Key takeaways for FMCG Sector- UAE/QATAR/GCC/ME | Require A Robust Business Strategy-Covid/Post Covid-19/Current Challenge

FMCG businesses who have already been investing in newer technologies are prepared better in the unfortunate scenario that happened due to COVID-19. As per my opinion just like 2020, the year 2021 will remain tough and a year of uncertainty till the third quarter of 2021. Effective administration and efficiency of vaccination to be seen. And most important is the advancement in the treatment of patients and new developments in the medical field. No clear future can be predicted due to the ever-changing nature of the Covid-19 crisis. Businesses, Managers and executives will face tough choices. Businesses must be very careful yet bold, Agile but cautious and must combine data with creativity to take and drive decisions to steer the business forward. Only a corporate vision that combines and leverage all these qualities will be able to sustain itself and steer the business forward and face the challenges in front of them.

 

We must make sure that everything we do has a “Consumer is Paramount” approach. And this will determine current/future success. Adopting digital automation across manufacturing, planning, supply chain and marketing can help us to adapt and overcome the challenges we are facing or will be facing in near future.

 

In this report, I will give my insights on some of the unique challenges posed by Covid-19 and will share strategic points for managing FMCG business risks post covid-19 scenario after the gradual lifting of lockdown and coming back to normal business. The topics I’m going to touch on in my report are as follows:

 

1.       Challenges (Biggest & Unique Challenges) companies in Qatar/Middle East are facing due to Covid-19

 

QATAR/ME/UAE has a very high volume of businesses related to tourism and hospitality, which has experienced a steep fall and decline in revenue generation due to restrictions in the movement of people domestically as well as globally. As a result, significant employment loss happened for the largest sectors in Qatar/ME. Most of the revenue used to come from expatriates working in Qatar/ME and foreign travellers besides the domestic market. Bigger companies will still be able to come out of this tough period and will be able to recover from the downturn of the markets.

 

From a global perspective, the biggest challenge for businesses will be the cash flow. Due to this reason, these companies will not be able to generate consistent revenue and are having difficulties managing their overheads. These issues seem to be simple but are very critical that could result in closing down businesses that are not able to cope and sustain themselves in this tough scenario.

 

2.       Preparedness of business leaders and companies Before, During and After Pandemic:

Big lesson learnt by Businesses/Owners/Executives/Managers of start-ups, small, medium or large companies is that when we are creating a business plan, we must multiple scenarios in Profit & Loss and Business forecasts. Always prepare for the worst scenario and prepare yourself to take up the challenges head-on in any damaging situation.

I always recommend holding 20% liquidity to assist with cash flow and keep your expenses as low as possible without being extreme in order to prepare for recessionary trends and serious economic situations have arisen from challenges like this pandemic.

Being a great believer in very efficient and multiskilled workforce which also keeps the cost down. To summarise, liquidity and having an efficient workforce will help you to strategize in difficult situations and will keep you in good stead.

 

 

3.       Economic predictions After Pandemic:

We are in a steady period of decline in the global economy and recession similar to 2008-2009, but this time will be worse because of pandemic and it may have a long-lasting effect on people and businesses. If we have robust strategy, we can come out of this but as per my opinion and previous experiences it has been a tough 12-18-month period of sufferings and decline. There has been 12 years of constant growth in sectors like FMCG, hospitality and tourism (HORECA). And after this growth period most of businesses were not prepared for a time like this. A lot of learning has to be done and to rethink our approach to business.

Tips and advice for businesses during and after pandemic:

1. Plan to rebound and work hard.

2. Keep communicating with all your employees and stakeholders as a leader. In difficult times people need to see clear direction so that they can feel confident.

3. Keep growing and don’t stagnate. Look this pandemic as an opportunity to maximise your potential.

4. Focus on the passion.

5. Don’t quit. Mantra is keep working hard, learn always and never quit.

Pandemic has been a very harsh start and we have seen a steady decline in economy over the past 12-18 months in majority of the sectors while entering into recession.

Keeping this in mind, businesses need to pay attention to cashflow, liquidity, and workforce. If we haven’t paid attention to these over the past 12 years of positive growth, then we have to make some difficult decisions.

 

I encourage everybody to educate themselves on world economy, what’s happening now and happened in the past and make your own decisions based on the facts. Please do not take everybody’s word for it and do your own research and find the best approach for your company or business. Cutdown your expenses and overheads as another decade of hard work and growth is coming to provide the opportunities to develop business. Spend less and try to find out ways to earn more to build up cash flow. It will be worth it.

 

FMCG sector in Qatar/Middle East/GCC - Way Forward

Businesses are grappling with the negative impact of pandemic severely disrupting sustenance of established businesses in Qatar/Middle east and the world at large. I will try to provide insights on the challenges in FMCG sector, impact on FMCG marketing mix and macro-economic impact caused by the pandemic. I would also like to share four important and key strategies FMCG business can adapt to avoid this kind of situation arising out of this pandemic/other recessionary trends in future.

COVID-19 numbers are on an upward trajectory in most of the countries, in some countries seriously and others somewhat under control or decline. Vaccination Started. At personal and professional level, uncertainties related to pandemic are still there. Businesses in Qatar/ME/GCC/World are caught off guard and are facing this new challenge and trying to find ways to tackle with. The impact of pandemic in Qatar/ME/GCC region is expected to show adverse effect at least for the next quarter of 2021 after a period of 12-18 months and will leave an economic scar for long time to come.

Businesses and companies have to adapt fresh strategies to face the challenges and will have to implement these strategies at a great speed to come out of this crisis as a winner.

On the government front, we are seeing the infusion of billions of dollars to save businesses and industries. We are expecting a lot will change and a new normal is on the cards along with swift vaccination Programmes.

FMCG Consumption: Permanent Consumer Behaviour Changes Expected

ME/GCC consumers and shoppers didn’t take long to change their buying pattern by shifting to online for their needs. A big paradigm shift in consumer buying behaviour is being seen while they were being confined to their homes.

 

Middle East has very reliable connectivity, a mature E-commerce ecosystem with faster deliveries enabled people to shift from traditional ways of shopping to Online shopping very quickly being digitally savvy population. The buying needs according to priority are as follows: Buying starts from- Hygiene products then food essentials followed by personal care essentials like Shampoos, Soaps, Toothpaste, Hair oils, creams and so on.

 

If we consider the study of McKinsey as a learning, then it becomes apparent that shoppers and consumers will shop more for FMCG products even after the pandemic challenge is over. Hygiene will become a new normal and shoppers will tend to stick to online shopping to a greater extent and degree even after pandemic.

 

Impact on FMCG Marketing Mix:

 

Pandemic has made it hard to sell and market the products aggressively without being accused of insensitivity. A softer tone with relevant message to the consumer must be developed and adopted. Pandemic has made more and more consumers spending their time online. Marketing communications and consumer preference are mostly coming from virtual space.

 

In FMCG Sector, the need of the hour is Innovative and bold marketing campaigns constantly emphasising wellbeing of the consumers, highlighting the safety concerns of consumers, staff, and suppliers and not forgetting the quality aspects of the products. So, traditional ROI based approach must be replaced by brand building taking into consideration of marketing budgets.

In-store behaviour and experience will change – Bulk buying and stock-up approach will stay around for long and may become a new norm. it will force FMCG sector retailers to rethink their supply chain and manufacturing schedules while keeping more inventory in the warehouses and stores. Social distancing will remain on everyone’s mind for a while and impact of the footfall and actions of people when they do get into selling place.

E-commerce platforms-Investment in technology: Being consumers shifted and shifting to online shopping, E-commerce platforms and investments in e-commerce are increasing in MENA countries. It helps to improve consumer engagement by delivering personalised communications and at the same time will help to learn and understand online shopping behaviour of the consumers. Most of the ME/GCC businesses are trying to have more SKUs and online retail platforms.

 

Critical for Success-Last Mile Fulfilment: The best online campaign may not bring desired or expected result unless backed by strong and robust fulfilment to the last mile. We have to ensure enough stocks so that the consumers’ needs are met on time without delay.

Macro-Economic impact on Middle East FMCG Sector (Middle East/Qatar/UAE/GCC)- The Governments have been proactive and have started widespread testing, nationwide disinfection campaigns, Vaccination Programmes and investment is heavy to help people across all nationalities, protecting jobs, and providing liquidity into the economy. Qatar/Middle East has been relatively ahead as compared to other countries when it comes to battling the COVID-19 Pandemic.

The major factor is the oil market: despite its slump, oil sector can be counted on a complete recovery when the demand is back to normal. This will make the region to be the first to bounce back and resume normal business as we are seeing it already.

Coronavirus impacted manufacturers and global supply chains. By adopting four-point strategy to counter the impact of recessionary trend arising out of pandemic, we can save and insulate ourselves form similar disruptions in the future by learning the new ways to counteract the challenges and overcome them.

1.       Say No to reactive approach and be predictive instead: Most supply chains are always reactive to sudden spikes or lows in the continuous mapping of supply-demand complexities, we must base our decisions on the model of predictive style so that we may be able to adapt to the changing markets and changing patterns.

2.       Supply Chains-Glocalization: Develop a supply chain that is a mix of globally reputed vendors with local development and production centres enabled us to tide over the crisis with local supplies.

3.       Digitization: We must amplify our supply chain digitization efforts allowing us to leverage data to shorten the reaction times of vendors. This will result in cost and time efficiencies while dealing with vendors across multiple geographies in real-time.

4.       Think outside the box: Our biggest strength will be our ability to challenge the tried and tested procedures and innovate on our feet. We have to implement creative approaches across verticals, from sourcing to manufacturing to logistics, to find solutions in real-time and solve what seems like insurmountable challenges.

 

Summary of the key insights from the entire topic is as follows:

1.       This is the right time for brand building and increasing product penetration: Many FMCG companies of Middle east are still gauging the situation and execution is very slow. In a situation like this, FMCG products and brands can increase and slowly accelerate their growth by right placement of the products and by increasing visibility of the brand to counteract the competition. Strong data-driven approach is must towards making decisions will be the real thing.

2.       Re-strategization is the key- Markets will tend to behave differently with new challenges: Communication models are changing. Interaction with the dealers, distributors and in turn their own interaction with the retailers is changing seriously and drastically. Companies can use this opportunity to manage supplies by adding to their warehousing facility and realigning businesses to deliver FMCG products during and after pandemic time is over.

3.       Re-orientation of Ho re Ca segment in FMCG is needed: Ho re ca sales have literally paused for a while. The companies that rely on Ho re ca channel have to move quickly towards a multichannel approach. The sales team, production and packaging team need to be realigned without delay as soon as possible.

Opportunities will also arise from the Qatar’s hosting of three major sports events, including the FIFA World Cup 2022, new shopping festivals and initiatives reforms such as allowing visa-free entry for nationals from 80 countries which will encourage high tourism spend going forward.

4.       Focus on the upgradation of Skills of the team and multiskilled approach: This will increase the efficiency of the entire team as and when the consumer demands get back to normal level to deal with the strong competition in the market.

5.       KRA of FMCG sales team has to be changed and modified: During this time the beverage industry is operating like Milk and bread industry. Companies have moved from monthly to weekly sales reviews.  KRAs and KPIs of the sales team has to be changed to get better results from them. From physical visits, the sales team has to manage business by calling on telephone more.

6.       Managing expatriate /migrant workers is important and immediate: To make your vision understood to the on-ground worker. Tell them why you exist and why it is important as a food/Beverage company to operate in Pandemic. Accessibility of senior and top management is very much required to get the real-time feedback and solving the grievances of the employees and workers.

Technology will be playing a much bigger and important role in the FMCG businesses in Qatar/Middle East/GCC and Other countries of the world. To get a strong competitive edge and to penetrate the market in a big way, it is important for us to be sharp enough to get the data, analyse and use the data to make quick decisions. 

Rajesh Rai Sharma is a working management professional having 28 years of experience in leadership roles, Marketing & Sales, Exports, International Marketing, Management, and Business Development. Worked in Asia-India / Bangladesh, Africa / West Africa as PCH / GM / Marketing /BD /Commercial / Operations. Core Areas of Expertise – Textiles / Fabrics / RMG / Fashion / FMCG - Food & Beverages /Soap /Chemicals /PET / Polymers.