AltoPartners: FMCG & Digital Disruption - How Companies Are Evolving To Remain Relevant

This paper presents commentary and insights from AltoPartners executive search and leadership consultants, specialising in Consumer, Retail and Luxury Goods placements and assessments.

The retail industry is being hugely impacted by technological disruptions that give consumers the ability and freedom to shop however, whenever and wherever they choose. This has taken its toll on brick and mortar retailing in many ways, and companies are being forced to transform or risk becoming irrelevant.

The need for an overarching omni-channel strategy that marries the physical store with the digital, mobile, social media universe is no longer an add-on or extension; it is now a core element of how a company goes to market.

Added to the mix, Big Data is also enabling retailers to individually target consumers on a micro-level. This trend has led to transformations that touch merchandising, marketing IT, and supply chains. For consumer products companies, these changes are challenging brands in new ways and in turn demanding a higher level of leadership.

These changes incrementally impact the organisations from a talent management and human capital perspective, and Executive Search firms are increasingly tasked with looking at how companies have to hire in new people with specific skills – and in many instances create new positions – that will help keep the business relevant. A prime example of this is LVMH’s 2015 hire of former Apple executive Ian Rogers as LVMH’s new Chief Digital Officer, a newly created position within arguably the elitist, and most established, luxury brand group.

According to a study by The Global Center for Digital Business Transformation – a research initiative of IMB and Cisco – retail will be third among the industries most affected by digital disruption in the near future, topped by the technology sector itself and the media and entertainment industry. But, industries seem to be in denial about the disruption – the survey found 45% of companies didn’t deem the subject worthy of discussion at a board level. About one-third of companies are still taking a ‘wait and see’ approach, and only 25% said they are being proactive and disrupting themselves to stay competitive. By 2020, close to 150 million consumers are expected to be digitally influenced in FMCG and these digital consumers alone would spend about $40 billion on FMCG categories, says the Confederation of Indian Industry (CII) National FMCG Summit Report 2015 released by BCG and CII following the “Re-Imagining FMCG in India” Summit held in 2015.

The movement towards 2020 Internet of Things (IoT), where everything will be connected and every product can communicate, gives the FMCG retail industry opportunities to constantly be in contact with customers and will result in new services and possibilities. The shift in emphasis is now to the client/customer experience rather than on the product. The power is in the data and the translation of the data to their own market sector. Digital disruption and big data are blurring the boundaries between consumers, stores and consumer brands and has completely transformed how the customer shops, and their expectations in both the physical and digital shopping environment. Big data is enabling a more customised and ‘bespoke’ approach, treating each customer as an individual. This has the potential to build stronger brand loyalty if done correctly.

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