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article imageConsumer-products companies waste 60% of DX investments: Survey

By Tim Sandle     Aug 1, 2019 in Business
With consumer-products, a new report finds that close to $50 billion invested annually in digital advertising and trade spend is failing to drive positive return-on-investment. This drawn from a AlixPartners survey.
AlixPartners undertook a poll of senior executives who work in the consumer products industry, drawing on leading companies around the world (drawing on 1,110 executives located in China, France, Germany, India, the UK, and the U.S). The survey found that more than 50 percent of companies’ digital-transformation investments, especially in the form of marketing and trade spend, are being wasted with no significant returns being delivered.
The types of companies surveyed ("Achieving profitable growth in consumer products: Practical digital transformation") included firms active in the food and beverage, household products, and health and beauty areas. In each of these companies sales of items in physical stores had declined and digital sales were growing, to the degree that digital sales across the sector account for some $218 billion per annum and this is expected to grow to around $440 billion by 2023.
Lack of talent and unfocused corporate culture
One of the reasons for the opportunities not being realized was identified as a lack of talent within firms (in that the right people to steer digital transformation had not been recruited. Another obstacle was, despite the overall multi-billion investment in the sector globally, there is a lack of funding is many firms. The final factor was cultural, especially with the corporate culture emanating from the board. Together these factors combined to represent the key impediments to successful transformation.
Digital commerce grows
The survey did find some positives. Digital commerce is an important part of businesses strategy and it is leading to a $220 billion growth opportunity for the industry. Furthermore, the survey highlighted that profitable growth can be achieved through targeted, measured, and tailored strategies. The trick is with getting these strategies right.
The need for precise and targeted methods
Discussing the data, David Garfield, a global leader at AlixPartners, noted in correspondence sent to Digital Journal, that several companies have "innovated quite well at a micro level". However, these firms are finding it "challenging to apply those changes across the whole organization, as their sheer size and complexity make cultural change difficult. Ultimately for digital transformation to be successful, company leadership, starting with the CEO, must shatter traditional cultural, organizational, and structural silos that are frequently the most intractable impediments to change.”
To pursue the promise of growth through digital, have simply thrown money at the problem, leading to billions in wasted investments. However, digital for the sake of digital will serve no one, and as our survey shows, there are many expensive mistakes being made in pursuit of digital nirvana. Success is achievable over time by using more precise and targeted methods, which have greater opportunities for consumer engagement and data analytics. Those who are lagging need to catch up, and fast, as now is the time for rapid transformation in pursuit of a share of the available prize.”
More about Consumerproducts, digital transformation, DX, Investment
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