Consumer products companies aim to increase revenue in 2022
The majority of multinational consumer goods companies (93%) have set revenue growth as their main objective this year compared to the previous year, following the bold decisions adopted in 2021 which are now bearing fruit, according to Deloitte 2022 Consumer Products Industry Outlook. They also see some challenges posed by ongoing supply chain disruptions, labor shortages and rapidly rising costs. On the other hand, most respondents believe that 2022 will mark a battle for trust – 95% of them consider organizations with high consumer trust to be more resilient.
According to the study, at least half of the companies surveyed expect their operating margins to increase this year, despite rising costs. However, existing challenges could limit the industry’s ability to achieve the expected growth. Nine in ten respondents see supply chain issues as the biggest threat to growth, and six in ten see labor shortages already threatening growth this year.
The study also shows that 90% of consumer goods companies believe their costs of entry will rise in 2022, amid rising inflation, and eight in ten believe they will partially transfer the additional costs into the prices. But only half of businesses (54%) believe prices can be raised without affecting consumer demand, reporting that some consumers will not be able or willing to pay more for the same products.
“Inflation is currently experienced by all economies in the world, including the European one, and the phenomenon is most visible in the consumer goods industry, which directly affects the final prices paid by consumers. However, in Romania, companies in this field benefit from strong household demand. According to the latest data from the BNR, producers of consumer goods, especially non-durable goods, less affected by the component crisis, recorded the most favorable growth rates in the third quarter of last year. For this year, the authorities estimate private consumption on a positive trend (+4.5%), an encouraging aspect for the industry,” said Raluca Baldea, Tax Partner, Deloitte Romania, and industry leader in retail and consumer goods.
To maintain or increase the trust of their stakeholders, consumer goods companies intend to act in three directions: increasing transparency, developing digital engagement and investing in the future of work. Consumers lose trust, particularly when companies are not open and transparent (90%), fail to meet consumers’ environmental, social and governance (ESG) expectations (84%), when labor shortages work affect product quality (79%), or when price increases are more than justified (76%). Nine out of ten survey participants say the industry needs to do more to maintain trust.
Finally, the study presents five ideas that could change the industry over the next ten years: increase sales of digital goods (many argue that the metaverse is not so much a place, but a time when consumers begin to appreciate large components of their digital life more than their physical life), automated shopping (77% of respondents believe consumers will automatically restock fast-moving consumer goods in ten years), ambient computing (everyday household goods enabled by a package of digital services, which could come to life automatically when consumers use them), the local factory, reinvented due to the interest in shorter supply chains, and the post-consumer vision, according to which consumers will make more purchasing decisions based on sustainability, for reasons of environmental protection and t resources or due to rising prices.