What is Consumer Goods Sector
The consumer goods sector is a category of stocks and companies that relate to items purchased by individuals rather than by manufacturers and industries. This sector includes companies involved with food production, packaged goods, clothing, beverages, automobiles and electronics.
BREAKING DOWN Consumer Goods Sector
Performance in the consumer goods sector depends heavily on consumer behavior. When the economy grows the sector will see an increased demand for higher-end products. When the economy shrinks there is an increased demand for value products. While some product types, such as food, are necessary, others, such as automobiles, are considered luxury items.
Trends in the Consumer Good Sector in 2018
Organizations doing business in the consumer goods industry in 2018 are currently developing newer and bolder strategies to execute traditional levers against a backdrop of a more stable US and worldwide economy. Among the current trends are:
- Emergent trends and markets. Companies in consumer sectors are looking to identify trends and capitalize on growth in emerging markets. They are also always keeping an eye out for opportunities to acquire or partner with companies to enable access to consumers, leverage market solutions, and in some cases, access sources of raw material. With weak demand and increased competition in North America across consumer product categories, many US companies are positioning themselves for growth opportunities beyond the United States and other traditional markets of developed western economies. One approach companies are taking to gain access to emerging markets is forging partnerships with local brands. Such partnerships can help US-based companies adapt their products to the needs of a specific market.
- Innovation. Consumer products companies have traditionally looked to innovate as a source of growth, and now, they are trying newer and bolder strategies than ever. Many such companies utilize agile workflows to frame their approach to developing, testing, and iterating innovative ideas compared to traditional, highly structured, more time-consuming testing methods. However, companies are changing how they pursue innovation. In addition to following traditional new product development cycles, many companies in the consumer products industry are experimenting with new approaches, such as innovation through: venture capital-styled incubators, crowdsourcing and partnering with consumers, renovation of previously successful products, continued focus on health and wellness/good-for-you products.
- M&A activity. Companies in the consumer products industry are often increasingly looking to expand across geographies and reach out to markets that can drive both sales and profitability.
- Digitization. Companies in the consumer products industry are aligning technology in creative and efficient ways to optimize customer engagement and influence the consumers’ path to purchase.