From survival to revival: How retail and consumer goods CFOs can drive success in today’s business environment
The COVID-19 crisis and the associated economic outcomes have profoundly altered business and operational imperatives for CFOs at retail and consumer goods companies. As disruptions persist, some CFOs are struggling to understand material changes to their company’s finance function and how to proactively prepare for the next 18 months. Others are pivoting to e-commerce and grappling with the technology needed to automate processes and gain market share.
While many retail and consumer goods companies are facing significant economic challenges, others are experiencing an unexpected upside: COVID-19 has spurred substantial increases in e-commerce sales for those with digital sales channels. In fact, market research firm eMarketer forecasted earlier this year that e-commerce would grow by 18% in 2020.
This surge in e-shopping is largely due to rapid changes in consumer behavior as a response to COVID-19. Virus-wary shoppers quickly minimized human contact through online buying as well as adoption of click and connect, curbside pickup, and less-frequent shopping trips.
To maneuver through these shifting business models and behaviors, the finance function will need to harness the power of data-driven models and real-time data analytics.
Navigating disruption with agility
In today’s economic landscape, we have seen several retail and consumer businesses move from a brick-and-mortar business model to one that emphasizes digital sales. A transition to a direct-to-consumer (DTC) business model, in particular, requires that finance leaders quickly update their processes and technologies to help deliver the higher responsiveness that DTC demands.
Consider, for example, that the DTC model will require 360-degree operational and financial data analytics to understand and respond to customer needs. But business applications are often disparate and unconnected across the organization, and deliver data that is inconsistent and cannot be used on all systems. These can include customer relationship management (CRM), enterprise resource planning (ERP), inventory management, and finance applications.
Businesses that standardize systems and data can perform weekly and even daily forecasting to better manage inventory, logistics, cash flow, and labor needs. More frequent forecasts also position companies to quickly respond to unpredictable market swings or fluctuations in demand.
Agile planning and forecasting will require that all business systems are integrated with finance and that all data are centralized. CFOs should lead by reassessing existing technologies and processes, then taking action to enhance planning capabilities, enable nimble operations, and prepare for future crises.
Building a better finance function
Amid shifting business strategies, operating models, and workforce availability, CFOs of retail and consumer goods companies face growing pressure to reprioritize spending. Doing so can enable finance leaders to invest in initiatives that matter most, including digital transformation, e-commerce and social media platforms, omnichannel presence and inventory management, data management, physical stores, and, for some, DTC models.
Today’s uncertain business environment has also underscored the need to reexamine supply chain partners and planning strategies to protect and deliver against profitability obligations. To that end, some CFOs are broadening the traditional financial planning and analysis (FP&A) platform to connect directly with their supply chain planning processes via integration or expansion of supporting planning technologies to allow for a seamless 360-degree view and real-time data.
The power of today’s robust planning and analytics technologies can allow organizations to perform real-time, what-if analysis to assess the impacts of disruptions in supply chain and cycle times, price elasticity, and other business decisions. It can also help deliver the data and insights needed to support business decisions, including investments in growth and resource allocation.
How to bridge the gap
Building a business that remains competitive will demand that retail and consumer CFOs reconsider what to measure and how to measure it, as well as how to prioritize systemic changes required to successfully navigate the “new normal.”
Agile planning and flexible finance strategies call for a holistic strategy that unifies people, systems, data, and processes across applications and functions. Armed with data analytics and a 360-degree view of operations, CFOs can make sound business decisions and better manage operational and financial risks, which can trigger a cascade of operational efficiencies, reduced operating costs, and improved financial performance. Combined, these outcomes can provide the insight you need for enduring value.
Coronavirus Resource Center