![]() Stay tuned for more CPG industry insights in GEP’s forthcoming 2023 CPG Outlook. With the cost of borrowing increasing because of interest rate hikes from central banks, CPG companies and retail brands must be creative and adaptable in finding ways to drive growth. They will be even more crucial in the event of a potential recession, which would put further pressure on consumers. The steps discussed above are important to maintaining profitability in what will no doubt be a challenging year for CPG companies and retailers. Taking Advantage of E-commerceĬPG companies and retailers have accelerated the adoption of e-commerce and are emphasizing data-driven supply chains to drive profitable omnichannel growth.` Impact of Inflation and Recession Increasing the effectiveness of marketing expenditures enables them to invest in strategic growth priorities when others may decide to cut down. Engaging in Strategic MarketingĪmid volatile and unpredictable market conditions, some CPG companies and retailers are increasing their strategic marketing efforts. The end result is a greater capability to control costs and price products in line with market fluctuations to maximize profitability. Using AI-powered tools for should-cost modeling helps firms understand the cost drivers in their production process and improve their negotiating power with suppliers. Lack of visibility into volatile commodity prices and cost drivers can lead to inaccurate pricing for CPG and retail companies. Should-Cost Modeling Using AI-Based Tools Under rapidly changing market conditions, strategic cost management can help free up working capital to drive growth. They should also focus on optimizing the cost of goods sold (COGS) by getting insight into the cost drivers in their value chains and taking a more strategic approach to cost management. Thus, CPG and retail companies are anticipated to divest their failing assets to help with areas of sourcing, product development, manufacturing and logistics. It will be essential to sell off underperforming assets to increase financial flexibility. However, there are other, better steps CPG companies and retailers should be taking in 2023 to help offset the rise in costs and maintain profitability. However, it is struggling with labor shortages, especially in the trucking industry.Īlso Read: COST CONTROL IN CPG: 3 WAYS FOR THE INDUSTRY TO STAY COMPETITIVE IN 2022 In Q3 2022, the company witnessed 12% growth in profit margin after increasing prices. Some CPG companies and retailers are attempting to increase sales or raise prices to offset the higher costs of production in an inflationary environment.įor example, Walmart is focused on providing value-for-money products to boost sales as consumers opt for low price options in an inflationary environment.Ĭoca-Cola increased prices in 2022 and is opting to do so again this year. While there are signs that inflation will peak this year, what can CPG companies and retailers do now to handle the inflationary pressures before prices eventually come down? Increase Sales or Increase Prices to Offset Higher Production Costs? Inflation was a major concern for CPG companies, retailers and consumers in 2022, and it’s likely to be the same in 2023.Ĭompanies are feeling the pinch from their suppliers, and consumers are getting a price shock. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |