OUTLOOK | August 29, 2023
Authored by RSM US LLP
Consumer goods trend #1: Technology is key driver for growth
Targeted investment is key for driving growth for consumer goods companies
Strategic investments for consumer goods companies need to include data analytics platforms and generative AI.
Strategic investments necessary for growth
Consumer goods businesses are gearing up for post-pandemic growth through strategic technology investments. Reduced imports in 2023 signal inventory concerns and changing consumer preferences. To manage excess stock, discounts are being employed, though slow-moving inventory could impact margins. As consumers shift towards experiences, companies are embracing data analytics and discounts. Understanding consumer debt and stability is vital. Despite early hype, businesses are now focusing on AI and tech for inventory efficiency. Middle market companies must choose tools wisely to stay competitive and expand effectively.
Consumer goods trend #2: Economic headwinds pose a challenge
From growth to profitability
Consumer goods companies will shift focus from growth to profitability.
Reexamining operational strategies
Consumer goods companies that benefited from elevated demand during the pandemic are reexamining their operational strategies as consumers become more strategic about spending and look for value in their purchases. This shift is driven by deflationary price pressure, production costs, a tight labor market, and increasing borrowing costs.
As consumer demand decreases, middle market companies should focus on maintaining profitability by controlling costs, automating processes, removing low-margin products, and getting rid of underperforming product lines. Supply chains should be a primary area for review, and manufacturing hubs should be a primary discussion point.
New home sales will affect home products consumption through 2023
Home products companies should be prepared for a sustained period of economic pressure.
The impact of declining home sales
Historically, consumption of home products correlates to new home sales, as many homebuyers refurnish or upgrade appliances within a year of a new home purchase. This correlation shifted during the COVID-19 pandemic as a result of the surge in mortgage refinancing and shifts in consumer spending toward goods and away from services.
In periods of uncertainty, the effective use of real-time data to manage the business will differentiate companies looking to thrive versus simply survive.
This article was written by Mike Graziano, Nick Stuart and originally appeared on Aug 29, 2023.
2022 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Armstrong, Backus & Co, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.
For more information on how the Armstrong, Backus & Co, LLP can assist you, please call us at 325.653.6854.