Winning through the squeeze

The last 12-18 months have seen global levels of inflation that we haven’t experienced for 40 years, which has required rapid and drastic actions from players across the consumer goods landscape. But as input cost deflation becomes a live and very real phenomenon in many (but not all) areas, retailer and consumer expectations continue to evolve at pace.

In this context, winners in consumer goods are already plotting their next moves, and prioritising the right set of levers to deploy ‘on the other side’, given their market, category and competitive positioning.

The current environment creates margin recovery opportunities after a challenging period of margin compression – but it also creates risk, as retailers increasingly seek to recover pricing and consumer preferences and perception of value shift.

The portfolio, range and pricing strategy and levers that players choose to deploy now, from promotional resets and price pack architecture modifications through to SKU rationalisation and premiumisation, will be critical to navigating this complexity and ultimately realising value.

Critically, the onus is on both suppliers and retailers to balance two potentially competing needs: protecting and recovering profit, whilst also providing value to the stretched consumer. This is not a straight-forward balancing act, but by effectively deploying the right mix of levers and working collaboratively with retailers, the right blend can be found.

To find out what this means for you, whether you’re a consumer goods player or an investor in the space, contact our experts.