Consumer CEOs are surprisingly optimistic

If any industry should be pessimistic right now, it’s consumer markets. CPG companies are struggling with supply chain disruptions and reduced purchasing power among consumers. Retailers face escalating demands about speedy delivery and other expensive services. Yet in PwC’s 2023 Global CEO Survey, consumer markets CEOs were less pessimistic than the overall sample. Nearly 40% of all CEOs say that their company will no longer be economically viable in 10 years on its current path, compared to just 31% for retail CEOs. That disparity is surprising, but consider that most other industries benefited from favourable market conditions prior to 2022, making the macroeconomic volatility and inflation seem like a major disruption. For consumer markets companies, those are only the latest challenge—on top of a heap of others that have been playing out for years. An 8% inflation rate and a potential worldwide recession? Just another tough day at the office.  

Still, as accustomed as CM CEOs are to complex challenges, they haven’t yet figured out how to solve many of them. (And those challenges aren’t going away.) Competing in the current environment requires a focus on three priorities:

1. Get physical assets off the balance sheet. Rather than owning everything, companies can franchise locations, lease them, and operate them through joint ventures, among other steps.
2. Invest in data. Retailers have firsthand access to customer data, but they can leverage it more effectively to understand consumers and tailor products and services. CPG companies are developing direct-to-consumer models with the same objective. In some cases, companies can even build a separate business—and profit pool—based on generating insights from consumer data.
3. Redesign the organization to reduce costs. Some companies may opt to outsource some functions to specialists, in non-customer-facing areas like shared service centers, technology, or marketing.

The common thread among all three of these moves is that they make companies more streamlined, agile, and flexible.