In the future, the predictive analytics, collaborative channel management and demand-driven supply chains that sustain these strengths will be more important than ever.
The Future Outlook
Over the next five years, growth in the global home and personal care market is expected to slow to half the levels achieved between 2004 and 2009 (to 2.2 percent in the household sector and 2.6 percent in personal care).1 Demand for relevant, convenient products in key beneficial categories such as anti-aging skincare targeted at the over 50s, as well as sun and baby care, will remain strong. But developed markets are maturing fast, which will mean fiercer competition for in-store market share. The key to sustained growth will be in emerging markets, where a billion new consumers and rising disposable incomes offer tremendous growth potential for players who can move in quickly with the right combination of brand positioning and channel management. Asia’s rapidly expanding skincare market, fragrances in Latin America and extra-BRIC markets (such as Pakistan and Venezuela), and “green” homecare offer especially interesting opportunities.
Industry Background
Two factors—the fallout from the recession in mature markets and one billion new consumers in emerging markets—have transformed the industry landscape for home and personal care, complicating longer-term trends such as aging and health consciousness, and intensifying and globalizing competition.
In mature markets, thrifty consumers have continued to trade down—with significant consequences for private label penetration. In household care, competitively priced private label paper products, bleaches and polishes have made strong inroads. And taking advantage of the move to “masstige” beauty and personal care, some mass-market retailers have come up with private label products as sophisticated as their branded equivalents.
In emerging markets, which will account for the bulk of global sales growth over the next five years, middle-class consumers are trading up in both sectors.
The High Performers
Against this background, high performers have been able to consistently increase revenues while maintaining strong profitability over a five-year period. They have also delivered higher returns on invested capital over both three and five years—a reflection of their higher levels of capital efficiency.
The Building Blocks of High Performance
These high performing companies owe their success to the mastery of three building blocks.
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Market Focus & Position
High performers continue to focus on two things: where to play and how to win. They have enhanced their proven expansion strategy and are taking the same approach to gain share rapidly in emerging markets, either by acquisition or by adapting their products to make them relevant in these markets.