The Consumer Goods Forum recently announced a leadership change, with former Oliver Wyman executive Wai-Chan Chan taking over as managing director from Peter Freedman. ESM caught up with both of them.
This article first appeared in ESM Issue 4 2020.
While the road ahead is anything but clear, retailers and manufacturers have demonstrated in the past few months that by acting flexibly and proactively, they can adapt to even the most hostile of situations.
This has certainly been the case for the members of the Consumer Goods Forum (CGF), which comprises around 400 CEOs and senior managers from across the retail and consumer goods sectors.
In May, the Forum announced the departure of its long-standing managing director, Peter Freedman, whose six and a half years at the helm helped drive purpose into what was once a ‘talking shop’ of top-level industry executives.
Replacing Freedman in the top job is Dr Wai-Chan Chan, a former Oliver Wyman and McKinsey executive, who also previously served as North Asian regional director for retail giant Dairy Farm.
With that in mind, and given the current challenges facing the global retail and consumer goods sector, ESM caught up with both individuals to gauge their expectations for the industry in general, as well as for the Forum itself.
Succession Strategy
“This has been a long succession plan – the CGF co-chairs and governance committee have known about it since last June,” Freedman explains. “We were initially going to announce it in March, but that was just about when things started to happen with the coronavirus.
“With most organisations, when you have a leadership transition, you have a period of induction and a period of shadowing. With everything that’s going on, we’ve had to do this via Zoom – I’m in my office in the UK, and he’s in Hong Kong. We’ve sort of ‘reinvented shadowing’, you could say.”
For Chan, who previously worked alongside Freedman at McKinsey, and who has been at most CGF events in recent years – “I think I’ve built up a good understanding of what’s critical, what’s not critical, what works and what doesn’t work,” he says – the new role presents an opportunity to drive positive change, very much in keeping with the mindset of both the Forum and its members at present.
“I’ve been a consultant all my life, apart from a period when I was a retailer, and the older you get, the more you like to do things that are a bit more altruistic in nature,” Chan explains. “This, to me, was a good opportunity to do that. I like to think of myself as someone who cares about ‘impact’. Show me what you are doing. Has it actually made a difference, and where has it made a difference?”
Testing Times
In many ways, the current COVID-19 crisis has been a sort of litmus test for CGF members – for many years, the Forum has sought to foster joined-up thinking across some of the world’s biggest companies and translate this into action on areas such as waste reduction, deforestation, and health and wellness.
Recently, it established a series of ‘Coalitions of Action’, backed by a charter adopted by all Forum members, which foster purpose-driven business models with actionable results.
“The Coalitions of Action are and remain very much the next evolution of the Forum,” says Freedman. “These are very much around getting committed companies to drive positive change, and then report on this change. So far, we have launched eight, based on initiatives that we have discussed in the past, and these have given us even stronger clarity on what we are trying to achieve.”
As he explains, the current situation has placed some of these in the spotlight – for example, the Collaboration for Healthier Lives Coalition, which launched in April, just as the pandemic was reaching its peak.
With members including Nestlé, Carrefour, Danone, Tesco, Coca-Cola, Walmart, PepsiCo, Mars, Sainsbury’s, Unilever and many others, the establishment of the coalition has enabled them to share best practices on how to maintain the safety of both their employees and consumers, ensure supply chain stability, and coordinate charitable donations.
“In the long run, this will mean more of a focus on the health-orientated processes that will emerge from the coronavirus situation, especially when it comes to less well-off or underprivileged customers,” says Freedman, who adds that the lockdown situation has already facilitated some positive discussion between members of the various coalitions.
“Through the power of Zoom, we are now able to meet, discuss and coordinate actions on these eight areas, as well as reflect on where each member can make a distinctive contribution to tackling the coronavirus.”
Core Areas
At the same time, the Forum has no intention of taking its eye off the ball when it comes to some of the core areas that have dominated discussion in recent years, such as waste reduction or deforestation.
“There may be some areas where you want to dial down the energy levels, but, at the same time, so many of them are interlinked,” says Freedman. “Take deforestation, for example. Coronavirus is a zoonotic disease, in that it passed from animals to humans, and many zoonotic diseases are triggered by deforestation, as we’re pushing animals out of their natural habitat, so there’s been a lot of interest in accelerating our efforts in this area.
“This is where the Coalitions of Action can be so positive. Typically, leaders in a particular area join a coalition and encourage others to join them, so you can develop a critical mass.”
Focus Minds
At a broader level, both men also believe that the coronavirus crisis has shown the retail and consumer goods sectors at their best, both in terms of responsibility and flexibility – many businesses have shown impressive dexterity in how they have adapted their business models.
“I think the industry has responded pretty fast,” Freedman explains, adding that the Forum has had several discussions with CEOs to determine why this is the case.
“Most of them talk about purpose, in terms of being clear about your responsibilities in this particular circumstance, to provide essential goods and services, and food, in a crisis. That purpose is incredibly empowering and has galvanised organisations from the bottom up.”
Having spent most of his career working in Asia, Chan adds that such rapid flexibility and adaptability is regularly seen in markets such as China, and its adoption by businesses around the world in a time of crisis has been inspiring.
“For those who work in China, there’s a term that’s used, especially by multinationals, called ‘China speed’. It’s a kind of warp speed,” he says, “that one year spent working in China is equivalent to five years in the rest of the world.
“Since this crisis has emerged, I’ve been pleasantly surprised at the level to which businesses around the world have also adopted ‘China speed’. It has been quite a feat of engineering from the multinationals.”
Consumer Trust
What effect will such efforts have on consumer trust? As last year’s Consumer Goods Forum Global Summit in Vancouver found, trust in branded manufacturers is low among millennials, and lower still among Generation Z shoppers, who feel that most brands are not honest about ‘practising what they preach’. Could the COVID-19 situation offer an opportunity for a reset?
“Trust has grown in brands since the coronavirus crisis started, which suggests that, short term, there are opportunities for bigger businesses to engender trust,” says Freedman, “but it’s too soon to judge the long-term effects.
“COVID-19 has created an ‘unfreezing’ opportunity for both large brands and challenger brands to earn trust on the issues that consumers care about, and will continue to care about, such as nature, climate, waste. Also, with health and safety, there’s a real opportunity to earn trust at the moment.”
According to Chan, in terms of rebuilding trust, it is important that the message that gets out there is a holistic one. No brand wants to be seen to be cheerleading in a pandemic, even if the measures that they have taken have been exhaustive.
“The issue is really around who’s articulating this,” he says. “If the message comes out in a neutral way, consumers are going to trust it a lot more. I would imagine that most brands or manufacturers aren’t going to come out and say, ‘Look at what we did,’ but if, for example, employees came out and talked about how their well-being was looked after, and how they were kept safe, I think it would have a positive impact on consumer sentiment.”
At the same time, of course, this is just one part of the customer journey, and long-term trust may take longer to generate.
“There will always be something else that could counteract or erode this trust again,” Chan adds. “You can earn brownie points and build up some stock in the tank, but it will only last a little while.”
The Right Time
The Consumer Goods Forum has changed quite substantially in the six and a half years since Freedman’s appointment as managing director, with the former McKinsey executive saying that his mandate from the outset was to help Forum members “find purpose” and, in turn, help instigate positive action.
“When I joined the CGF, it was a group where all the CEOs would show up once a year and chat to each other, and sort of wonder what they were supposed to do next,” he says.
In the years that followed, the Forum successfully shifted its mindset towards the consumer, and his or her expectations when it comes to brands and the wider retail and consumer foods industry.
“This led us to focus on trust and how we can act together to drive that trust. That’s something we can do quite effectively at the Forum, as it’s a group that’s led by chief executives, which is quite rare. Also, it’s global, it’s collaborative, and it brings together retailers and manufacturers. It’s that uniqueness which led us to work out who we were and what we needed to do.”
As to the timing of the announcement?
“I’m a great believer that CEOs have a lifespan in a particular job, and my measure of that is five to seven years,” he adds. “If you’re in it for much less than that, you can’t have an impact, and if you’re in it for much more than that, you possibly lose the energy and the momentum. It’s something that I’ve stuck to throughout my career.”
Chan, meanwhile, is looking forward to working with forward-thinking Forum members on building on the strong foundations laid down by his predecessor.
“With the Forum, you have a lot of the most important people in the industry in the room, trying to make things happen,” he says. “Sometimes they will agree, and sometimes they won’t, but you have the potential to drive great action.”
The Consumer Goods Forum, together with Boston Consulting Group and Nielsen Global Connect, have just published a revealing report on the state of consumer health, nutrition and wellbeing around the world. For more information, visit www.theconsumergoodsforum.com
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
