Executive Briefings

Emerging Nations Lag Behind on CPG, Retail Collaboration

Consumer packaged goods companies and retailers are natural allies. They have many of the same objectives - increased sales, cost savings, optimized processes and systems, and happy customers - and already work together in many parts of the world. But in emerging economies, such collaboration has yet to take off.

Emerging Nations Lag Behind on CPG, Retail Collaboration

In a recent survey of 500 leading CPG firms and retailers in India, Strategy& and the Federation of Indian Chambers of Commerce and Industry found that although 91 percent of respondents had participated in at least one collaboration initiative, most of these ventures were one-offs rather than sustained relationships. Only 15 to 20 percent of respondents reported that these collaborative projects had met their objectives.

It's a huge lost opportunity. Across Asia, Latin America, and, increasingly, Africa, sales channels are proliferating, demographics are shifting, and individuals are gaining greater access to online information about companies and their products. These trends have taken their toll on revenue growth and profits. In India, for example, sales growth has leveled off since 2010; operating margins in both the CPG and retail industries are holding steady at best. Working alone, frankly, is not really working.

Collaboration, however, could yield quick wins and short-term benefits - and could ultimately transform the complex and fragmented consumer landscapes of many emerging economies into more sustainable, more efficient business environments. Even limited cases of collaboration between CPG companies and retailers have led to positive, enduring industry-level changes.

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In a recent survey of 500 leading CPG firms and retailers in India, Strategy& and the Federation of Indian Chambers of Commerce and Industry found that although 91 percent of respondents had participated in at least one collaboration initiative, most of these ventures were one-offs rather than sustained relationships. Only 15 to 20 percent of respondents reported that these collaborative projects had met their objectives.

It's a huge lost opportunity. Across Asia, Latin America, and, increasingly, Africa, sales channels are proliferating, demographics are shifting, and individuals are gaining greater access to online information about companies and their products. These trends have taken their toll on revenue growth and profits. In India, for example, sales growth has leveled off since 2010; operating margins in both the CPG and retail industries are holding steady at best. Working alone, frankly, is not really working.

Collaboration, however, could yield quick wins and short-term benefits - and could ultimately transform the complex and fragmented consumer landscapes of many emerging economies into more sustainable, more efficient business environments. Even limited cases of collaboration between CPG companies and retailers have led to positive, enduring industry-level changes.

Read Full Article

Emerging Nations Lag Behind on CPG, Retail Collaboration