Consumer and retail execs say 'agility' could boost revenues by $345 billion
A new survey of global C-suite executives from consumer and retail firms reveals that, on average, they expect the adoption of business agility to ramp up revenues by 23% - or $345 billion across the companies surveyed.
Firms today want to be agile, able to adapt and respond quickly changes in their environment. For consumer and retail businesses, that means being able to adapt their mix of goods and services to meet the shifting demands of consumers. An important aspect of this is offer personalization based on effectively used swaths of consumer data.
A recent A.T. Kearney survey of 270 global C-suite executives from large consumer and retail firms examined offer personalization and questions around the agility of firms in the sector. The consulting firm also gave some tips on how to evolve from an idle firm to an agile firm.
According A.T. Kearney, research asserts that Gen Z and millennials want to be served ‘on their own terms’ instead of as part of a demographic cohort defined by affluence or some other metric. The report also relates that younger, digitally connected consumers are more influenced by their fellow consumers than by brand communications.
A result of the above trend is that retailers and consumer goods firms are shooting for a more personalized approach with its customers. According to the survey, executives are reporting that their companies are transitioning from products and surveys designed for the masses to more personalized offers. 38% of global CEOs expected their firms to move to a more personalized model by 2026, with the same percentage saying so in the US.
On opposite ends of the personalization continuum, the amount of firms with a 100% mass-produced approach to products/services is expected to drop from 11% today to 5% by 2026; the share of firms with 100% personalized products/services is expected to rise from 9% to 17% by 2026.
The survey also found that executives favor data gathering and ominchannel strategies for creating a competitive advantage. Data gathering (20%) and omnichannel focus (16%) ranked first and second in terms of strategies to create a more personalized shopping experience, while new technology ranked at the bottom with 5%. A.T. Kearney relates that many firms, however, struggle to separate themselves from the pack in the top-ranked areas.
The most common approach for firms to collect data for personalization is through discounts and financially-driven loyalty programs. 79% of respondents said they incentivized data collection through discounts, loyalty programs, and gift cards. The report remarks, “In essence, companies are paying their best consumers.”
The survey also found that though respondents most frequently identified firm culture as an obstacle to agility, they still planned to prioritize hiring based on ‘cultural fit’ rather than ‘disruptive thinking’. When asked how they would recruit top talent by 2026, 51% of executives responded that they would target those who seemed to be the best cultural fit, while only 11% said they would deliberately recruit disruptive thinkers.
The report revealed that executives think they can boost company revenues by as much as 23% by making their companies more agile. Applying this to the firms involved in the survey – which earn more than $1.5 trillion annually in revenues – agility could result in a revenue boost of $345 billion.
Finally, the management consulting firm offers a few pointers to transition from an idle consumer/retail company to an agile one. Firstly, instead of struggling against complexity and slow top-down decision-making, companies should try to build smaller teams more tuned into consumers and better able to follow their instincts rather than strict directives from up top.
Secondly, firms should listen to consumers and translate their input into meeting their needs rather than trying to broadcast to consumers. Thirdly, rather than analyzing data to see what consumers will buy, firms should try to engage with consumers to understand and serve them personally. Finally, instead of following trends, firms should try to trailblaze and shape trends with offers that create new customer demand.
