The top goal for the majority (93%) of consumer products (CP) companies in 2022 is generating more revenue, according to the latest Consumer Products Industry Outlook from Deloitte. To get there, many companies are focusing on improving trust with consumers and other stakeholders.
Deloitte drew from its prior research and client work for the report, as well as a survey of 100 senior executives from food and beverage, household goods, personal care, and apparel companies, most of which are multinational companies with more than $1 billion in revenue. They found that two-thirds of surveyed companies are making trust their highest priority this year, and most are investing in trust-building strategies and technologies.
Top challenges for CP companies create trust issues
Nine in ten executives said supply chain issues would be the greatest threat to their growth in 2022. Among their most difficult supply chain challenges are securing key inputs for products in a timely manner (35%), difficulties with international transportation (28%), and not enough labor to keep up with demand (15%).
Speaking of labor, 60% of CP executives said labor shortages have already proven to be a threat to growth this year. And the labor shortage problem isn’t going away any time soon — most CP companies said they expect the increased voluntary separation to last throughout 2022 (58%). Almost 80% of surveyed executives cited the labor shortages that affect quality as a risk to consumer trust.
Costs are also rising. Already, 90% of companies predicted that their input costs will increase this year, and 80% plan to pass those costs onto consumers by raising prices. But if prices go up too much, companies run the risk of damaging trust — for example, 84% of consumers who noted higher prices in fresh groceries believed prices were raised more than justified. And 76% of companies believe this level of price increases causes loss of trust.
So how can CP brands reverse or prevent the damage? Deloitte identified three primary strategies companies are using to build trust — increasing transparency, expanding digital engagement, and investing in the future of work.
Nine in ten executives said brands that aren’t transparent are most at risk of losing the trust of their customers, which is partly why 60% of companies are making at least a moderate investment in boosting transparency with consumers and stakeholders this year. Some of the specific areas they’re investing in include:
- Collecting more detailed data from their supply chain (45% significant, 42% moderate)
- Increasing environmental, social, and governance reporting (45% significant, 41% moderate)
- Improving the level of transparency they provide to consumers and other stakeholders (32% significant, 57% moderate)
To be successful, transparency initiatives require not only underlying infrastructure to help companies collect data, but the ability to share meaningful data in a format stakeholders can understand.
Promoting digital engagement
Half of CP companies agree that consumers lose trust when brands don’t engage with them in a personalized manner.
To improve their interactions with customers, the CP industry will have to pay close attention to the differences in how consumers are emerging from the pandemic. Some consumers are now in a better financial position, so they may be looking to spend more on niche and premium products. Others will be searching for the best value at a time when prices are increasing.
Some of the ways CP brands are investing in digital engagement in 2022 include:
- Improving their ability to personalize the consumer experience (63% significant, 26% moderate)
- Creating or improving their direct-to-consumer sales channel (57% significant, 31% moderate)
- Adopting technology to improve their ability to engage with consumers (54% significant, 34% moderate)
Preparing for future of work
Eight in ten surveyed executives said that if labor shortages impact quality, consumers lose trust in the company. And 90% agree that employees become less trusting of their employer when they don’t experience a sense of belonging. Maintaining trust in this area will come down to building a future of work through investments that keep people at the center.
Here’s where companies are investing in their workforce:
- Diversity, equity, and inclusion (48% significant, 39% moderate)
- Recruiting new people (34% significant, 46% moderate)
- Improving employee retention (28% significant, 45% moderate)
- Changing the composition of the workforce (20% significant, 46% moderate)
More companies are putting their faith in diversity, equity, and inclusion (DEI) to win the war for talent. More than six in ten (64%) CP companies have goals and standards for DEI, 58% are measuring their performance in this area, and 55% prioritize DEI in their hiring and retention efforts.
What’s next for the industry?
When asked about the most important areas for innovation in 2022, more than half of companies (54%) said sustainability, ranking it far above other innovation areas like developing entirely new products (10%), services around key products (9%), and more varieties of existing products (9%).
Deloitte also revealed five big ideas that could change the CP industry over the next ten years — digital goods, automated buying, ambient computing, edge manufacturing, and post consumption. Automated buying could come into play if consumers begin to rely on auto-replenish systems, whether through DTC channels or online retailers. And while sustainability is already influencing post consumption, we could see new regulations on packaging and consumers increasingly choosing products that create less waste.
Regardless of how these trends and opportunities take shape in the industry over time, trust will play a critical role in how well companies are able to adapt to changes and remain profitable in the coming years.
More from Deloitte
- Is the Food Industry Ready for the Future of Work?
- DEI Training, Leadership Development Help Food Companies Tackle Workforce Challenges
- The Rising Demand for Digital Skills in the Food Industry
- Fresh Food Sales Up, With Fierce Competition From Frozen