Some surprising news for the mobile industry emerged from a recent survey of retailers and consumer goods companies conducted by KPMG. The survey did not include telecommunications companies, even though many see themselves as retailers of consumer goods, and only CFOs were approached – 350 of them, no less!
The majority felt that mobile technology would be the key driver to maximize their sales over the next two years ahead of more traditional ways to generate business such as business intelligence or supply chain management.
The research suggests that the importance placed on mobile technology varies by country. According to the KPMG Consumer Markets CFO Survey*, 36% of UK respondents view mobile technology as key to maximize sales, compared to 46% in Germany, 44% in the US and 50% in India. One of the key reasons for mobile technology being more important in developing countries is the lack of access to broadband and stores so more people are shopping via their smartphones.
However, it’s not only the access to mass-market consumers that is attractive. Many sighted the fact that within the space of a few years, mobile communications have transformed consumer behavior as well as business practice. CFOs see mobile as the top technology for maximizing sales. Some retailers are now using mobile devices instead of tills – the first major innovation in point of sale for decades. Mobile is also the key to tapping emerging market growth, since mobile phones are often the primary means to access the Internet in these regions.
Tim Clifford, Partner Consumer Markets at KPMG comments, “Mobile technology will help decide who wins in the retail space. Retailers must embrace mobile technology as an urgent priority or otherwise risk falling behind.” “Mobile technology is dramatically altering the retail experience and changing the relationship between retailers and customers. Success in both developed and emerging markets will depend on the swift adoption of mobile as a device for communicating with customers and for facilitating transactions. Consumer goods and retail companies that are slow to embrace mobile will find themselves struggling to keep up at a time when competition for market share is becoming increasingly fierce.”
Some other interesting results from the survey give us some insights into how other industries are viewing investment, risk and ROI. Retail finance leaders also have to manage the trade-offs between allocating resources to profitable, but low-growth developed markets, or shifting them to high-growth markets that may require investment over a period of years before turning a profit. Investments in new markets, particularly emerging ones, typically take longer to achieve returns because the company needs to build awareness of its brands, and develop an infrastructure that will enable its products to reach the market.
Twenty percent of those surveyed expect it will take longer than a year for their new products in an existing market to achieve expected return on investment, but in new markets that figure increases to over 30 percent. In some cases, CFOs may be willing to accept a longer ROI and higher risk in the short term, where the decision is in the context of the overall portfolio.
The extraordinary pace of technological development is transforming both customer behavior and business practice in the consumer sectors. Not only did respondents cite mobile as the technology that is most important in terms of their ability to maximize sales, it ranked higher than both the Internet and e-commerce, providing a clear illustration of both the speed of transformation in the communications industry and its impact on business.
An eerily familiar message emerges from some of the surveys conclusions:
- Companies are advised to maintain market share through new innovation and through strategies to increase efficiency and productivity across the business;
- CFOs must temper over-enthusiasm for emerging markets – such is their allure that many companies are likely to invest too much and leave themselves exposed to declining market share in their core markets;
- Tracking consumer behavior and changing product strategy in-line with its evolution will be critical to success. Today’s fast-changing, dynamic risk environment requires constant monitoring;
- CFOs should explore ways of achieving a more consistent, holistic view of their risks that will provide senior management with greater insight into the potential threats that could undermine their strategic choices.
*KPMG’s report “Turning global risk into an opportunity” surveyed 350 senior finance executives in the retail, food, drink and consumer goods manufacturing industry. Respondents were spread evenly around key regions of the world, including North America, Latin America, Asia-Pacific, Europe, the Middle East and Africa. The interviews were conducted in December 2011.
Posted
02-14-2012 10:57 AM
by
The Insider