As we progress into the new year, the outlook for business is improving. Last year, many businesses focused on the “survive till 2025” mindset, controlling costs and avoiding discretionary spending.
Very few, though, forgot about the consumer/customer and the need to continue to serve, surprise and delight with excellent product, service and pricing. Most FMCG businesses will be looking to return to better margin positions this year and indications are favourable that this is achievable.
The inflation beast has been tamed, so interest rates have fallen and are predicted to drop further (albeit not by a huge amount) through the year ahead. Business sentiment is on the rebound. Consumer confidence is at its highest level for two years, which in turn improves business confidence. Whilst the signs are positive, navigating from the survival mindset to a thrive mindset doesn’t happen without intent.
So, what are some helpful tips to consider as FMCG businesses transition into what should be a period of growth, and importantly how to create value and embed sustainable profitability. Here are some areas to consider and explore:
- Align operations to execute your business strategy.
- Plan to drive profitable growth.
- Unlock, deliver and celebrate quick wins.
- Create and embed a continuous improvement culture.
- AI: Proof of value.
Align operations to execute your business strategy
Operations is where the rubber hits the road for your business strategy. Are your operational teams involved in the key decisions as you launch new products, drive innovation, and review range, pricing, and promotional plans? If not, they should be. They operationalise strategy, plans and tactics into reality. Get them onboard early, and you will realise value faster and more effectively.
Plan to drive profitable growth
Continue your focus on productivity. Last year taught most to drive efficiency through their existing business operating model, as very few invested in capital options due to the cost of borrowing. With more capital projects likely this year remember and retain the behaviours that got you through last. Growth should be profitable, but if not done correctly, it can cost you as bottlenecks, capacity constraints, and people/process/system capability get challenged. Plan it out, assess your readiness to change, model outcomes, test and learn and integrate your teams to ensure success is embedded and sustained.
Unlock, deliver and celebrate quick wins
With large-scale transformations and major capital projects (infrastructure, digital, automation) likely back on the cards this year, don’t forget to capture value on the way through. There is no better way to drive and sustain a transformation than getting runs on the board early, celebrating the success and showing yourselves, your teams and your customers that you are driving change correctly.
Create and embed a continuous improvement culture
Adopt lean techniques and tools and adapt them to your business, your team and your ways of working. They are proven globally over many decades and stand true today as fundamental to value creation and growth mindsets. Build and nurture this capability in your leaders and teams – and most importantly, don’t stop… it is called continuous for a reason.
AI: Proof of value
Is it possible to write an article on trends and predictions for 2025 without referencing AI? Probably not. AI is here, it is real, and it can and should be super valuable. It can also be daunting to know where to start and some have spent lots of money or time for little benefit. Our recent survey of the food and grocery sector told us that 74 per cent of businesses have or are planning to invest in Generative AI over the next three years. AI adoption is no longer polarised by age group – we are all giving it a go. Get clear on your use cases for AI, where and how it can add value, reduce repetitive tasks, and provide deeper, more holistic insight. Start small, build it, prove the value, and then keep going.
As businesses shift from survival mode to sustainable growth, now is the time to take action. Which of these focus areas will drive the most value for your business this year? The team at Argon & Co ANZ is here to help – let’s start the conversation.
Contact us today: Australia@argonandco.com or NZ@argonandco.com
About the author: Chris Foord is a partner at Argon & Co ANZ.
