Key findings from the retail & consumer industry

20th CEO Survey

Confidence remains good

Retail and consumer goods CEOs maintain healthy, relative optimism about their companies’ growth over the next year at a time of economic and political change.  In PwC’s 20th CEO Survey, which was carried out between September 26 and December 5, 2016, about one-third of retail (37%) and consumer goods CEOs (32%) said they were very confident.   Looking forward to the next three years all CEOs, including retail and consumer goods, were bullish on their companies—with 48% in retail and 45% in consumer goods very confident.

Adapting to grow in complex times

In planning over the next 12 months to drive company growth or profitability, both retail and consumer goods CEOs see organic growth, cost reduction, new alliances or joint ventures, and new M&A as the leading ways to move the business ahead.  Retail CEOs place less relative emphasis on new alliances and JVs, with only 34% keying in on that tactic to drive results, against 48% globally and 42% among consumer goods CEOs. Retail CEOs also see the US as relatively less dominant (26%) in generating growth than do either consumer goods CEOs (41%) or the global CEOS (43%).  In terms of business threats to prospects, both retail and consumer goods CEOs are most concerned about volatile commodity prices, availability of key skills, changing customer behavior and speed of technological change. Commodity prices are a particular concern for consumer goods, where 76% of CEOs earmark that as a risk compared to only 55% globally.

Innovation -- key to the future

CEOs generally see innovation as the key to a future that is also driven by talent, technology and competitive advantage. But retail and consumer goods CEOs vary their emphasis, with the latter highly bullish on innovation as the key to opportunity (34% versus 23% globally) and much less focused on technology—7% versus a global 15%. Both sectors see themselves less affected by automation and other technologies in decreasing headcount, at only 10% against 25% globally.  Both sectors rate creativity and innovation and leadership the two hardest skills to find, followed by emotional intelligence and problem solving. And surprisingly, both rank slightly below the global average of 20% in feeling technology has reshaped their industry in the past five years. Only 9% of consumer goods CEOs versus 23% globally think technology will completely reshape competition in their industry in the next five years. 

Gauging the digital trust challenge

Trust has been climbing steadily up the CEO agenda. And as our interactions become ever more automated, data driven and virtual, the human factor is receding. The top four threats to trust levels for retail and consumer goods CEOs – breaches of data privacy and ethics; cyber security breaches affecting information or critical systems; IT outages; and risks from social media – parallel global CEOs’, varying only in priority order. Most notably, consumer goods CEOs are less worried about cyber security breaches (35%) than the global average (53%). Both sectors are more than 10% below global levels in steps taken today to address breaches of data privacy and ethics and cyber security.

Balancing a global vs. national  perspective

CEOs recognize the challenge as the world’s political and social compass begins to point more toward national interests rather than collective, global ones.  Retrospectively, retail and consumer goods CEOs agree that globalization has helped most markedly in four areas—enabling universal connectivity; improving the ease of moving capital, people, goods and information; upholding access to infrastructure; and creating a skilled and educated workforce. Fewer felt it helped to close the gap between rich and poor or to build fairness in global tax systems. But as nationalist sentiments grow more robust and the framework for global trade shows strain, just over half (56%  consumer goods, 54% retail) agree or agree strongly that it is becoming harder for CEOs to balance competing in an open global marketplace with trends toward more closed national policies. 

What is on the minds of China and Hong Kong CEOs for the year ahead?

The Chinese economy continues to undergo complex structural reforms to ensure balanced and steady development and growth. Business outlook for executives in China appears quite positive. To achieve this growth, numerous challenges combined with global economic uncertainty have to be overcome. Intense industry competition, the pace of technological development, changes in consumer spending and behaviour, difficulty with recruiting employees with advanced skills and lack of trust in business were cited as main threats to growth prospects.

Business leaders today have a great opportunity and responsibility to lead through the disruptions by demonstrating purpose and increasing trust. Find out more from our China report: Leading through disruption.

Explore the key insights

Contact us

Michael Cheng

Asia Pacific & Hong Kong/China Consumer Markets Leader, PwC Hong Kong

Tel: +[852] 2289 1033

Kevin Wang

China Consumer Markets Leader, PwC China

Tel: +[86] (21) 2323 3715

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