{"id":1554,"date":"2024-11-05T08:31:00","date_gmt":"2024-11-05T08:31:00","guid":{"rendered":"https:\/\/eccellenzedimpresa.it\/magazine\/rethinking-business-strategy-in-the-face-of-unprecedented-disruption-in-consumer-behavior\/"},"modified":"2024-11-05T08:31:00","modified_gmt":"2024-11-05T08:31:00","slug":"rethinking-business-strategy-in-the-face-of-unprecedented-disruption-in-consumer-behavior","status":"publish","type":"cp_magazine","link":"https:\/\/eccellenzedimpresa.it\/cn\/magazine\/rethinking-business-strategy-in-the-face-of-unprecedented-disruption-in-consumer-behavior\/","title":{"rendered":"Rethinking business strategy in the face of unprecedented disruption in consumer behavior"},"content":{"rendered":"\n
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The Consumer Goods sector is on the eve of a very strong discontinuity in purchasing patterns throughout the Western world and beyond. A contraction in the purchase of consumer goods has been underway in the U.S. since 2019, which has continued even after the post-pandemic economic recovery, never again reaching a \u201cnew normal\u201d after Covid . The volume decline has mainly affected the food & beverage sector, with a -2.9 percent slump between 2022 and 2023 (Nielsen Sources). The upward price spiral caused by inflationary dynamics has been one of the causes of the volume decline; in fact, faced with price increases that have grown +34% for the FMCG world (43% faster than wages in the US), consumers have become much more cautious. <\/p>\n\n\n\n

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What is happening in the United States is not an isolated case, and the U.S. is not the only market facing unusual, erratic, and difficult-to-predict<\/em> demand behavior; Europe is also facing a radical change in consumption patterns. The clearest evidence is the polarization of purchasing behaviors: on the one hand, there is a growth of consumers who prefer premium products-as long as these substantially and effectively meet some specific needs, such as a higher nutritional intake of fiber or protein for example-and on the other, a group of consumers who are more price-sensitive. Analyzing the latter category, we find that there is not a strict loyalty to brands as in the past and, often, even the product’s sustainability attribute is considered a driver that is not a priority over affordability. In fact, a characteristic of the Italian and European middle class in the post-pandemic era is a preference for \u201cexperiential\u201d activities (such as trips and dinners) that thus lead to savings in everyday spending, also conveying the choices implemented among the supermarket shelves. One obvious result of this phenomenon is the widespread growth of private labels to the detriment of manufacturer-branded products, again, especially in the absence of substantial and substantive benefits. <\/p>\n\n\n\n

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The situation changes as one moves toward Eastern markets; in fact, according to a McKinsey study, young Chinese, Indian, and Saudi consumers between the ages of 18 and 24 are inclined to purchase premium products and willing to pay a higher price than their peers in advanced economies. They are more optimistic about economic conditions in their home countries, and this phenomenon is expected to materialize in higher levels of consumption. It is very important not to underestimate this pattern, <\/em>which represents an opportunity for Italian companies in those territories, considering that by 2030, 75 percent of consumers in emerging economies will be between the ages of 18 and 34.<\/p>\n\n\n\n

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The scenario, therefore, appears difficult to read. Linear extrapolation of past trends can no longer work in mature economies, the segmentation models used by companies to define target consumer groups may change radically, cutting out important customer segments. The approach that needs to be taken is toward micro-segmentation to address specific needs of particular consumer groups and establish itself in selected market niches. At these junctures there is less price elasticity and the offering can be revised with a view to scale-up and emphasize the value proposition. <\/p>\n\n\n\n

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To avoid the occurrence of major shocks at the sector level-such as those that have impacted automotive or fashion-strategic planning needs to be re-focused. Activities such as new product launches and jumps into new markets must again be examined with a lens that considers the discontinuities mentioned earlier. <\/p>\n\n\n\n

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The opportunities arising from specific consumer needs in local markets and a tilt toward premiumness in emerging markets must be investigated, and the \u201ccompass\u201d for navigating growing complexity must be that of increasing equity value over the long term through strengthening competitive technological and product vantAges.<\/p>\n\n\n\n

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Elisa Montanari is director of EDI<\/p>\n\n\n\n

Grace To is a junior consultant at EDI.<\/p>\n\n\n\n

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