How the COVID-19 pandemic is changing the consumer goods landscape - Consumer Goods
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Consumer Goods How the COVID-19 pandemic is changing the consumer goods landscape
How the COVID-19 pandemic is changing
the consumer goods landscape
The COVID-19 crisis demands the utmost from people, governments, health care systems,
financial markets, and almost any business across the globe. The impact of the virus on
How the COVID-19 crisis chan
demand varies dramatically, depending on the product category (figure 1). This will present
very different challenges and opportunities for manufacturers and retailers in the consumer
goods industry in the coming months.
the consumer goods landscap
Indicative
Fresh F
Refres
Demand
Non-es
Demand
(A)
(B) items
(C)
Food, H
Beauty
Person
Before
Before During
During After
After
COVID-19
Covid-19 COVID-19
Covid-19 COVID-19
Covid-19
Current observation based on press releases and expert feedback
(A) Fresh Food & Refreshments
Assumption based on expert discussion and historic crises analysis
(B) Non-essential items (Luxury, Clothing, etc)
* Footnote | ** Footnote 2 | *** Footnote 3
**** Footnote 4
(C)
Source: Porsche Consulting
Food, Home, Beauty & Personal Care
CO-Standard_EN_4.1.potx
Current observation based on press releases and expert feedback
Assumption based on expert discussion and historic crises analysis
© Porsche Consulting
Figure 1. How the COVID-19 pandemic is changing the consumer goods landscape
How the COVID-19 pandemic is changing the consumer goods landscape 02The crisis has rapidly changed consumer behavior. On the one (figure 1, category C). Zalando, an established e-commerce
hand, the hoarding of food, home care, and beauty and per- player, reported declining sales for their online business.2
sonal care products has put global supply chains under pres-
sure (figure 1, categories A and B). This has led Amazon to pri- After the crisis, when consumers feel safe again and initial
oritize high-demand categories and stop delivery of others.1 panic has faded, their attention will likely switch to nonessen-
It is likely that categories now in high demand will eventually tial categories. It is possible that, for a short while, demand
plunge and then return to normal after the crisis. will increase beyond what was considered normal before
the crisis. Consumers will start shopping again and “reward”
On the other hand, luxury goods, clothing, and other nonessen- themselves in the period following isolation.
tial items are being almost entirely neglected by consumers
Reacting to the situation and preparing for the post-crisis period
Businesses challenged by the coronavirus must address three fields of action:
01 02 03
Protect and preserve Minimize risk Review the product
the workforce’s health in the supply portfolio, with a
and ability to work chain focus on volume
Safeguard human resources and prepare for increasing needs to come
The top priority is to protect and preserve employee health Cooperation with other industries is an option for companies
and ability to work—especially in operations. This means min- that require extra workforce during this high-demand phase.
imizing risk by distributing shifts and work breaks throughout For instance, ALDI is temporarily hiring McDonald’s workers
the day to reduce worker contact to an absolute minimum. for food retail, and airport workers are switching to logistics
An advanced example would be the development of individual tasks in the CPG sector. Whether demand is increasing or de-
timetables, so that employees start at different times during clining, the use of digital tools can be key to keeping employ-
the day without disrupting production. Furthermore, it is im- ees safe and utilizing available human resources efficiently.
portant to strengthen hygiene regulations: daily temperature Companies with decreasing demand should not only take
checks before starting work, mandatory use of masks, main- comprehensive measures, like running down work-time ac-
taining distance between employees, and regularly scheduled counts or introducing short-time work (Kurzarbeit), but also
disinfection of the workplace are potential measures. keep critical assets at the ready for a quick restart of produc-
tion. The smart use of currently available resources for such
Increasing demand means adjusting the workforce accord- measures as preventive maintenance, planned downtime in-
ingly, such as introducing temporary additional shift work, terventions, and construction will result in a competitive edge
changing shift patterns, or adding temporary workers. At food to jump-start the business and create an upswing in demand
retailers, administrative employees can support sales staff. after the crisis.
1 New York Times, March 17, 2020. | 2 Der Aktionär, March 19, 2020.
How the COVID-19 pandemic is changing the consumer goods landscape 03Ensuring supply is a critical success factor in navigating the crisis
As a first step, companies will need to set up robust interdis- oration models can help. Setting up task forces to ensure
ciplinary crisis teams in physical or virtual task force environ- critical supply of raw and packaging material are essential to
ments, centrally collecting all relevant information. Their main reduce the risk of shortages and find alternative suppliers. If
goals are to closely analyze changes in demand for different international supply chains are at risk, companies should ac-
product categories and to complete risk assessment and mit- tively search for nearshore or regional suppliers.
igation of production and transport capacities.
Businesses struggling with low demand should set up action
Most companies maintain business intelligence tools to col- plans with those suppliers who cannot be replaced to ensure
lect point-of-sales transaction data, enabling them to quickly supply after the crisis. Intense exchange and increased collab-
assess demand swings. Observing altered demand behavior oration with suppliers are key for a quick restart.
in countries struck earlier by the virus also helps predict buy-
ing behavior in Europe and the US. Availability and restocking
at the point-of-sale must be top priority; alternative collab-
Rethinking and adjusting product portfolio
Under normal circumstances, higher variance in the product ing a team to oversee product demand and critically evaluat-
portfolio means higher turnover; however, the current abrupt ing product requirements is crucial. Keeping a close eye on
changes in demand call for companies to reassess their port- supply risks vs. brand perception by regularly checking con-
folios. Focusing on the right items ensures product availability sumer behavior facilitates proactive measures.
and efficient use of resources. This means that a temporary
reduction of product portfolio can help to ensure increased In times of crisis, a critical look at the product portfolio and
demand. Currently, consumers will accept reduced variance the ability to quickly adapt and introduce new products is a
for the sake of availability. clear competitive advantage.
While analyzing and adjusting product portfolio, it is import-
ant to be aware of the highly volatile environment. Establish-
Manage the crisis and prepare for the post-crisis period
Managing the crisis demands even shorter cycles of moni- The key competitive advantage will be avoiding a long-term
toring, planning, and adapting production factors—human bullwhip effect: choosing the right point in time to decrease
elements, assets, and material. Normalization of custom- or increase capacities in the whole supply chain.
er demand in all areas after the crisis will be a challenge for
companies, independent of product categories.
How the COVID-19 pandemic is changing the consumer goods landscape 04Contact
Michael Tribus
Senior Partner
T: + 49 711 911 12107
E: michael.tribus@porsche-consulting.com
Porsche Consulting GmbH is a leading German strategy and operations consultancy and employs 670 people worldwide. The
company is a subsidiary of the sports car manufacturer Dr. Ing. h.c. F. Porsche AG, Stuttgart. Porsche Consulting has offices in
Stuttgart, Hamburg, Munich, Berlin, Frankfurt am Main, Milan, Paris, São Paulo, Shanghai, Beijing, Atlanta, and Belmont (Silicon
Valley). Following the principle of “Strategic vision. Smart implementation,” its consultants advise industry leaders on strategy,
innovation, performance improvement, and sustainability. Porsche Consulting’s network of 12 offices worldwide serves clients
in the mobility, industrial goods, consumer goods, and financial services sectors.
Porsche Consulting
Stuttgart | Hamburg | Munich | Berlin | Frankurt a. M. | Milan | Paris | São Paulo | Atlanta | Belmont | Shanghai | Beijing
www.porsche-consulting.com © Porsche Consulting 2020You can also read
