2023 consumer goods industry outlook
OUTLOOK | August 29, 2023
Authored by RSM US LLP
Consumer goods trend #1: Technology is key driver for growth
Targeted investment is key for driving growth for consumer goods companies
Strategic investments for consumer goods companies need to include data analytics platforms and generative AI.
Strategic investments necessary for growth
Consumer goods businesses are gearing up for post-pandemic growth through strategic technology investments. Reduced imports in 2023 signal inventory concerns and changing consumer preferences. To manage excess stock, discounts are being employed, though slow-moving inventory could impact margins. As consumers shift towards experiences, companies are embracing data analytics and discounts. Understanding consumer debt and stability is vital. Despite early hype, businesses are now focusing on AI and tech for inventory efficiency. Middle market companies must choose tools wisely to stay competitive and expand effectively.
Consumer goods trend #2: Economic headwinds pose a challenge
From growth to profitability
Consumer goods companies will shift focus from growth to profitability.
Reexamining operational strategies
Consumer goods companies that benefited from elevated demand during the pandemic are reexamining their operational strategies as consumers become more strategic about spending and look for value in their purchases. This shift is driven by deflationary price pressure, production costs, a tight labor market, and increasing borrowing costs.
As consumer demand decreases, middle market companies should focus on maintaining profitability by controlling costs, automating processes, removing low-margin products, and getting rid of underperforming product lines. Supply chains should be a primary area for review, and manufacturing hubs should be a primary discussion point.
New home sales will affect home products consumption through 2023
Home products companies should be prepared for a sustained period of economic pressure.
The impact of declining home sales
Historically, consumption of home products correlates to new home sales, as many homebuyers refurnish or upgrade appliances within a year of a new home purchase. This correlation shifted during the COVID-19 pandemic as a result of the surge in mortgage refinancing and shifts in consumer spending toward goods and away from services.
In periods of uncertainty, the effective use of real-time data to manage the business will differentiate companies looking to thrive versus simply survive.
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This article was written by Mike Graziano, Nick Stuart and originally appeared on Aug 29, 2023.
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