Cases of agile innovation and transformation of consumer goods enterprises

In the last five years （2016-2021） in 3 Great disruptive force ： Reshape the value chain ; The scale advantage is eroded ; And the rapidly changing global consumer population and preferences , Creating new winners and losers in the consumer goods industry , The enterprises that perform well are those that catalyze and utilize it . Seven leading benchmarking companies in this study agile Innovation transformation How to use subversive power ？

Consumer goods industry 3 Great subversive force

In the past five years （ from 2016 To 2021 year ） in , The performance of shareholder returns in the consumer goods industry has been lagging . For many consumer brands 、 For manufacturers and retailers , This is a retribution ; from 2006 Year to 2016 year , The industry has enjoyed excellent shareholder returns over the past decade .

The near-term prospects since the outbreak are still full of challenges . Many consumer goods companies have ignored price increases in certain categories . They also avoided the most serious global supply chain problems . However , Three interrelated disruptive forces that adversely affect the industry still exist ： Reshape the value chain ; The scale advantage is eroded ; And the rapidly changing global consumer population and preferences （ See chart 1）.

These forces may intensify . They will bring huge unknown problems and great opportunities to consumer goods companies . They can open the door to innovators , Let them launch new products and services , And new ways to buy and receive them .

The following is the expression of disruptive forces in the consumer goods ecosystem ：

Disintermediation in the value chain
At multiple points in the entire industry value chain —— From the upstream of the supply chain to the downstream of retail —— New entrants are breaking up traditional relationships . In the field of payment and distribution Square and DoorDash Companies such as , And from e-commerce platform giant Amazon to fast-growing start-ups （ Such as Dollar Shave Club） Digital marketers , By focusing on decentralized activities , Get a lot of value in a short time, which was previously bundled into the integrated Consumer experience in . They are good for consumers 、 The value proposition of customers and suppliers is novel , They are not necessarily consistent with the success of traditional consumer necessity enterprises .

Erosion of traditional scale advantage
Consumer goods companies have long enjoyed scale advantages . One of them is to manage large-scale manufacturing and complex global distribution networks . The other is the power that affects the retail experience . The third is through mass marketing at the same time The ability to interact with many consumers . However , New technology makes it easier for light capital start-ups to enter the market at all links of the value chain than ever before , And respond flexibly to customer preferences . for example , Direct to consumers （DTC） The upsurge is to effectively outsource design by new brands 、 Driven by the capabilities of manufacturing and self operated e-commerce . Challengers can also obtain a large amount of data and analysis about customer preferences at a low cost .

The global consumer population and preferences are constantly changing

Overall speaking , This industry is doing a good job of listening to customers and consumers and tracking and predicting trends . However , For people Consumers whose mouths are changing Come on , New technology makes it easier for them to find 、 Understand and turn to new products . Consumers are increasingly making informed decisions , Not only for brand purposes 、 The formula of the product or its characteristics , Also based on how they find these products 、 How to buy and use them immediately .

The latter consideration —— The impact of products on the environment —— Forcing consumer goods companies to make difficult choices in terms of sustainability . Even though Consumer stated preferences There is a significant gap between it and its actual purchase behavior , But the risk of falling behind the trend is real .

In the past 5 Consumer goods enterprises TSR Poor performance

The study reviewed the financial data of listed consumer goods companies worldwide in the past five years , In order to have an in-depth understanding of how the best performing companies deal with and make use of these three disruptive forces .

Firstly, we study 2016 - 2021 Total shareholder return of the industry during (TSR) Compared with other industries . In short , The consumer necessities industry performed poorly . food 、 drinks 、 Housewear & Furnishings 、 Hygienic Products 、 The total return rate of shareholders of listed companies such as tobacco and alcohol is less than half of the average level of all industries in the same period . If the shareholder is 2016 year 1 I bought 100 The consumer goods index of the dollar , So to 2021 end of the year , Their investment will be from the broader market index 236 The dollar goes up to 143 dollar （ See chart 2）.

7 Leading benchmark enterprises stand out from the crowd

Although the overall industry performance is poor , However, seven enterprises not only perform better than the whole industry , And is implementing Innovation transformation Excellent performance in strategy .

How did they do it ？ They strive for business model innovation , Changed the way they operate . therefore , We call them leading benchmark enterprises of consumer goods （ See the method description at the end of the text ）.

These benchmarks come from many places in the field of consumer goods —— From product brands to retailers —— And there are different business penetration all over the world . Although some of their excellent financial performance is undoubtedly due to the strong category downwind （ Especially in the case of high-end beauty products ）, But the wide variety of Companies in leading benchmarking enterprises shows , In addition to belonging to the correct category , There are other things happening at the right time .

Are the seven leading benchmark companies uniquely aware of three disruptive trends ？ Not at all . contrary , They are determined to take a more active Agile action , Take the lead in subversion . for example , stay Predicting consumer demand aspect , These enterprises are establishing direct Consumer channels Far better than peers . Including the development of new distribution channels , Significant new figures have been established DTC Business model . These seven transformants not only focus on their traditional business ; They go beyond the transformation of traditional value chain —— In some cases, it even accelerated the transformation （ See chart 3）.

Disruptive forces will create new winners and losers in the field of consumer goods . In the next ten years , The enterprises that will perform well will be those that catalyze and utilize them .

How can benchmarking enterprises do it ？

In the past five years , How do the seven leading benchmarking companies make use of disruptive forces ？ We found that they are surprisingly similar in four aspects ：

1. To develop Innovation transformation Polaris target
in consideration of change Various needs , Executives need to agree on the direction of the company in the next decade and beyond 、 Formulate and clarify clear plans .

Estee Lauder The recent success stems from the CEO Fabrizio Freda Clear vision and focus on execution .“Fabrizio 100% Be clear about our priorities and how we will achieve them . When it comes from the top , It's really helpful ,” A former executive told us . During his tenure , Extensive changes and strategic transformation Include ：

Focus on the Chinese market and invest , At the same time, negotiate with tmall and other major partners , To get high-quality positioning , To protect and enhance its brand reputation .

take Lauder Our brand is seen as a portfolio rather than an independent company , Transform culture from “ Trend driven ” And the tradition based on intuition has changed to be more data-oriented —— Actively invest in consumption trends . Through acquisition, it has established a good reputation as a Founder brand place .

Again , Large retailers have announced that e-commerce is crucial to their future . Follow its Polaris declaration , Has adopted an active acquisition and investment strategy . It invests more than 200 Billion dollars to acquire more than 15 E-commerce companies . These include 2016 Annual acquisition Jet.com To stabilize their position as online players —— And inject digital talents into the company —— as well as 2018 In the past years 160 US $billion acquisition of Indian e-commerce companies Flipkart, This is by far the largest acquisition .

2. Look at the business portfolio to align with Polaris goals
then , They made difficult decisions , Give up excellent businesses that are no longer suitable or have limited growth potential , At the same time, the new businesses and capabilities to be pursued were clearly identified .

Nestle Has been steadily shifting its focus from food and beverages to nutrition 、 Health and health care , And continue to make strategic portfolio changes . In recent years , It divested its candy and water businesses in the United States , With “ In our view, the future growth will be strong and [ Sure ] Invest and innovate in a range of leadership positions ,” Mark, CEO · Schneider (Mark Schneider) Express . This includes pet care 、 Coffee and baby nutrition .

Another benchmarking is Shiseido Successful practice . CEO Yayan Yugu is 2014 At the helm in , The company is at a standstill , In low profitability and Internal change Struggling under resistance .Uotani yes Shiseido140 The first external CEO in many years of history , He led a careful review of the brand portfolio .“ People think about the company's strategy and which brands are Which consumers are confused ,” A former executive told us . Yugu decided to focus on the company with more professional knowledge “ Reputation first ” brand . The company signed a new deal to expand its high-end product portfolio and divest its personal care product line . By strengthening the focus ,Shiseido Focus its leadership and investment on the booming Chinese market . This led to a sharp increase in total shareholder returns .

Focusing on the business portfolio has also boosted Ocado Destiny . It's on 2000 Founded in England in , It is an online supermarket platform , Later, it sold its proprietary warehouse and shopping technology to grocery retailers around the world . The business is Ocado Solutions and Logistics Department , from 2016 Year to 2019 year , Income is expressed in 80% Compound annual growth rate of . The company has repositioned itself as a software and robotics business .

3. Direct to consumers DTC—— Digital touch and interaction

from 2015 Year to 2021 year , The field of consumer goods is about 85% Of venture capital funds have gone to new retail 、 E-commerce and logistics platform . This is a harbinger of continuous innovation and distribution disruption . Seven Innovation transformation Benchmarking companies take full advantage of this trend , Create new channels and new DTC Business model , With Satisfy consumers The needs of 、 Time and way . No matter how strong the brand is , Consumers increasingly value those who obtain products in the most convenient way . in fact , Consumer search 、 Find out 、 The way to acquire and dispose of products is increasingly becoming a key part of products .

Estee Lauder Developed personalized skin care 、 Virtual consulting and product trial loyalty program , And in its 50 Multi national 1,700 A single platform approach to providing a unified customer experience on e-commerce websites .

The early pioneers of e-commerce were Nestle.1990 The mid - , With Nespresso Introduction of coffee machine and coffee , It becomes directly oriented Innovators in consumer sales . Now , It is the most profitable annual turnover of the company 60 $100 million business . From then on ,Nestle Expand its direct marketing to other businesses . In terms of meal bags , It bought American Freshly And English Mindful Chef. In pet care , Its subsidiary Purina has increased the assets of Lily kitchen, a brand of healthy pet food . Healthy pet food is one of the fastest growing market segments , Year-on-year growth 10%.

In addition to direct , Understand the diffusion of consumer data It can also point out the way for the company to win in new fields .

With Walmart For example . It actively uses data to launch digital focused businesses . The company regards millions of visitors to its website and stores as marketing audiences , Created Walmart Connect, This is a fast-growing advertising business . It also launched free shipping 、Walmart Health and WalmartPhonePe Characterized by payment services Walmart+ Omni channel platform . from 2019 Year to 2020 year ,Walmart The online market size of has doubled .

4. Create something that constantly embraces change Agile culture

To prepare for the future , The company must establish a culture , Enable employees to quickly adapt to new challenges 、 competitors 、 Ideas and trends . They must emphasize innovation , And ensure that a diverse workforce plays a key role and has a strong voice .

2017 year ,Woolworths Launched its innovative business WooliesX, To make major investments in strategic priorities . The Australian company said , from “ Electronic Commerce 、 technology 、 The smartest minds in media and data ” Provide support ,WooliesX Creating “ A truly connected customer experience , This experience is humanized and warm , Driven by our goals ： Make our customers' daily life easier .”

Again , The leaders of Tata consumer goods in India also regard subversion as the norm . In their view , Product life cycle is getting shorter , Especially since the prevalence of arrogance . Besides , They see the younger generation demanding sustainability 、 No plastic packaging 、 Innovation in health and wellness and guilt free indulgence . The company gives priority to The team Build innovation ability , And generate a lot of powerful ideas , Have deep knowledge of products and functions , To meet product development 、 manufacture 、 Sustainability and regulatory requirements . The company provides Tata with strong incentives for management to take risks and invest in new products . It supports this code of ethics , Because it is willing to bear the bottom line for failed products .

Shiseido It must also reshape its culture to meet continuous change . As the global market becomes more and more important , Its organizational structure is viewed from two centralized areas （ Japan , Place of incorporation and “ The rest of the world ”） Transform into an internationally decentralized structure , team leader Six key areas .Shiseido We are also committed to building a more inclusive and diversified culture . This is reflected in the diverse new leaders appointed as key roles , They are far away from the leadership dominated by Japanese The team .

Summary and Enlightenment

An indelible disruptive trend for the global consumer goods industry —— Disintermediation in the value chain 、 The erosion of traditional scale advantages and changes in the demographic structure and preferences of global consumers —— It only accelerates .

in consideration of Web3 And metauniverse and other emerging support technologies , And pandemic 、 Inflation 、 Additional socio-economic impacts from geopolitical instability and polarization , They will work in new ways .

The success of the seven major consumer goods transformation and innovation benchmarking enterprises shows , Every traditional brand or retailer can Far reaching changes , Drive growth and create a positive impact for stakeholders . Those who adjust their strategies according to Polaris' goals 、 agile Adjust the investment portfolio 、 With DTC Patterns and Consumers establish direct interaction Enterprises that market and let their culture actively embrace change will become 2020 Brand leaders in the new decade .

appendix - How do we choose the consumer goods enterprises Innovation transformation Benchmarking
In order to screen consumer goods enterprises Innovation transformation Benchmarking , We reviewed the headquarters located in 56 A country 、 Income exceeds 10 $ 600 Performance of listed consumer goods companies . This determines 34 Companies that meet two criteria ： They achieved the top quarter of total shareholder returns in their sub categories , And in its country / Top three regions . Last , We have identified those factors that drive growth from new businesses or new business models outside our core businesses , As a result, we have written in this report seven Innovation transformation Benchmarking .

Link to the original text ： Innovation cases ｜ from 7 See the agile innovation transformation of consumer goods enterprises from a leading benchmark

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