After rising prices led to an estimated global sales growth of almost 10% in 2023, CPGs urgently need to revive volume growth in most markets. Bain & Company’s latest research report shows that long-term, profitable growth in the CPG sector is linked to a company having a positive impact on all stakeholders — not just shareholders, but also consumers, customers, employees, and the planet.

A closer look at the need for consumer packaged goods logistics leaders to focus on volume growth tops our review of the news and trends shaping the transportation and logistics industries in February.

Bain & Company’s Consumer Products Report 2024: Resetting the Growth Agenda

In addition to prioritizing volume-driven growth, CPG executive teams should seek to accelerate the acquisition of next-generation capabilities in their 2024 strategic agendas. The Bain report states that with no room left for price increases, CPGs must fundamentally reshape their businesses to reignite profitable, volume-driven growth.

Price increases implemented in 2023 in response to dramatic cost inflation are just one constraint the CPG industry faces. Room for maneuvering on costs is being limited by tight labor markets, high capacity utilization, and the ending of the era of ultra-low interest rates. The success of past efficiency drives means there are fewer cost-saving opportunities, too.

But questions abound. Is a return to volume growth in developed markets possible, or will emerging markets become the critical battleground? How will the growth imperative shape the next frontier of digital capabilities? What’s the best way to make real progress against sustainability goals and thereby create a new platform for long-term growth? Check out Bain & Company’s first annual Consumer Products Report, to answer these pressing questions.

Hasbro Cuts Half Of Its SKUs As Sales Fall 23% In Q4

Hasbro Inc.’s revenue fell 23% to about $1.29 billion during the fourth quarter, down from $1.68 billion a year ago. The company posted a Q4 operating loss of $1.2 billion in its latest earnings announcement.

For the full year, Hasbro’s revenue fell 15% to $5 billion from $5.9 billion a year earlier. The company saw an operating loss of $1.54 billion, including $1.3 billion of impairment charges related to divesting eOne, as well as nonrecurring inventory costs and royalty expenses. Their full-year outlook anticipates revenue for its consumer products segment will be down 7% to 12%. The company also raised its cost-cutting target to $750 million from its previous goal of $350 million to $400 million by the end of 2025.

Hasbro took three actions to help improve performance in 2023:

  1. It sold its eOne film and TV business to Lionsgate for $500 million and used the proceeds to reduce its debt by $400 million.
  2. The company accelerated its efforts to clear excess inventory, reducing its owned inventory by 51% versus last year.
  3. In December, Hasbro said it planned to eliminate about 900 jobs to improve profitability and fuel long-term growth investments.

Another part of the company’s long-term revamp included eliminating half of its SKUs which represented just 2% of revenue and were duplicative and unprofitable for the company and retailers. Hasbro’s toy and game brand portfolio includes Dungeons & Dragons, GI Joe, Nerf, My Little Pony, and Transformers, which had a related movie release last year.

Warehousing Demand Is Starting To Shrink

Retailers and suppliers have been cutting down inventory to deal with pricing debacles in 2023 and 2024. Now this trend is also affecting warehouses and storage space. The once-booming US warehousing market is coping with signs of contraction as businesses consolidate warehouses and, in some cases, upgrade existing sites rather than add facilities. The shift comes as retailers have turned the corner on a big drawdown of inventories and are aligning their supply chains for more normal, pre-pandemic stocking and consumer spending patterns.

That marks a significant change for an industrial real-estate market that saw demand explode and vacancy rates plummet during the pandemic, as e-commerce orders soared and retailers stocked up on goods to avoid supply-chain disruptions. The tight market pushed the average warehouse asking rent up by nearly 24% in 2022 year-over-year, compared with an annual increase of 6.3% in 2019 before the pandemic, according to real-estate services firm JLL.

Consumer goods maker Newell Brands, retail-pharmacy chain Rite Aid, and sports-apparel retailer Fanatics are among the merchants closing warehouses or upgrading existing facilities rather than opening new sites this year.

Other companies are unloading storage capacity by subleasing space. The amount of US warehouse space listed for sublease reached a record high of more than 156 million square feet in the fourth quarter of 2023, more than three times the amount available in the fourth quarter of 2021, according to real-estate services firm Savills. Find out how these changes will affect the warehousing market in this detailed read.

Holiday Inventories Remained In Good Shape As Shoppers Show Strength, NRF Says

NRF said that 200.4 million consumers shopped over the holiday cycle, which began on Thanksgiving, included Black Friday, and ended with Cyber Monday. That broke last year’s record of 196.7 million shoppers and surpassed NRF’s 2023 expectations by 18 million. Even as more people shopped this holiday season, there were concerns about stockouts leading to a negative domino effect on the supply chains.

But holiday inventories remained in good shape and showed no signs of depletion even as US consumers broke shopping records for the five-day Thanksgiving period, the National Retail Federation reported. This seems to rule out widespread overstocked conditions, as well as concerns over product stockouts that might trigger a late-cycle inventory replenishment push.

Despite concerns that many Americans have drawn down pandemic-related savings, there are substantial savings still sitting on the sidelines, according to NRF President and CEO Matthew Shay. On average, each shopper spent about $321 on holiday-related items during the cycle, according to the NRF, which conducted a survey along with Prosper Insights & Analytics. About 121.4 million people visited physical retail locations to browse and buy. That was down from 122.7 million in 2022.

Online shoppers totaled 134.2 million in 2023, up from 130.2 million the year before. Nearly half of consumers surveyed were about halfway through their holiday shopping at the time the five-day cycle ended, NRF said. The data is consistent with what NRF expects to be a 3% to 4% year-over-year rise in holiday spending to between $957.3 billion and $966.6 billion. Find out how holiday spending evolved in 2023, and what motivated the record-breaking number of consumers that shopped this BFCM in this detailed article.

Connecting the Dots: Zengistics Gives You Real-Time Visibility

As we look at changing consumer behavior patterns, it’s clear that real-time visibility and awareness are important for supply chain and logistics success, especially in the CPG sector. At Zengistics, we provide this real-time visibility along with other strategic advantages that empower your business to thrive in a rapidly changing landscape.

Our Services:

  • Flexible options for dynamic needs: Reefer, Flatbed, Dry Van.
  • Predictive Analytics: Anticipate disruptions and proactively adjust your logistics strategies.
  • Dynamic Route Optimization: Optimize shipping routes based on the latest trends and developments.

These services, seamlessly integrated into Zengistics, ensure that you stay informed and gain a competitive edge in the market.

Don’t just navigate your industry; lead it with Zengistics. Speak to one of our experts today and discover how Zengistics can elevate your shipping and tracking capabilities.