Viewing offline content

Limited functionality available

Dismiss
Deloitte Middle East
  • Services

    What's New

    • Deloitte175

      Join us for a celebration of 175 years of making an impact that matters.

    • Building the Resilient Organization

      2021 Deloitte Global resilience report

    • 2020 Global Gender Impact Report

      A collection of Butterfly Effect stories highlighting how our Deloitte professionals are positively impacting the lives of women and girls around the world

    • Audit & Assurance

      • Assurance
    • Consulting

      • Strategy, Analytics and M&A
      • Customer and Marketing
      • Business Operations
      • Human Capital
      • Enterprise Technology & Performance
    • Financial Advisory

      • Mergers & Acquisitions
      • Forensic
      • Real Estate
      • Turnaround & Restructuring
    • Risk Advisory

      • Strategic & Reputation Risk
      • Regulatory Risk
      • Financial Risk
      • Operational Risk
      • Cyber Risk
    • Tax

      • Global Business Tax Services
      • Indirect Tax
      • Global Employer Services
    • Deloitte Private

      • Family Enterprise
    • Legal

    • Sustainability

  • Industries

    What's New

    • Deloitte perspectives

      Leadership perspectives from across the globe.

    • Deloitte Insights App

      Our thought leadership and Dow Jones news, now at your fingertips

    • Future of Mobility

      Learn how this new reality is coming together and what it will mean for you and your industry.

    • Consumer

      • Automotive
      • Consumer Products
      • Retail, Wholesale & Distribution
      • Transportation, Hospitality & Services
    • Energy, Resources & Industrials

      • Industrial Products & Construction
      • Mining & Metals
      • Oil, Gas & Chemicals
      • Power, Utilities & Renewables
    • Financial Services

      • Banking & Capital Markets
      • Insurance
      • Investment Management
      • Real Estate
    • Government & Public Services

      • Civil Government
      • Defense, Security & Justice
      • Health & Social Care
      • Transport
    • Life Sciences & Health Care

      • Health Care
      • Life Sciences
    • MENA Sovereign Wealth Funds

    • Technology, Media & Telecommunications

      • Technology
      • Telecommunications, Media & Entertainment
  • Insights

    Deloitte Insights

    What's New

    • Deloitte Insights Magazine

      Explore the latest issue now

    • Deloitte Insights app

      Go straight to smart with daily updates on your mobile device

    • Weekly economic update

      See what's happening this week and the impact on your business

    • Strategy

      • Business Strategy & Growth
      • Digital Transformation
      • Governance & Board
      • Innovation
      • Marketing & Sales
      • Private Enterprise
    • Economy & Society

      • Economy
      • Environmental, Social, & Governance
      • Health Equity
      • Trust
      • Mobility
    • Organization

      • Operations
      • Finance & Tax
      • Risk & Regulation
      • Supply Chain
      • Smart Manufacturing
    • People

      • Leadership
      • Talent & Work
      • Diversity, Equity, & Inclusion
    • Technology

      • Data & Analytics
      • Emerging Technologies
      • Technology Management
    • Industries

      • Consumer
      • Energy, Resources, & Industrials
      • Financial Services
      • Government & Public Services
      • Life Sciences & Health Care
      • Technology, Media, & Telecommunications
    • Spotlight

      • Deloitte Insights Magazine
      • Press Room Podcasts
      • Weekly Economic Update
      • COVID-19
      • Resilience
      • Top 10 reading guide
  • Careers

    What's New

    • Millennial Survey 2022

      Gen Zs and millennials are striving for balance and advocating for change.

    • Candidate Profile

      After applying for a job in this country, you can access/update your candidate profile at any time.

    • Job Search

    • Students

    • Experienced Hires

    • Executives

    • Life at Deloitte

    • Alumni

    • Diversity and Inclusion

  • XE-EN Location: XE-English  
  • Contact us
  • XE-EN Location: XE-English  
  • Contact us
    • Dashboard
    • Saved items
    • Content feed
    • Profile/Interests
    • Account settings

Welcome back

Still not a member? Join My Deloitte

How can consumer products companies stay relevant and be future-ready with analytics?

by Barb Renner, Shweta Joshi, Curt Fedder
  • Save for later
  • Download
  • Share
    • Share on Facebook
    • Share on Twitter
    • Share on Linkedin
    • Share by email
Deloitte Insights
  • Strategy
    Strategy
    Strategy
    • Business Strategy & Growth
    • Digital Transformation
    • Governance & Board
    • Innovation
    • Marketing & Sales
    • Private Enterprise
  • Economy & Society
    Economy & Society
    Economy & Society
    • Economy
    • Environmental, Social, & Governance
    • Health Equity
    • Trust
    • Mobility
  • Organization
    Organization
    Organization
    • Operations
    • Finance & Tax
    • Risk & Regulation
    • Supply Chain
    • Smart Manufacturing
  • People
    People
    People
    • Leadership
    • Talent & Work
    • Diversity, Equity, & Inclusion
  • Technology
    Technology
    Technology
    • Data & Analytics
    • Emerging Technologies
    • Technology Management
  • Industries
    Industries
    Industries
    • Consumer
    • Energy, Resources, & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • Tech, Media, & Telecom
  • Spotlight
    Spotlight
    Spotlight
    • Deloitte Insights Magazine
    • Press Room Podcasts
    • Weekly Economic Update
    • COVID-19
    • Resilience
    • Top 10 reading guide
    • XE-EN Location: XE-English  
    • Contact us
      • Dashboard
      • Saved items
      • Content feed
      • Profile/Interests
      • Account settings
    8 minute read 12 June 2020

    How can consumer products companies stay relevant and be future-ready with analytics? With good data comes great analytics

    8 minute read 12 June 2020
    • Barb Renner United States
    • Shweta Joshi India
    • Curt Fedder United States
    • Save for later
    • Download
    • Share
      • Share on Facebook
      • Share on Twitter
      • Share on Linkedin
      • Share by email
    • Consumer products industry has a long way to go to unlock the true potential of analytics
    • How to win with analytics
    • Opportunity versus effort: Where consumer products companies are investing and whether that’s enough
    • What’s ahead? Augmenting every aspect of the consumer products value chain to prepare for the “new normal”

    Our analytics-on-analytics research reveals the time to invest in analytics is now.

    At the start of 2020, the consumer products industry was addressing traditional operational issues and slowly adapting to emerging consumer trends. However, the COVID-19 outbreak may have fundamentally changed consumer demand and the integrated supply chains that serviced it, defining a “new normal” for businesses and altering some category dynamics forever. The acceleration to advanced analytics has become table stakes for companies that need to adjust to this new normal.

    Learn more

    Explore the consumer products & retail collection

    Read more from the analytics collection

    Learn about Deloitte’s services

    Go straight to smart. Get the Deloitte Insights app

    While many consumer-centered companies have steadily invested in data collection, generating tons of potentially valuable information, as much as 80% of this customer data is not mined,1 meaning companies may not be fully clued into their customers’ needs. Our research reveals that the companies have not tapped completely into the data generated internally within their value chain as well.

    The importance of analytics has never been more obvious—the lack of direct-impact metrics has made it difficult for companies to envision the value of data and analytics in improving business agility and sustaining operational performance. Our analytics-on-analytics approach supports the role of analytics in enabling enhanced performance. Our research also shows:

    • Users of analytics stand to gain from adoption, regardless of where they are in the adoption curve.
    • Heavy users are typically better at cost management than nonadopters, reaping higher profits.
    • Companies consistently investing in analytics and widening their solutions spectrum are better poised to handle business disruptors and their impact on the different aspects of business in the long term.
    • Speed to value from adoption of analytics varies depending on the business area companies choose to invest in.

    Thus, consumer-centered companies stand to win with analytics. But what is the reality of implementing analytics?

    Consumer products industry has a long way to go to unlock the true potential of analytics

    A 2018 study2 found that consumer products executives rated the industry as being in the mid-to-lower end of the digital-maturity spectrum. Additionally, only four in 10 consumer products executives felt that their organization was actively seeking use of new data analytics to improve performance (figure 1).

    Consumer-facing industries actively seeking use of new data analytics

    Though the consumer products industry has boosted its digital efforts, many companies are not agile or even agile-ready, face distributed decision-making, struggle with buying and implementing the right technology, etc. As a result, their ability to manage risks may be limited.

    It is not surprising then that our analysis (see the sidebar, “Research methodology”) reveals very few consumer products companies are at analytical maturity. Given the changes in fundamental consumer behavior and the current uncertain environment, the hallmark of forward-looking companies is their ability to quickly adapt to the “new normal” by deploying scenario planning and analytics to their true potential.

    Research methodology: “Analytics-on-analytics” research to assess consumer products companies’ analytical maturity

    To analyze the maturity of consumer products companies’ analytical efforts, we took the data-savvy route and applied advanced text analytics (figure 2).

    Assessing analytical maturity of our coverage universe

    So, what does winning look like? For any business, it can be visualized using three aspects, namely:

    1. Where are we now: Self-evaluation by a company on its current analytical efforts
    2. Where are we going: Clarity on the desired end state from the adoption of analytics, such as being agile and future-ready or being data-ready to manage uncertain business environments
    3. How can we reach there: A clear road map to move up on the analytical solutions curve

    Through such an assessment, companies could identify themselves in one of the four major categories (figure 3).

    Types of analytics users in consumer products

    Nonusers, clearly, are those uninitiated in a business area. Other users are defined by the sophistication of their analytical solutions in each business area. We found that increased adoption in areas such as consumer insights, marketing, sales, supply chain, and manufacturing triggered further efforts in these areas. And as this usage went up, the need for more predictive and prescriptive solutions emerged, enhancing the analytics portfolio of these companies.

    How to win with analytics

    Pockets of excellence within consumer products: In which business area should a company invest first?

    For companies that have not started, the message is clear—start yesterday! For many years, practically every consumer products company has cited “margin improvement and cost reduction” as one of the top focus areas.3 Our analysis reveals that companies with higher adoption rates have consistently lower cost of goods sold (COGS)/revenue ratios than nonusers, with the difference being as high as 12% in some years. A gap of that magnitude reflects favorably in profitability too—the difference was as high as 16% in gross margin. For an industry that hasn’t seen the return on assets of more than 3–4% in the last decade, this can be a great way to boost the growth by improving efficiencies.

    That said, a nonuser consumer products company could stand to benefit by using analytics in any business area. To prioritize the areas for investment, companies should assess the business environment, lean on decision science to start strategically, and assess the speed to value.

    Starting slow: Can light users win?

    No matter the level of analytical effort, there’s something for everyone. This has been observed particularly in relation to light users’ efforts in sales analytics. The solutions deployed in this space are descriptive, so the heavy users, in particular, do not have an edge here. But, over 2009–2019, light users have shown consistently lower selling, general, and administrative (SG&A) margins than other users—a metric that typically includes costs associated with marketing among other overhead costs. During this period, the industry benchmark SG&A cost margins dropped 4.2% and heavy users’ SG&A margins dropped 1.2%. Light users reaped quick benefits from their initial effort in this area and surpassed the other users—with a reduction of 6.1%. Moreover, because of their smaller market capitalization, the impact of their improved cost efficiencies was amplified and reflected in higher revenue growth compared to other players over 2009–2019.

    Winning today: Who’s benefitting the most from analytics now?

    In the short term, moderate users have seemed to benefit the most from analytics. This has been observed on many metrics across the five main business areas. In logistics, for most years between 2009 and 2019, moderate users outperformed heavy users and the industry benchmark on accounts receivables turnover, average days sales outstanding, average days payables outstanding, and average cash conversion cycle. The same goes with their performance on some of the key manufacturing-related metrics, such as COGS/revenue, other operating expenses/revenue, and fixed asset turnover, which reflects in their gross margin and return on assets.

    However, if we look at the industry landscape today, it’s the heavy users that have developed a more sustained performance edge due to their foresight of investing in analytics early on and building more integrated platforms. They have also demonstrated more agility in adapting to irregular demand, evolving channel patterns, and are also skillfully strategizing their last mile efforts.

    Winning in the long term—what do heavy users teach us on being future-ready?

    Over the last decade, what have the heavy users done well? Many things, including their foresight about wanting to be future-ready, their deliberate approach toward deploying analytics, seeing first-hand benefits in their financial and soft metrics, and the consequent drive to invest back in analytics. Between 2009 and 2019, heavy users experienced improved production efficiency, better cash flow from operations through effective cost management, and higher investments in capital-intensive projects aimed at growth. In logistics, they showed superior performance in managing inventory and payables and have consistently achieved the best cash conversion cycle. These efforts also reflect in their revenue growth in this period. Further, they have better cost management pertaining to sales, marketing, and other overhead expenses, resulting in consistently highest EBITDA margins, signifying stable business earnings.

    To understand which of the above four situations best applies to your business, it is important to assess the analytics adoption maturity of the consumer industry and where you stand in this milieu. A candid reality check, however, is good first step.

    Opportunity versus effort: Where consumer products companies are investing and whether that’s enough

    To better understand where consumer products companies’ analytical focus lay in the last decade, we analyzed the analytics-related literature from 52 companies between 2009 and 2019. In the first five years, companies mainly focused on core areas, implementing automation for efficiency and quality, design and process improvement, inventory planning, and supply chain modernization. Interests shifted from 2015 with advances in marketing technology and social media explosion. Companies’ focus moved to improving their last-mile efforts.

    But are their efforts and investments in business analytics enough? The answer is multifaceted. In steady business conditions, companies would typically prefer investing in core areas. But in nonconfirmatory, unique business situations, they should be agile. Their investment focus might shift as business needs evolve and when consumer behaviors alter. For example, when consumers stockpile a few select categories placing others on the backseat, the spotlight would move to supply chain and sales, while ensuring partner management.

    Today, most companies have their own pockets of excellence in adopting analytics and very few have managed to master all the five business areas consistently. So, where do their efforts stand vis-à-vis the potential? This analysis at every stage of consumer products value chain reveals a significant gap (figure 4).

    A deep dive into the gap between actual implementation and what’s possible revealed that within specific business areas, there’s considerable room for improvement (figure 5).

    Thus, so far, we’ve established the link between analytical efforts and profitability, how a few leading heavy users have benefitted by using systematically implemented analytics, and the untapped potential of analytics. These highlight the obvious incentives that consumer products companies have to invest further in analytics.

    What’s ahead? Augmenting every aspect of the consumer products value chain to prepare for the “new normal”

    Going ahead, consumer products companies should prudently deploy analytics to cope with uncertain business situations that may impact their long-term strategies. They should account for management of working capital, risks to the supply chain, and possible long-term shifts in consumer behavior. Analytics can help them devise practical next steps, including developing contingency plans and supporting business continuity.

    The global customer analytics market is poised to grow to US$24 billion by 2025, a CAGR of 18% between 2020 and 2025.4 With consumer products companies across the globe5 recognizing what’s achievable via analytics, their efforts can enable the overall market growth. Our analysis of recent investor call transcripts validates that companies that were already actively investing in analytics in 2018—including light users—increased their investment in 2019 via in-house efforts or acquisitions. Many heavy users, who are leading in the analytics space, are experiencing the benefits of analytics first hand, especially in the current turbulent business environment. Per their recent investor call transcripts, they have geared up their efforts to strengthen consumer insights, manage supply chain/logistics, and improve marketing strategies. They’re meeting near-term goals across business areas.

    For the companies that are in early phases of their analytical lives, it could be a good idea to assess how analytics can help achieve their broader business goals and kick-start the effort. They should sync their analytics vision, investments, and performance by calculatedly embedding analytics across the enterprise, including talent, process, data, and technology. This can improve their "speed to insight,” thereby empowering decision-makers with better and quicker information to improve performance and unlock growth. And in a turbulent business environment, they should be able to respond, recover, and thrive quicker than those behind in the analytics adoption curve.

    Acknowledgments

    The authors would like to thank:

    Stephen Rogers, managing director, Deloitte Consumer Industry Center
    Nithya Swaminathan, senior manager, Deloitte Consumer Industry Center
    Puja Singh, analyst, Deloitte Consulting LLP
    Narasimham Mulakaluri, assistant manager, Deloitte Support Services India Pvt. Ltd.
    Shruti Panda, senior analyst, Deloitte Support Services India Pvt. Ltd.
    Kavita Saini, manager, Deloitte Support Services India Pvt. Ltd.

    Cover image by: Sonya Vasilieff

    Endnotes
      1. Daniel Newman, “Improving customer experience through customer data,” Forbes, April 4, 2017. View in article

      2. Gerald C. Kane et al., Coming of age digitally: Learning, leadership, and legacy, MIT Sloan Management Review and Deloitte Insights, June 2018. The study is based on responses of 4,300 business executives across 123 countries representing 28 industries. Digital maturity is calculated based on respondents’ rating of their company on a scale of 1 to 10, with 1 being the lowest. View in article

      3. Consumer Analyst Group of New York (CAGNY), “CAGNY 2020 conference,” February 17–21, 2020. View in article

      4. MarketsandMarkets, Customer analytics market worth $24.2 billion by 2025, accessed June 1, 2020. View in article

      5. Mordor Intelligence, Customer analytics market—growth, trends, and forecast (2020–2025), accessed May 2020. View in article

    Show moreShow less

    Topics in this article

    Consumer Products , Retail & Distribution , Consumer Industry

    Analytics for Strategy & Operations

    For Deloitte’s Strategy & Operations practice, analytics is a critical element in how we help organizations navigate the changing data landscape to solve their many pressing business challenges. We not only apply analytics strategically to help clients increase growth, assess new market entry, and manage costs, but also drill down to address tactical challenges—from what marketing approach can provide the leading results, to what supply base is appropriate for a given commodity. Harness the power of analytics with the benefit of Deloitte’s deep industry and domain experience and learn how we can help transform analytics from an academic science to an applied business tool that can improve top and bottom line performance. 

    Learn more
    Get in touch
    Contact
    • Barb Renner
    • Partner
    • Deloitte Tax LLP
    • brenner@deloitte.com
    • +1 612 397 4705

    Download Subscribe

    Related content

    img Trending

    Interactive 3 days ago

    More on analytics

    • Macro technology forces Article2 years ago
    • Diffusing agility across the organization Article2 years ago
    • How analytics and AI-driven enterprises thrive Article3 years ago
    • Infusing data analytics and AI Article3 years ago
    • Modernize management of big data Article4 years ago
    • Analytics Collection
    Barb Renner

    Barb Renner

    Vice Chair & US Leader | Consumer Products

    Barb is vice chair and the US Consumer Products Leader, Deloitte LLP. She has more than 31 years of professional experience serving large multinational clients through a variety of leadership roles. Barb works directly with consumer and industrial product clients focusing on their regulatory environment, supply chain, technology and processes, and other issues and opportunities. She has also served in key leadership roles with Deloitte’s Women’s Initiatives and Junior Achievement.

    • brenner@deloitte.com
    • +1 612 397 4705
    Shweta Joshi

    Shweta Joshi

    Assistant manager | Deloitte

    Shweta Joshi is an assistant manager with Deloitte Support Services’ Consumer Industry Center. She has nine years of experience in developing data-driven thought leadership on a range of themes in consumer products, including mergers and acquisitions, customer segmentation, digital commerce, cyber risk, regulations, and American pantry. In her prior role with Deloitte Financial Advisory Services, Joshi focused on goodwill impairment, bankruptcy and restructuring processes, and M&A research. In addition, Joshi is a CFA charter holder.

    • shwjoshi@deloitte.com
    • +1 678 299 9089
    Curt Fedder

    Curt Fedder

    Senior Manager | Deloitte Services LP

    Curt is a senior manager at Deloitte Services LP’s Center for Industry Insights and leads market research for consumer products. With expertise in consumer research, and a focus on brand equity, customer satisfaction, and advertising. Curt has led consumer research groups in consumer products and retail organizations. He has published articles in the Journal of Advertising Research and Quirks Marketing Research, and presented at market research industry conferences.

    • cfedder@deloitte.com
    • +1 312 486 3710

    Share article highlights

    See something interesting? Simply select text and choose how to share it:

    Email a customized link that shows your highlighted text.
    Copy a customized link that shows your highlighted text.
    Copy your highlighted text.

    How can consumer products companies stay relevant and be future-ready with analytics? has been saved

    How can consumer products companies stay relevant and be future-ready with analytics? has been removed

    An Article Titled How can consumer products companies stay relevant and be future-ready with analytics? already exists in Saved items

     
    Forgot password

    To stay logged in, change your functional cookie settings.

    OR

    Social login not available on Microsoft Edge browser at this time.

    Connect Accounts

    Connect your social accounts

    This is the first time you have logged in with a social network.

    You have previously logged in with a different account. To link your accounts, please re-authenticate.

    Log in with an existing social network:

    To connect with your existing account, please enter your password:

    OR

    Log in with an existing site account:

    To connect with your existing account, please enter your password:

    Forgot password

    Subscribe

    to receive more business insights, analysis, and perspectives from Deloitte Insights
    ✓ Link copied to clipboard
    • Contact us
    • Search Jobs
    • Submit RFP
    Follow Deloitte Insights:
    Global office directory Office locations
    XE-EN Location: XE-English  
    About Deloitte
    • Newsroom
    • Deloitte events
    • Our blog collections
    • Press releases
    • Press contacts
    • Corporate Responsibility & Sustainability
    • Report an ethics complaint
    Services
    • Audit & Assurance
    • Consulting
    • Financial Advisory
    • Risk Advisory
    • Tax
    • Deloitte Private
    • Legal
    • Sustainability
    Industries
    • Consumer
    • Energy, Resources & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • MENA Sovereign Wealth Funds
    • Technology, Media & Telecommunications
    Careers
    • Job Search
    • Students
    • Experienced Hires
    • Executives
    • Life at Deloitte
    • Alumni
    • Diversity and Inclusion
    • About Deloitte
    • About Deloitte in the Middle East
    • Privacy
    • Terms of use
    • Cookies
    • Avature Privacy

    © 2022. See Terms of Use for more information.

    Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see About Deloitte to learn more about our global network of member firms.