Consumers continue to use digital commerce to purchase a range of products while demanding more transparency in their interaction with companies. Cost pressures, limited shelf space in major supermarkets and the threat from new business models will challenge many local consumer product companies.
Consumer product companies face a challenging and dynamic market place. Consumers are more empowered through digital channels and social media and can change and adapt their preferences and requirements at a rapid pace. On the supply side local manufacturers are faced with competition from imports and must improve efficiencies and product innovation to remain competitive.
Challenges and trends facing the sector:
- Restrained consumer spending due to lower consumer confidence and slowing economic growth.
- Demanding consumer requirements across multiple channels with consumers seeking more transparency in relation to product information and personal data.
- Increasing use of digital commerce and the growing importance of a company’s digital strategy.
- Emergence of new business models such as direct to consumer subscriptions and leaner more flexible organisations.
- Expansion of private label by larger supermarket chains, reducing shelf space for many national brands.
- High input costs relative to offshore competitors. Labour and supply chain costs continue to challenge the industry although recent lower fuel prices have offered some relief.
- Increasing use of customer data. This presents a challenge for privacy and security of personal information and also an opportunity to significantly increase the understanding of consumer spending habits.