Consumer Markets Overview
In the last few years a number of trends have emerged making market conditions increasingly more challenging and competitive.
Power shift from Manufacturers to Retailers
Direct contact with customers has given retailers the power to influence purchasing decisions or even promote their own brands in direct competition to manufacturers. This has generated increased cost competition and an even stronger need for differentiation in consumer product companies. Being just right is no longer enough to be successful; what is needed is excellence.
Loss of Customer Loyalty
Difficult economic conditions and a shift of customer preferences from products to experiences means that there is less disposable income available which in turn increases pressure for lower prices. As much as 50% of sales in super markets are done through promotions and an increasing number of consumers have traded loyalty to their favourite brands with more cost compelling products on offer. The aggressive calendar of promotions swiftly shifts consumer preferences and diminishes the power of brands. Businesses have to react to this either by being more efficient or by increasing their customer perceived value to encourage repeat business.
Global Sourcing
More and more production is shifting to new emerging markets with a clear focus on cost reduction. As a consequence of this, complex supply chain networks are developing fast and the need for visibility and flexibility is crucial to making sure that fulfilment is performed effectively. There are, however implications on work ethics and health and safety. Socially responsible companies have to invest to ensure manufacturing plants in the foreign countries operate within the limit of acceptable international standards. Short term cost savings may end up backfiring when the use of child labour or other non-ethical working practices are discovered. Businesses that want to be market leaders have to lead by example in this respect.
RFID
Radio frequency identification devices present a significant opportunity for supply chain efficiency and visibility, fraud prevention and increased customer service. The slow uptake of this technology in 2005 has meant that the cost of implementation is still very high due to most implementations being 100% bespoke. The key persisting question is "who will bear the cost of the RFID tags? With high tag volumes there is a significant erosion of margin for manufacturers. Not all players are big or aggressive enough to push their suppliers along the path towards widescale adoption of RFID with the corresponding economies of scale. The opportunity remains considerable and businesses need to be vigilant in deciding how they are going to approach this issue.
Whether you have issues with your merchandising processes and systems, your supply chain and distribution, the finance and human resource processes, customer relationship management, or even pure technology issues we may be able to help.
If you would like to discuss how Leadent’s approach to achieving real benefits and innovation in the Retail Sector can help your organisation then please contact us on 08707 664 884 or at info@leadent.com.