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Consumer Markets

The convergence of wellness, sustainability and digitalization on retail and consumer products in Asia

Subscribe to Consumer Markets 4/29/2014

Retail and consumer product companies are facing an increasingly challenging environment. Digital convergence remains pervasive and informed consumers continue to become more health-conscious and aware of sustainability issues. This combination of dynamics is placing pressure on the extended supply chain of companies in the sector.

As consumers become more and more sophisticated and digitalization continues to accelerate, the way consumers shop and behave is undergoing a fundamental transformation. The use of mobile and online channels has reached a tipping point. Traditional paths for reaching consumers have changed irreversibly and many organizations are grappling with how to react to the changes. Combined with increasing health and wellness concerns and a heightened awareness of environmental constraints, the pressure to create the right mix of products and a high-performing supply chain and procurement function is becoming more pronounced.

A number of leading industry players have been quick to respond to the changing dynamics. Retailers and manufacturers such as Burberry and L’Oréal have been driving digital engagement with consumers that enables real-time engagement and delivery of the right product at the right time for the shopper. At Burberry, associates in stores have iPads that have capabilities to track loyalty, clientele preference and drive optimal in-store experiences. The digital push has seen investment in both online and offline technology, both of which are driving revenue for Burberry. L’Oréal has also invested in digital real-time applications including coupons, real-time offer engagement and common global platforms for consumer engagement across all channels. This level of digital engagement requires sophisticated enabling technology, a clear understanding of shoppers’ needs and a synchronized supply chain. The understanding of the intersection of mobility and digitalization, and the awareness of the need for the seamless integration of technology and process is helping organizations like Burberry and L’Oréal deliver optimized consumer experiences.

Manufacturers like Unilever and Nestlé have responded to health and wellness concerns as well as sustainability challenges by launching programs and products that meet evolving consumer demands. In India, for example, Nestlé has launched Maggi Atta Noodles, a wholewheat flour noodle variation that meets the needs of increasingly health-conscious consumers. Unilever has also launched sustainability key performance indicators and started a ‘Living Project’ with Walmart in China. Other major industry players are also responding to address sustainability and health and wellness across their portfolios and supply chains.

It is imperative that organizations meet the demands of the future head-on. Winning in this new playing field will not only demand the right strategy and processes – more fundamentally, success will be determined by having the best mix of seasoned executives and young top talent. So what are some of the steps required to succeed?

Create an Asia-relevant strategy

Understanding the real needs of consumers in the region is the first step. Only then can a vision be defined and agreed to address the digital, wellness and sustainability challenges. Organizations must have simple, well-defined strategies in place that are regionally aligned, but which are tailored to local tastes and preferences. A clear vision and strategy can then help ensure companies have the right combination of resources to deliver on the digital challenge. Although this task requires C-suite ownership, it must be cascaded throughout the business and delivered with the right return on investment.

Engage the board early and often

Addressing these challenges requires CEO stewardship; however, the key roles are played by the CMO and CIO. Organizations need to empower and enable the CMO and CIO to develop the right operational plans to execute the company’s vision and strategy. With regular board engagement and approval to proceed with investments, the CIO and CMO in close collaboration with Supply chain and Operations can lead organizations forward to deliver brilliant digital experiences for consumers that fulfill the promise of wellness and sustainability.

Build a dynamic team

The war for talent is becoming tougher. Finding top talent in retail is scarce and is a common problem for CEOs in Asia. Although traditional core competencies remain reasonably strong in FMCG, it is clear that a greater blend of young top talent is needed to supplement executive teams, especially given the compelling changes driven by digitalization. The youth’s savvy is paramount in an era when everything is delivered by the ‘double tap’ of an app. The talent pool of candidates in their mid-twenties is vast and is necessary to craft creative digital responses in collaboration with the mentorship of experienced leaders. Beyond digital convergence , the wellness and sustainability agenda requires deep expertise across the supply chain, marketing and product development/merchandising. Organizations which hope to succeed in this respect will require the best experts in the field to work with C-suites to deliver financially viable results.

Consumer products and retail operating environments are changing. The pressure on margins driven by changing consumer behavior and concerns over wellness and sustainability all combine to make selecting the right organizational and people strategies vital. As the talent war intensifies, the winners in FMCG and Retail today are those that harness the best pool of top talent to execute forward-looking strategies that cater to the evolving and increasingly sophisticated consumer needs.


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