2022 consumer products industry outlook
Overcoming new challenges in the battle for trust
Bold moves made during last year’s uncertainty are paying off, as the year ahead for the consumer products industry looks to be one of strong economic growth. Yet, some challenges could stand in the way of continued progress. How can consumer packaged goods (CPG) companies outmaneuver of these obstacles? Explore Deloitte’s perspective and what 100 executives from apparel, household goods, personal care, and food & beverage companies think awaits them in the year ahead.
Report preview—State of the industry
For the consumer products industry, the next 12 months will likely be one of strong financial performance. Like last year, driving greater revenue continues to be the top goal for 93% of executives in Deloitte’s 2022 consumer products industry outlook survey. The “no-regret moves” companies undertook amid 2021’s unpredictability are paying off.1 And despite rising costs, at least half of companies surveyed expect their operating margins to increase. This coincides with an environment conducive to raising prices for end consumers.
But 2022 will likely also come with some significant challenges. Supply chain struggles are unlikely to be resolved fully or quickly; labor is hard to come by and keep; costs of all kinds are increasing rapidly—and all are impacting the industry’s ability to achieve desired growth. As evidence, nine in ten executives surveyed rate supply chain issues as the greatest threat to growth. Additionally, 6 in 10 say labor shortages are already threatening growth this year.
However, in the eyes of consumers, retail partners, and employees, things may look different. These key stakeholders have a more fundamental lens for understanding the current barriers for the consumer products industry: Trust.
Economic outlook for consumer products
The baseline outlook for 2022 is for relatively strong growth in consumer products, even amid continued supply chain stress and labor shortage, though both should gradually abate. During the pandemic, governments, businesses, and individuals undertook actions that set the stage for strong economic growth.
- Ira Kalish, chief global economist, Deloitte
Three imperatives in 2022’s battle for trust
Trust means different things to the people—or in this case, the stakeholders—who hold it. Two-thirds of executives surveyed said that building trust was their company’s highest priority, and even more said it was their company’s most valuable asset. As a result, most executives said they are investing significantly in initiatives that prevent the erosion of trust. Explore how leading consumer products companies will work to rekindle trust in three primary ways this year.
Trust and transparency go hand-in-hand
Consumer brands that aren’t open and transparent are the most at risk of losing meaningful trust with consumers, according to nine in ten executives surveyed. Becoming more transparent isn’t just a matter of changing a company’s overall approach or attitude toward openness. So, consumer product companies are putting their money where their mouth is. Six in ten companies are making moderate, if not significant, investments in 2022 to increase the level of transparency they provide to consumers and other stakeholders. For more, download the report.
Increasing trust with elevated digital experiences
In our analysis, 50% of the companies surveyed believe that consumers lose trust in brands that fail to engage with them in a personalized manner. Consumer products brands are changing their go-to-market strategies to better do just that. Consumers need to be engaged as individuals if traditional CP companies are going to compete and grow. Digital engagement systems, including DTC platforms, are an important way to offer personalized service and also share data on sourcing, labor, carbon reduction, safety, freshness, and more. While these platforms, of course, also collect data on consumers, protection of privacy must be designed into the system to build and maintain that trust. For more, download the report.
Creating trustworthy workplace cultures
Consumer product companies are facing an immediate problem of getting enough people and skills. But there’s a bigger picture at play, as well. Technology and new sources of talent are changing the nature of work, workplaces, and the workforce. Many companies are putting people squarely at the center of their future of work visions, humanizing work, and rallying around outcomes that inspire and energize. The future of work isn’t about waiting for tomorrow. It’s being built today, through the investments companies are making right now. For more, download the report.
Bonus content—‘5 in 10’
While the 2022 consumer products industry outlook focuses on the next year, Deloitte is also keeping an eye out for potential long-term game changers looming on the horizon.
Download the 2022 consumer products industry outlook for five big ideas with the potential to change the industry in ten years. Some of these ideas may never fully manifest. Others are already playing a small role today. Assess for yourself and prepare now for the future.
About the report
In addition to insights derived from client work and prior research, Deloitte surveyed 100 senior executives from a mix of food & beverage, household goods, personal care, and apparel companies in November 2021. Most of the companies are multinationals, all with over $1bn in revenue.