Daniel: Hi, I’m Daniel Torres Dwyer and welcome to LS International’s Career success podcast. Today we are going to discuss a very interesting topic: the evolution and future of the US macro-economy and its impact on the consumer goods industry. For this, it’s a pleasure to have Roopa Varghese with us.
Roopa is the Sr. Director for Digital Marketplaces and New Brands for Georgia-Pacific. She is based in the US but is a truly global executive, originally from India, and has education and work experience in Africa, Asia and Latin America as well.
She started her career at India’s FMCG company ITC, and then joined The Boston Consulting Group, after which she had leadership roles in Marketing at The Hershey company before joining Georgia-Pacific.
Hi Roopa! Thanks for being here with us today.
Roopa: Thank you very much Daniel. Thank you for having me.
Daniel: So, as I mentioned before, we’re going to be discussing the U. S. macro economy, and the US macro economy seems to have been registering a strong growth in the last years following the drop that occurred during the last recession around 2007-2008. In your opinion, Roopa, what have been the main key factors for this recovery?
Roopa: Well the US macro-economic recovery since the 08/09 recession has been weaker than prior recoveries but I do agree with you that there has been an improved performance since last year. Now, some of this is due to a cyclical recovery of industries such as oil and housing and the US multinationals of course have benefited from improved growth overseas. But innovation in the US has played a very important role. The tech sector, which in the US is a key driver of innovation, has done extremely well – E-commerce is booming. Another factor is, really, the optimism about upcoming policy changes, including tax, that could favorably affect US corporate profits. And this has been a key driver of stock market performance.
Daniel: Okay. And you, Roopa, as someone that was working in the corporate US of 2007/2008, during the economic crash. Back in that day, ten years ago, what behaviors did the consumer have at that time?
Roopa: Well it’s hard to believe it’s been ten years. But, you know, consumer confidence was extremely high prior to the crash. There was a much greater willingness to spend overboard, across the board and that really translated to high consumption across all sectors. Now this has really changed in the years since the recession, more for some groups of people than for others as incomes from the U. S. have become more polarized.
Daniel: And is this recovery period where the numbers seem to be going back to where they were, as we said, ten years ago, how have these behaviors in the consumer changed in retail and mass retail and fast moving consumer goods, consumer packaged goods?
Roopa: Yes, so consumers as said are much more cautious than they were prior to 2009 and they’re much more value driven. And in Retail you can see how this translates into a strong performance for Discount retailers such as Dollar General.
Also, consumers in general are much more comfortable digitally and a lot more convenience oriented, which has changed the way they shop and so the growth in e-commerce retail, as well as digital media channels, is a direct result of the behavior changes.
Daniel: And do you think that that’s like a purely demographic economical change or do you think that the in store habits have also been affected?
Roopa: I would say both. Both demographics and in store habits have changed. Demographically millennials are now in their peak earning years: they actually drive about thirty percent of CPG and Retail spend today. They are digitally native, they are much, much more comfortable online so they tend to spend more time online and shop more online, and mobile, of course. And that kind of fundamentally alters the consumer across the board. So you see the in store changes for these consumers because the way they engage in store changes as a ratio of how they spend all their time, and as the landscape evolved you find retailers also adapting. So really, for retailers optimizing the Omni-channel experience across all of the multiple touch points of the consumer journey both in store and online, has become really important.
Daniel: Yes and actually this, Roopa, brings me to the next question. Which is that, as we are saying, digital seems to be “the” catch word of this new era and from your vantage point, currently, in e-commerce how do you approach the American consumer of the 21st Century?
Roopa: At a fundamental level, the consumer has not changed, you know Daniel. Consumers still want products and experiences that meet their needs and delight them, at some level. So, really, the job of understanding the consumer, what his or her needs are and figuring out how to fulfill these needs in a way that adds value to them remains the same, and it’s as important as ever. Now what digital technology has done is change the way consumers engage in the buying journey and so this is a change.
Consumers today; they’ve grown to expect a much higher degree of customization and personalization and 24/7 convenience. All of this has been made possible by data. As I said, a growing portion of the population are digitally native consumers, it’s millennials and the people that have come after them.
So, really, in order to find solutions to delight this consumer – this evolved consumer, if you will – it’s important to have a very deep understanding of how they engage in this new landscape and be able to leverage digital tools to create value for that.
Daniel: And looking forward, because we’ve looked at the years that followed the recovery of the economy. But looking forward to the next 10, 15, 20 years and beyond, Roopa. What top three trends new foresee for the next decade?
Roopa: For the first one I would say is that e-commerce adoption by consumers will accelerate. We’ve sort of almost reached a tipping point and I think that trend going to continue. What that will do is it will drive continued innovation in consumer-facing digital tools. For example, artificial intelligence etcetera. But also, it’ll drive supply chain innovation as companies figure out how to optimize delivery mechanisms and shipping costs as the commerce really gets to scale not just for Amazon but for others as well.
The second thing that we would expect to see is continued consolidation of brick and mortar retailers. I think there’s going to be really a reckoning between the strong and the weak.
And the third thing is the Disruption of the CPG industry. It’s an industry ripe for disruption. It’s a large profit pool and one would expect to see new entrants much more in tune with the digitally native consumer who are able to disrupt, as we have been seeing with companies such as the Dollar Shave Club.
Daniel: Fantastic, these I think are very interesting points. So Roopa thank you so much for sharing your insights with myself and with us and with our listeners.
Roopa: It was a total pleasure, Daniel. Thank you for having me on this podcast.
Daniel: And thanks to all the listeners and look forward to seeing you again in LS International’s Career Success Podcast. Have a great day.