ALEXANDRIA, Va.—The consumer products sector is entering 2023 with both optimism regarding financial performance and concern over ongoing disruption, according to Deloitte’s 2023 Consumer Products Industry Outlook, which surveyed 150 consumer products executives.
Seven in 10 respondents say their job is more stressful today than it was five years ago.
“Despite favorable tailwinds for the industry in recent years, executives’ stress levels today are no surprise. Record inflation, supply chain issues, labor shortages, global conflicts, climate change and a potential recession—each in isolation is challenging. Combined, they are overwhelming,” writes Deloitte.
The report points out that consumers' heads are likely spinning. Their context keeps changing and with it their behaviors. Major demographic, political, environmental, technological and cultural shifts are underway that forecast more change to come. Executives in the survey think keeping up with the changing consumer will be one of their greatest challenges.
“Consumer products, as an industry, is based on stability and consistency. Now the squeeze and whipsaw of change could make this one of the most difficult periods to navigate in recent decades,” writes Deloitte.
Here are five key takeaways from the survey.
- Consumer product executives have two minds about the year ahead. Eight in 10 respondents say they are neutral or leaning pessimistic about the global economy and geopolitical stability. However, despite these headwinds, executives are optimistic about both their company's performance (74%) and its strategy (80%).
- Labor concerns linger, but many see progress. This year, 42% of companies surveyed say that higher-than-normal levels of voluntary attrition are an issue, which is down 13 percentage points from 2022. More than half of executives either think labor shortages will be over in six months or are already no longer a problem for them. Only 8% think workforce issues will be extremely challenging for their company in the year ahead.
- Supply chain is still a top concern. Despite improvements from the height of pandemic disruption, 62% of CPG executives still expect supply chain issues to be quite or extremely challenging in 2023. Almost half (48%) of companies think “just-in-time” as a supply chain strategy will need to be replaced, and even more (57%) are worried about the reliability of supply from once dependable markets (57%).
- Inflation cannot be ignored. Despite record-high CPG prices, eight in 10 executives plan to raise their prices even further in 2023. And while those higher prices are helping boost revenue expectations (83% expect higher revenue in 2023), 56% still say sales growth will be a challenge.
- Amid these challenges, five priorities will enable profitability. Deloitte’s analysis found that profitable growth companies are succeeding because of investments in five primary areas: 1) embracing a changing consumer; 2) going for market share; 3) creatively transforming; 4) driving data through supply chains; and 5) prioritizing ESG.