Which consumer trends will stick?
Sajal Kohli: There are a few consistent shifts that we’re seeing across the globe. What consumers value is truly shifting, and so is their channel choice. Consumer spending is “overpronating” massively toward value, and there’s a material flight to online. We think that both of these trends are going to be very sticky. For example, what’s happening to e-marketplaces is quite astounding in terms of the meteoric growth that they’re all experiencing. Discounters as a format are truly running up market share and continuing their steady rise across the globe.
Liz Hilton Segel: Some of the changes that have already taken place are, for example, the shift to more people cooking at home, maybe making more healthy eating choices, or the increase in in-home exercise equipment. I do believe that the shifts to digital will be permanent. I do think that mall traffic and department-store visits will be challenged going forward. My guess would be that the shifts in terms of healthy eating and exercise are likely to be more fleeting.
Sajal Kohli: We’re also seeing another seminal trend: a real shock to loyalty. We are seeing consumers, on the one hand, shift to trusted A brands. On the other hand, there is a lot of pervasive promiscuity because consumers have so much choice as they’ve shifted online that their consideration set has expanded quite dramatically.
The future of business: Reimagining 2020 and beyond
What are the top priorities for consumer companies?
Sajal Kohli: I believe it’s very important for management teams to take stock of a few things. One, clearly, is a programmatic look at your portfolio. You’ve got to very aggressively look at new growth opportunities through inorganic routes—so make acquisitions but also equally focus on divestitures. This is a great time to reset your portfolio and basically chase how consumer shifts are happening in terms of consumer preference.
Liz Hilton Segel: I think the most common pitfall that I see consumer companies falling into is just being too grounded in even the most recent past—an assumption that things that have held true in the recent past will be true two to three years from now. The COVID-19 crisis is a time where, more than ever, there’s a real need to try to look around the corner and anticipate how trends are going to affect your business and then to prepare for those trends and build capabilities that will lean into them.
Sajal Kohli: It’s amazing to me how agile organizations have been in the past three months. And wouldn’t it be terrific to actually make this the new way of working as we go forward? Renew how you organize yourself and how you think about decision making, especially for speed. Where should you be global versus where should you be local?
Liz Hilton Segel: The first thing I think consumer companies should do is double, triple, quadruple their ambition around the scale and pace of their digital transformation—whether that’s the adoption of analytics or whether that’s improving the productivity and the experience of digital channels.
Sajal Kohli: You have to accelerate productivity and reset your cost structure to be more competitive going forward. This is much more than the budgeting process of 2 to 3 percent productivity gains to beat inflation. It is actually a 20 to 30 percent reset in your cost structure so you’re competitively fit.
Liz Hilton Segel: Really take reskilling seriously as a competency in your organization. There’s no question that all of the shifts that are happening—whether it is the shift of sales channels or service channels to digital or whether it is the use of automation—will mean changes for everyone’s workforce.
Sajal Kohli: And this is, frankly, not a time for admiring the problem and incrementalism. This is actually a time for being massively transformational and not tweaking on the margins. Challenge every assumption, challenge your value chain, challenge your asset structure, and see if you can reinvent the organization or the company.