Latest news with #RobHolston
Yahoo
27-05-2025
- Business
- Yahoo
EY report: consumer products industry battling relevance as structural behaviors test ability to grow
New EY report urges consumer products (CP) firms to reclaim relevance with consumers, customers (retailers) and capital markets, offering a roadmap to thrive Without bold, focused investment, CP firms risk drifting into irrelevance Retailers are increasingly powerful while insurgent brands are thriving; the very largest CP brands must take action to survive increasing competition LONDON, May 27, 2025 /PRNewswire/ -- The consumer products (CP) industry is facing a critical juncture according to a new report and research released today by the EY organization. "The EY State of Consumer Products" report, which surveyed more than 500 CP manufacturers and retailers, more than 20,000 consumers, 190 CPCEOs across the globe, and conversations with 24 industry executives (report). The report offers a detailed analysis of the challenges and opportunities facing the CP industry and offers a roadmap on where to focus investment and innovation in today's rapidly evolving market. The report calls for CP firms to act with urgency to build brand relevance with consumers, customers (retailers) and capital markets, and transition away from past reliance on pricing power strategies to drive growth. Capital markets resetIn the evolving landscape of CP companies, investor expectations remain steadfast, seeking steady and reliable performance. However, confidence in the sector is waning, faced with cost-of-living pressures, many firms have focused on cutting costs, reducing innovation and honing tactical pricing strategies. Nearly two-thirds (65%) of CP leader respondents acknowledge that investor expectations are increasingly influencing their business strategies. With anemic volume performance in many firms and top-line growth challenged by difficult consumer pricing environment – CP leaders are looking for M&A to drive the next level of performance. Although 81% of CP leader respondents believe that growing valuation gaps will hinder widespread M&A recovery in the next few quarters, CP firms are accelerating M&A portfolio reviews and inorganic growth strategies to position themselves to capture new markets and segments. Acquisitions in CP often generate three-year higher growth, but lower shareholder returns and operating margins. While divestitures result with lower three-year and operating margins, but generate higher shareholder returns. To regain investor confidence, companies must prioritize a future-forward operating model fueled by technology, enhanced and granular commercial practices, and accelerated product innovation to capture and shape consumer trends. The sector can find opportunities to reinforce its defensive position to investors and adapt to the structural and cyclical challenges taking place in the sector, with a clear emphasis on sustainable performance and effective capital allocation. Rob Holston, EY Global and EY Americas Consumer Products Sector Leader, says:"Our findings present a roadmap for CP firms to reclaim relevance, restore belief in the power of brands and thrive in a changing world. By understanding the critical shifts in consumer expectations, retailer dynamics and capital market demands, leaders can act boldly to rebuild relevance to lead with confidence." Retailer capability and confidence growsThe report reveals that competing pressures on shelf space are increasingly shifting the dynamic between CP firms and retailers. Retailers are gaining leverage over CP firms through private label expansion, control of consumer data and retail media networks. Seventy-eight percent of retailer respondents believe that, in the long run, only one mass-market brand will remain on shelves, with the remaining shelf space made up of private labels, premium or niche brands. A view shared by 65% of consumer-packaged goods (CPG) companies. This signals that retailer confidence will likely become the catalyst for change, placing increased pressure on CP firms to define their relevance and profitability to maintain their place across physical and digital shelves. With retailer confidence growing, 76% of retailer respondents say shelf space is becoming a more significant tool in negotiations with CP firms. Seventy-eight percent of retailers plan to continue to expand into more premium and niche product categories, and 67% say they will prioritize the development of their own brands over the next three years. Perceptions of how the industry is evolving vary widely across regions. CP leaders in the Americas are most likely to predict a retailer-dominated future (47%), leading the charge by consolidating power through platform models, acquisitions and logistics control, while leaders in Europe, Middle East, India and Africa (EMEIA) are most likely to forecast stronger retailer and CP collaboration (40%). Asia-Pacific (APAC) leaders (41%) also predict retailer dominance. With retailers and CPs increasingly competing in the same spaces, the report reveals CPs face the potential of their influence eroding: 70% of CP leaders state the challenges they face now require new strategies. Challenger brands add further competition to shelf space with their ability to innovate and distribute new products quickly, often outpacing larger, more established brands with new technologies. Many CP leaders are doubling down on strategies such as reach, efficiency and control, but these, discussed in the report as "Defensive Scale" are no longer sufficient. Only one-third of very large companies (over $1billion in revenues), for example, prioritize selling through retailers; 67% want to build their own distribution channels to recapture power. Innovation and collaborationThe report finds that despite a shift in the dynamics between CP firms and retailers, both agree collaboration is still essential: 75% of retailers say working effectively with manufacturers is vital to their success and CPs largely agree (77% say working effectively with retailer is vital to their success). Bolstering innovation capability is a primary driver of CP firms' M&A strategies. Retailers are increasingly prioritizing innovation as an area for collaboration, yet 21% of CP firms are still not engaging in joint innovation efforts. 76% of CP leaders agree that innovation is becoming more complex and increasingly requires analytics and artificial intelligence (AI) — but fewer than a third (32%) believe their AI, data and analytics capabilities give them a competitive edge. 65% of retailers say they rely on CP manufacturers to bring new and exciting products to stores to drive traffic. Yet, fewer than a third of CP leaders see themselves as highly effective at accelerating new product innovation (31%) and scaling it rapidly (29%). An area fostering increasing collaboration between CPG companies and retailers is retail media, which allows retailers to monetize their first-party data from loyalty programs and e-commerce platforms, creating a valuable revenue stream. The report explores how retail media offers endless collaboration opportunities, such as identifying and engaging new audiences, which are crucial for maintaining brand relevance. Sixty-three percent of CP leader respondents say retail media is becoming more important in their negotiations with retailers, emphasizing its significance. Overall, retail media is set to drive a new common agenda for CPG and retailers, ensuring operational efficiency and alignment with growth agendas. Holston says:"CP firms continue to recognize retailers are increasingly calling the shots. To strengthen the retail relationship and secure relevance with consumers, CP brands must collaborate to compete. By embracing what we call 'Disruptive Optimism,' showing up with conviction with real-time consumer insights and how they can grow the total category, CPs will have every opportunity to be recognized as a category leader, strategic partner and source of shared value." Data and analyticsAdvancements in AI technologies are helping CP companies keep their longstanding role in the market by overcoming extended product development cycles and determining the best investment opportunities. AI, data and analytics capabilities are a top priority for retailer respondents (52%) and CPs respondents (45%) to strengthen their business over the next three years. Seventy-six percent of CP manufacturer respondents are increasingly reliant on AI to overcome innovation complexity and both parties agree collaboration across integrating AI and automation (Retailers 64%, CPs 61%) is essential to deliver mutual value. Holston says: "Commentators are too quick to say the CP industry is in the doldrums. The insurgent brands are thriving. The very largest CP companies seem in control of their own destiny. The challenge is for those in between." The report outlines five strategies for CPG companies to enhance their relevance and profitability: Portfolio innovation M&A Tech-enabled operating model Commercial excellence Marketing and AI "The EY State of Consumer Products" report is available at: Notes to editors About EY EY is building a better working world by creating new value for clients, people, society and the planet, while building trust in capital markets. Enabled by data, AI and advanced technology, EY teams help clients shape the future with confidence and develop answers for the most pressing issues of today and tomorrow. EY teams work across a full spectrum of services in assurance, consulting, tax, strategy and transactions. Fueled by sector insights, a globally connected, multi-disciplinary network and diverse ecosystem partners, EY teams can provide services in more than 150 countries and territories. All in to shape the future with confidence. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients. About the EY "State of Consumer Products" report The report draws on multiple original quantitative research sources: We have collated feedback from more than 20,000 consumers. Through the EY Future Consumer Index, we've tracked changing consumer sentiment and behaviors across time horizons and global markets, identifying the new consumer segments that are emerging. The 15th edition of the EY Future Consumer Index surveyed 20,235 consumers across the US, Canada, Mexico, Brazil, Argentina, Chile, Colombia, the UK, Germany, France, Italy, Spain, Ireland, the Netherlands, Denmark, Sweden, Norway, Australia, New Zealand, Japan, China, India, South Korea, Saudi Arabia, South Africa and Nigeria between 24 January and 20 February 2025. We've held dozens of in-depth interviews with CPG C-suite executives and financial analysts providing deep insights into key topics, as well as interviews with EY leaders representing supply chain, M&A, commercial excellence and digital transformation. We've sought the perspectives of CP companies and retailers in the EY Consumer Products Dynamics Research. On behalf of the global EY organization, FT Longitude, the specialist research and content marketing division of the Financial Times Group, conducted an anonymous online survey of C-suite business leaders from 400 CP companies and 200 retailers around the world with annual revenues above US$1b, between 21 February and 21 March 2025. The survey explored the impact of specific trends and macroeconomic factors on the industry, and how organizations are responding, focusing on market challenges, competitive advantage and retailer-manufacturer dynamics. Respondents represented 17 countries (the US, Mexico, Brazil, Argentina, Canada, Germany, India, the UK, France, Italy, Nordics, Spain, South Africa, China, Japan, South Korea, Australia). Surveyed companies' annual global revenues were as follows: 68% US$1b-US$5b, 25% US$5b-US$20b, 8% >US$20b. We tapped into the quarterly EY-Parthenon CEO Pulse, last conducted in April 2025. It collected perspectives from 1,200 global CEOs, including 100 CP and 90 retail leaders, to assess their confidence in the sector, as well as strategic priorities, risks, opportunities and emerging trends. We conducted our own extensive secondary desk research using EY tools and databases, including Capital IQ, Euromonitor and Nielsen. Chloe Beebee EY Global Media Relations+44 (0)7859 Julia MenefeeEY Public Relations(+1) 850 228 View original content to download multimedia: SOURCE EY
Entrepreneur
13-05-2025
- Business
- Entrepreneur
CPI Report: Inflation Reaches Its Slowest Pace Since 2021
The U.S. Bureau of Labor Statistics released its April consumer price index report on Tuesday. Inflation fell in April to its lowest rate since February 2021, per the latest data released Tuesday by the U.S. Bureau of Labor Statistics (BLS). The consumer price index (CPI), which measures the prices of key goods and services, tracked that inflation was at an annual rate of 2.3% in April, a decline from 2.4% in March and a four-year low. The prices of core goods, excluding the volatile food and energy categories, rose 0.2% from March to April, below industry forecasts of 0.3%. Meanwhile, the yearly increase in core goods of 2.8% aligned with industry predictions. According to Bloomberg, consumer prices overall rose less than expected in April. April's CPI data indicates "positive momentum," Rob Holston, EY global and Americas consumer products sector leader, told Entrepreneur in a statement. "Brands should use the positive momentum to strengthen consumer connections and rethink value," Holston stated. "Those that move with the market can thrive – building stronger, more meaningful relationships with consumers." Related: The Fed Kept Rates Unchanged, But an Industry Veteran Says 'Mortgage Rates Will Drop.' Here's Why. Shelter costs were the main reason for the CPI increase in April. The category alone rose 0.3% from March to April, accounting for more than half of the overall monthly increase, per BLS. Energy costs also rose 0.7% over the month, but used car prices were down 0.5% and food prices dropped 0.1%. Meanwhile, the price of eggs decreased by 12.7% from March to April, the largest price drop in the category since 1984, though prices were still up 49.3% from a year ago. How Will the CPI Report Impact Rate Cuts? Gregory Daco, EY's chief economist, told Entrepreneur in a statement that EY now anticipates only two rate cuts instead of three for the year, and predicts that the first rate cut will happen in September instead of July. "For the Fed, tame inflation dynamics and resilient labor market conditions support the case for holding rates steady beyond mid-year," Daco explained. Related: U.S. Businesses Added 155,000 New Jobs in March, According to ADP Data: 'A Good One for the Economy' Federal Reserve policymakers held rates steady at 4.25% to 4.5% after the Federal Open Market Committee meeting earlier this month. The last time the Fed cut rates was at its December meeting, when it lowered rates by 0.25%. Austin Schaul, head of research at financial planning firm Avantax, told Entrepreneur that the April CPI report was "a win for the Fed." "With headline inflation easing to 2.3% – the lowest since February 2021 – Fed Chair Powell has more reason to stay patient on rate cuts," Schaul stated. Daco cautioned that upcoming CPI reports will reflect trade policies, like tariffs. President Donald Trump announced last month that he would levy a universal 10% tariff on all countries. On Monday, the U.S. announced it would cut its tariff rate on Chinese imports to 30% from 145% amid trade talks. Related: The Fed's Decision to Keep Rates Steady Is 'Unsurprising,' According to a JPMorgan Expert. Here's Why. Schaul says that the recent trade de-escalation gives the Fed "some valuable breathing space." "Maybe it's not a green light for cuts just yet, but it's a foot in the door, keeping it open for action if growth slows," he stated.
Yahoo
28-03-2025
- Business
- Yahoo
As inflation looms, brands have to work harder for loyalty
This story was originally published on CX Dive. To receive daily news and insights, subscribe to our free daily CX Dive newsletter. Amid economic pressures and tariff uncertainty, consumers are reassessing their shopping choices and showing less loyalty to brands, according to the EY Future Consumer Index released Wednesday. EY surveyed 20,000 consumers across 26 countries. Price sensitivity was the No. 1 purchase consideration for 4 in 5 consumers globally. More than half of consumers are very concerned about rising living costs. 'The survey findings tell us it's simply not enough to be just good enough,' said Rob Holston, EY Global and Americas consumer products sector leader, 'Brand loyalty is in the balance and consumers aren't just buying names anymore — they're buying value, quality, purpose and performance. Consumers are concerned about the economy, and as prices rise, they want more from brands to earn their loyalty. Anxiety about the economy is widespread. In addition to the EY survey, the Conference Board found that consumer expectations hit a 12-year low in March as expectations for employment, personal income and business environment over the next six months dropped. More than three-quarters of consumers are changing their purchase behavior in response to price increases, the EY survey found. In many cases, consumers are moving away from brand names. About one-third of consumers say they no longer consider brands when making purchase decisions. About two-thirds say private label items are just as good as branded products, and just over half only buy branded products when they are on sale. On an earnings call Wednesday, Dollar Tree said the inflationary environment had led to increased traffic at the discounter's stores. 'What's been most interesting is this time around, this inflationary environment, all shoppers across all income cohorts, including the higher income, is finding Dollar Tree as part of their solution,' Dollar Tree CEO Michael Creedon said. 'We believe it doesn't matter how much money you make, everybody is hurting right now.' Though consumers are widely prioritizing prices over brand loyalty, all is not lost for loyalty: Two-thirds of respondents say they still value brands. But consumers have higher expectations for value, trust and relevance. Among customers who have left a brand for another, about half say they would return to a premium branded product if it offers better quality or performance, and one-third say they would return for better value. As prices rise, consumers want more value for what they're paying. Customer experience can be a differentiator, Mario Matulich, president of Customer Management Practice, told CX Dive earlier this month. 'Those that are prioritizing CX as a primary offering, as a major piece and a foundational piece of their value proposition, those organizations are a position to gain market share in the in the next interim period where [inflation] may be the case, where prices are going up,' Matulich said.
