2021 consumer products industry outlook
The consumer products industry enters 2021 with ambition and confidence. The No. 1 goal is revenue growth, and four in five consumer products industry executives are confident in their organization’s ability to execute its business strategy in the coming year.
Trends defining the direction of the consumer products industry
How exactly 2021 will unfold is predicated on a variety of factors, including COVID-19 vaccine deployment, safety restrictions, fiscal support, state and local government coffers, the persistence of virtual schooling and work, and even consumer psychology and the stickiness of new habits. We account for these factors in our consumer goods industry scenario analysis and provide our full outlook in a downloadable PDF.
Five “no-regret” strategic moves
After analyzing multiple scenarios and connecting with a panel of industry executives, we’ve identified five “no-regret” strategic moves that we think will represent the direction of the consumer products industry in 2021.
1. Resetting go-to-market strategies
Consumers changed their behavior and preferences, so companies are changing their go-to-market strategies and capabilities in response. Industry players are recalibrating how they segment consumers, prioritize channels, establish product portfolios, position their brands, and deploy service models. This work continues in the new year.
2. Accelerating the shift to digital
We’re likely to see the words “digital acceleration” in almost everything we read this year. Of course, that doesn’t make them any less true. Out of every capability or strategy assessed by our executive panel, digital showed the largest maturity gap. Three in four executives said it’s important to meeting their objectives, but only one in four believed that their digital capabilities are advanced relative to industry peers. Of those making investments, 80% are allocating resources to improving their e-commerce and shopping platforms, including a full 60% investing in their digital DTC channels.
3. Building supply chain resilience
For decades, globalization, low-cost supply, and minimal inventory were the key tenets of efficient supply chain management. The industry is not abandoning those goals, but the emphasis in 2021 is on building resilience. Resilience is how companies keep their supply chains from breaking and restore them quickly when they do. It is also how they can gain the nimbleness and scalability to power new go-to-market approaches and innovative business models.
4. Investing in tomorrow`s business foundations
One thing is for sure: CPG companies aren’t letting the COVID-19 crisis go to waste. Instead, they are using this period of great change to make improvements across all aspects of their businesses structure and operations likely to be needed for future success. One such agenda item is cost structure realignment.
5. Connecting purpose to profit
Nearly nine in 10 consumers say the pandemic is “an opportunity for large companies to hit ‘reset’ and focus on doing right by their workers, consumers, communities, and the environment.” Our industry panel agrees. Three in four said that a “strategy to place purpose alongside profit, express corporate values, and address heightened consumer attention to sustainability, social justice, equality, and environmental consciousness” is an initiative that rank high in achieving desired strategic outcomes in 2021. Purpose is not a concession to profit. Instead, it is an accelerant.