Consumer Goods

Strategic pillars for the future of the FMCG industry

January 10, 2022

Nowadays, fast moving consumer goods (FMCG) firms are defining their progress via steady expansion and the use of new technology to meet customer needs, with many well-known brands continuously working on expanding their FMCG portfolios and capabilities. Modern technologies combined with creative business strategies are reshaping traditional value chains faster than expected.

Five fundamental pillars will assist with strategic planning in the FMCG sector over the upcoming years:

  • Digitalization
  • Personalization
  • Sustainability
  • Deglobalization
  • New business models

Digitalization

The fast-moving consumer goods market is changing at a rapid pace. Today, more companies are working around the clock to compete through sustained digitization. Companies must expedite the digitization of their business to fulfill client expectations. They should, however, go beyond just automating a process that already exists. Data models should be adapted to enable better decision-making, performance tracking, and consumer insights. Which will create demand for new positions such as data scientists and user-experience designers.

Advanced analytics will become a core element in the digitization process of the sector as e-commerce becomes a mainstay in the FMCG industry. More businesses will embrace advanced analytics to access, interpret and utilize data.

Other aspects of the FMCG chain, including supply mechanisms, will need to embrace automation as a new normal. The industry will experience a surge in the automation of supply chain tasks. The approach will lead to more significant cost-cutting as more businesses seek efficiency and minimize existing skills gaps. You should anticipate more robotics taking an active role in shaping the industry's future.

Personalization

Personalization is among the pillars that the FMCG industry must grapple within the next five years. Today, the demand for personalized products forms the pinnacle of change in the sector. Businesses must now utilize data to understand consumer needs and offer customized products that matches these needs. Three things inform these changing trends in personalization: technological changes, evolving strategic business models and changing social trends.

Sustainability

As the FMCG industry evolves, businesses must balance economic, environmental, and social pillars. Competitors in the business landscape have become more aware that they can achieve brand value and competitive advantage by seeking more sustainable business practices.

Businesses that are more concerned about the next generation are keen to reduce water, energy, and fuel consumption through sustainable practices. As corporations move towards a sustainability-oriented corporate strategy, the FMCG industry will likely witness greater efficiency and new ways of handling the production and distribution of goods.

Deglobalization

No one anticipated that there would be observable diminishing interdependence between different global economic blocks at one point. But as the impacts of trade wars intensify, deglobalization will likely take root. What remains a wild guess is how the Fast-Moving Consumer Goods industry will align with this shift. Corporates may need to begin embracing the idea of geopolitical divisions and their impact on the flow of fast-moving goods.

In most countries, increased protectionism may further affect how goods and services move from one market to the consumer. Indeed, the fast moving consumer goods industry will need to embrace the reality that more silos will emerge going forward, which will affect the ability to operate as one market.

Here are 4 ways companies can adapt to Deglobalization

Making supply chains more resilient

This may be achievable by adding manufacturing and storage aptness within the FMCG industry. Such a move will increase the supply capacity within specific regions.

Raising capital locally

In a highly deglobalized society, raising capital locally is the solution. This will help ensure that the industry keeps moving even without external funding.

Developing local talent

The effects of deglobalization will be a slower importation of labor from other markets. Building local talent can help bridge the skill gap that will emerge.

Decentralizing decision-making

As the FMCG industry becomes more heterogenous, there will be a need to decentralize decision-making. Setting up multiple decision-making centers can help the industry adapt faster to the changing scope of doing business.

Deglobalization tendencies compelled the sector to rethink traditional mass-market strategies based on volume and cost savings. Critical concerns such as supply chain management, local sourcing techniques, and mitigating risk by applying different methods of integrations, will play a substantial part in defining the growth of FMCG in the next five to ten years.

New business models

As the shifts in the global fast-moving consumer goods become evident, businesses may need to develop a different strategy. You need a business model to help your business evolve in line with the changing consumer behaviors, ways of doing business, and global economic trends. There are several models to choose from. Typically, firms will use a broad model and refine it to fit their specific needs. Whatever pathway you select will be determined by the industry you choose, but more significantly, by what the market agree to pay and what resources are available at your disposal.

The industries are exposed to a drastic future with rampant innovations and discoveries. Hence, the five strategic pillars will support the FMCG industry in the next five years: Digitalization, Personalization, Sustainability, Deglobalization, and new business models. While working on your 2025 innovation roadmap, think about these five strategic pillars.

Consumer Goods Consulting

Ollen Group is one of the best retail consulting firms in the Middle East & Africa region (MEA) offering retail consulting services with turnkey solutions from strategy to execution. Our expert consultants will help your through your journey.

Read our latest insights, ideas, and perspectives that explore the trends shaping the future of business and society. Our consultancy services go hand-in-hand with these insights, confirming our position as industry leaders. Get in touch to find out more about our consulting services and industry expertise.

Ollen Group is a global consulting firm established by passionate professionals with extensive institutional and entrepreneurial experience regionally and globally, to help business leaders achieve practical results with real impact. Ollen Group provides consulting services from idea-to-execution and covers capabilities such as research, analytics, strategy, innovation, planning, improvement, design, supervision, activation, and support.

For more information on industries and relevant consulting services, email us at info@ollengroup.com