An extensive amount of news today focuses on inflation and supply chain disruptions. The latest Survey of Consumers focused on inflation's impact to consumer sentiment, which fell to its lowest level since November 2011. While the Delta and Omicron variants have pushed the index lower, consumers' primary concern is rising inflation and falling real incomes.1
Companies have a difficult road ahead. Economic profit growth was 1/3 of the previous decade, and continuous cost pressures, supply shortages, and a changing consumer are creating a dreadful atmosphere. Worse, this will be the norm for the next 12-24 months. Hence, CPG companies are finding improvements using Revenue Growth Management.
Few things dramatically change society. Before the automobile, most people lived their entire life within 20 kilometers of their birth. The tractor, not the option of industrial labor jobs, made it possible for people to leave the heavy labor of farming. And the internet has also changed many facets of life, including allowing people to work from home. Now, AI and computing processing advancements have made the thought-intensive exercise of a single, demand-driven forecast (a Unified Demand Signal) a reality.
The old paradigm of trade promotion investments has failed. Companies that continue to reinforce the process will realize short-lived, incremental improvements. CPG companies will never achieve the transformational results necessary for being nimble and growing in the new environment without a broader, strategic consumer-focused strategy.
After last year's record holiday sales growth (Yes, record – except for fashion retailers), this holiday is heating up to be another great year, with US sales expected to grow by 7.4%. Even clothing and other discretionary spending are expected to rise. But if the correct amount of inventory is not placed in the right locations, all that opportunity is lost.