Original content provided by BDO United Kingdom
There have been countless articles on how the trading conditions for consumer brands over the past 24 months have been some of the worst for decades. We get it, but so do most. All businesses have been shaken, but the necessity for change has addressed weaknesses in operating models and brands that have emerged have become far healthier as a result.
In the commercial due diligence team, our task is to help management teams and their investors on their growth journey. In this current climate this has become more challenging but at its simplest, we help brands to win in three core areas: Image, Offer and Access.
Image: brands values, ethos, what a brand stands for
Offer: a brand’s proposition, what it sells, who it sells to
Access: where consumers find the brand, how a brand goes to market
With the development of digital tools and consumer insight methodologies there are plenty of data points that can be gathered to assess each of these areas. However, a brands market context has an impact on how we assess these areas and there has been plenty of disruption in the last two years. Although some market trends have been short lived, we see six trends enduring into 2022 which will have a continued impact on the consumer market.
- Sustainability: Sustainability matters, not just to consumers and governments, but increasingly to businesses too. Worldwide commitments to net-zero mean that soon it won’t be a choice for businesses, but a requirement
- Health consciousness: Rising incomes and living standards, along with a more open public dialogue have attributed to increased interest in personal health and wellness. This trend surged further forward in the midst of the pandemic, which highlighted the necessity of physical and mental wellbeing
- Shift-to-the-home: What we used to do in other locations – getting care, being educated, working, eating and shopping - is all moving into our homes on a much bigger scale than before
- Speed & convenience: In an era of exponentially disruptive technological change, scale, speed, and personalisation are the new relevant currencies. Technology is constantly redefining what’s possible and setting the new normal for customer expectations, which is being applied indiscriminately across industries
- Digital / physical blend: The physical and digital lines have blurred. The pandemic ignited years’ worth of digital transformation in just a few months; this is impacting everything in our day-to-day lives; from the way we learn, to the way we work, to the way we shop and interact with people
- Connection: As economies re-open, restrictions lift and travel restores, people will be looking to reconnect with friends, family, and co-workers, and re-establish community in their lives. Travel will rise in importance and the experience economy will once again flourish
With this market context, we would argue that operating a consumer brand today is exciting. There is more freedom and flexibility to experiment, gain rapid feedback, implement new strategies, or change operations. We are also aware that competition is tough and the headwinds facing consumer spending are significant.
So, what does this mean for brands today? We consider there are positive drivers in each of these areas and brands can position themselves for success by truly understanding each of them.
Image: Consumers are looking for brands to love:
The age old saying that trust has to be earned is still true. But consumers are more willing than ever to seek out brands with purpose, that align to their interests, that speak to their values. Consumers are curious and have countless ways to find brands through social media and other forms.
Takeaway:
Focus on articulating your brand values to your customers through every touch point and they will reward you with their loyalty
Offer: Technologies are quick to enable:
There are hundreds of new technology innovations that can be integrated into several consumer brands existing eco-systems. From payments to innovative clothes sizing apps, the speed at which these technologies can be put to use has never been quicker.
Takeaway:
Explore where enhancements in your customer experience are required and look at how available innovations could be applied to make material improvements.
Access: Multiple channels in a data rich environment:
The channels available to sell to the consumer are broad and most are still attractive - even physical retail stores, given lower rent, challenged landlords and relatively high vacancy rates. Going direct to the consumer has been a necessity in the last two years but those brands who have pivoted and succeeded are most likely sitting on infinitely more robust business models as a result. There is also a rapidly growing pool of data to assess channel effectiveness and prioritise marketing and sales investment.
Takeaway:
Invest in the appropriate tools to capture data and ensure the capability to translate this and act is embedded in the organisation.
Get in Touch
We regularly work with our clients to re-evaluate and prioritise investment, both human and capital. Working alongside management teams we use our access to data, broad network, insight tools and our experience to help set and develop strategies. We also provide operational support to help businesses implement these strategies.