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Safeguarding the Future of the Consumer Goods and Retail Industry

The world is running out of its natural resources. Global demand for food, water and energy continues to rise rapidly, particularly as economic growth in emerging countries puts pressure on the world’s ecosystem. With potential for demand to outstrip supplies in the next decade, companies must improve sustainability with respect to how products are made and delivered.

Mirrored alongside this, digitization is changing consumers’ lives and their shopping behavior. They expect greater transparency into product information, availability and price through multiple channels and devices—and quickly.

With so many critical issues facing the consumer goods and retail industry, the consumer goods and retail industry must better implement critical initiatives to safeguard the future and drive change across the industry.

The “Future Value Chain 2022: Industry Initiatives Address Challenges of the Digital World and the Fight for Resources” report from Capgemini and The Consumer Goods Forum (CGF) calls the consumer goods and retail industries to address two important trends.

“We identified the two key megatrends of ‘Digital World’ and ‘Fight for Resources’ as likely to have the greatest impact on the consumer goods and retail industry in the coming five to 20 years,” confirmed Thomas Storck, Member of the Management Board, Merchandising & Multi Channel Retailing Officer, Galeria Kaufhof (a subsidiary of Metro Group), and Co-Chair of The Consumer Goods Forum’s Emerging Trends Steering Committee. “Digitization is changing consumers’ lives and shopping behavior. At the same time, global demand for resources—like food, water and energy—is rising rapidly with the potential for demand to outstrip supply in the next decade. The industry must work together to develop concrete milestones to respond to these megatrends and build an action plan to move these from theory to reality.”

The CGF and Capgemini worked alongside 200 consumer goods and retail executives in an exhaustive process that consisted of analyzing research; an online survey; a crowd-sourcing exercise; and workshops to develop the “Future Value Chain” series of reports to assess emerging trends, their implications and present initiatives.

“The Future Value Chain program underpinned our industry’s ethos in ensuring the consumer is at the heart of our thinking, every step of the way, no matter what region the purchase is being made in or where they fit into the wider ecosystem,” said Kees Jacobs, Principal Consultant in the Consumer Products and Retail Global Sector at Capgemini. “The series of reports has been produced by the industry, for the industry.”

The collaborative exercise with the consumer goods and retail executives led to the selection of three initiatives that address the “Digital World” and “Fight for Resources” megatrends and highlight the need for swift action.

  • Consumer Engagement Protocol: This initiative is designed to address the changes being witnessed in consumer behavior. The potential power of user-generated and social media technology platforms to disrupt established institutions and the associated brand equity is undeniable. However, there are opportunities to connect directly with consumers as shoppers look for improved transparency in digital channels. There is an inherent need to mitigate risks from privacy invasion. Increasingly, companies recognize the requirement to be proactive versus being regulated in this area but currently there is no voluntary global commitment concerning this in the consumer goods and retail industry. The project is focused on establishing guidelines for digital engagement with consumers.
  • Next-Generation Product Identification: Today, in a world of rapidly expanding online commerce solutions, barcodes are unable to provide companies and consumers with the rich digital product information they seek. Consumer barcodes do not uniquely identify product or package variations that carry the same product identifier, meaning minor product variations cannot be accurately disclosed. This initiative focuses on connecting the dots to improve supply chain transparency, efficiency and traceability. The goal is to provide the industry and the consumer with accurate product information by using new technology capabilities for product identification to replace the current barcode.
  • Sustainable Packaging Coalition: This potential initiative is designed to establish a coalition of companies to work together on non-competitive topics to improve the sustainability of packaging across the different value chain stages. The focus of potential activities will be around the three R’s of packaging and packaging components: Redefine, Reduce and Reuse.

 

“This is a historic moment,” said Peter Florenz, Corporate Vice President and Global Head of Governmental Relations and Public Affairs, Henkel AG & Co KGaA and Co-Chair of The Consumer Goods Forum’s Emerging Trends Steering Committee. “The thorough process across desk research, online surveys and crowd sourcing as well as a workshop has helped achieve a defined roadmap for us as an industry to follow and commit to deliver on the recommendations. This is an exciting time to be a consumer—they are in control. The next 10 years will mark a radical change in how products are sourced and purchased.”

The Future Value Chain program. established over the past seven years, focuses on extensive industry research and analysis. More than 200 executives from some of the leading consumer goods and retail organizations worked together as part of the program to focus on how, through a set of collaborative initiatives, the industry can continue to bring benefits to consumers. This effort was triggered by the significant changes taking place in society, consumer behavior, the environment and technology.

“The industry is at a critical tipping point and must ensure its future by implementing these initiatives to drive innovation,” confirmed Sabine Ritter, Executive Vice President, Strategy, Industry Initiatives, Strategic Alliances at The Consumer Goods Forum. “Success is hard to quantify but we must focus on collaboration and non-competitive improvements that will protect consumers and the vital components that will create one of the most innovative and forward-thinking sectors. Today we are also announcing that The Consumer Goods Forum’s Board of Directors approved the action plans to move the proposed initiatives forward.”

To access the full report, visit http://bit.ly/12hQOZr.

This report is courtesy of Capgemini and The Consumer Goods Forum (CGF).

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