose
Consumer Business Predictions & Priorities Seminar 2013
Companies do not only integrate their operating models for cost purposes
but also to unlock adjacent and new growth opportunities
Globally integrated operating model
Global Shared Services Organization
Finance/HR/IT and standard technology platforms
Global Centers of expertise
Standardized core value chain processes
Global R&D Supply Chain End Markets
Innovation Sales
Brand strategy
Business Strategy
18
© 2013 Deloitte The Netherlands
As a result of these developments we identify four key priorities for the
Consumer Business Industry to realize long term growth
Growth &
Emerging Markets
Digital
& Cloud
Analytics Future
Operating Model
1 2
3 4
New Foundations
for growth
Consumer Business Predictions & Priorities Seminar 2013 19
© 2013 Deloitte The Netherlands
Q&A
Consumer Business Predictions & Priorities Seminar 2013 20