August 2022

SGV thought leadership on pressing issues faced by chief executives in today’s economic landscape. Articles are published every Monday in the Economy section of the BusinessWorld newspaper.
29 August 2022 Rossana A. Fajardo

How tech companies can stay agile in an uncertain world (First Part)

First of two partsThe recent surge in risks associated with international commerce and technology nationalism has had a significant impact on the technology sector. Tariff increases, export limitations, stricter privacy regulations that include data onshoring, changes to employment requirements, and a closer examination of mergers and acquisitions (M&A) and ownership regulations are just a few of these.The borders between technology and other sectors are dissolving rapidly due to digital disruption, and technology companies must address this now more than ever. A shared demand for data and technologies, as well as cross-sector trends, are fostering industry convergence. These include the establishment of alliances centered on data and technology, the development of industry ecosystems, the exploration of new business models, the increase in investments in new hybrid technologies, and the digitalization of everything.EY teams conducted a global research study with 750 technology executives to have a better understanding of the increased risks and difficulties that global technology companies must face. Additional insights and suggestions from the EY Global Technology Sector team were added to the findings to help people understand what technology companies must do to succeed in a constantly changing environment.In the first part of this article, we discuss how technology companies need to withstand uncertainty, address critical regulatory issues, optimize their supply chains, and choose the right operating model.WITHSTANDING UNCERTAINTYThe results of the EY survey show that technology leaders are coping with shifting political costs, political volatility, and new limits that are posing both possibilities and problems for their supply chains and operating models. Many technology companies have adopted a “China-plus-1” strategy as a result of tariffs and increased labor expenses. Asia-Pacific nations including Vietnam, Malaysia, Thailand, and India gain advantages from new investments that diversify risks in their supply chains. There is also a greater sense of threat since businesses around the world may experience more frequent cyberattacks that have an impact on their operations.Technology businesses increasingly view government intervention through two distinct lenses, depending on their position in the value chain. On one hand, governments that are worried about protecting their access to crucial technologies are developing new, multibillion-dollar incentive programs to encourage the expansion of new research and development (R&D) and fabrication capacity, such as the proposed US Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act and the European Union’s proposed Chips Act.On the other hand, governments are increasing the complexity of the situation with new laws and regulations. Federal contractors are subject to US government procurement limitations that are motivated by national security concerns and have an impact on their supply chains. The Digital Markets Act was passed by the European Union to place restrictions on digital platforms, including guidelines on their ability to grow and the requirement to give users access to competing services.ADDRESSING CRITICAL REGULATORY ISSUESThe complexity of ensuring compliance has increased as a result of current geopolitical issues, which have also led to new export control measures. These include new export bans on sensitive technologies, telecommunications, encryption security, semiconductors, sensors and software.For instance, the Export Administration Regulations, which are overseen by the Bureau of Industry and Security of the US Department of Commerce, are “extraterritorial,” meaning that they place restrictions on products that are manufactured outside the US using software or technology that has US origins. To make sure they are compliant with these and any upcoming rules, technology businesses will need a comprehensive understanding of their upstream value chains.The study highlights the following critical regulatory issues affecting technology enterprise operational practices:• Trade taxes, sales/use taxes, value-added taxes, and taxes on digital services• European Union’s approach to competition• The OECD Base Erosion and Profit Sharing (BEPS) 2.0 projects with Pillars One and Two• An executive directive prohibiting anticompetitive behavior• Review of crucial supply networks for producing semiconductors and other cutting-edge technology via executive order• Intellectual property taxes (IP)Technology companies worldwide are being increasingly impacted by a wave of regulatory and tax environment changes. Countries aim to broadly tax their digital economies and transactions, potentially driven by recent political shifts. Legislators are concentrating on new tax and regulatory regimes as a result of the evolution of digital services and operating models such as over-the-top and Software-as-a-Service (SaaS). Findings from the EY survey revealed that efforts to update antitrust and competition laws in the technology sector, data transfers, and trade and taxation regulations were the main influences to changes in operating models.A closer examination of the survey results reveals some notable differences between various facets of the technology industry. Executives at internet, e-commerce, IT services, and cloud companies consistently expressed more concern about the effects of nearly all the previously mentioned regulatory issues. According to legacy technology executives, they are affected by the General Data Protection Regulation (GDPR) of the European Union, digital services taxes, and global minimum taxation. On the other hand, emerging technology company executives focused more on sourcing of raw materials and the impact of sector competition/antitrust policy.OPTIMIZING SUPPLY CHAINSTechnology companies had to rethink their supply chains after the impact of COVID-19 and a host of new “black swan” events. The pandemic put further strain on the global supply chain, which was already coping with the effects of the US and China trade issues. Importers had trouble buying manufacturing supplies on time, and exporters had trouble getting bookings on ships due to worldwide factory closures and a lack of shipping containers. It may not come as a surprise that 95% of the executive respondents said their organizations are changing their operational model and supply chain.The desire of technology executives and their organizations to nearshore and reshore their supply networks was significant in the survey results, reflecting how the effects of the pandemic on supply chains have increased the focus on resiliency and sustainability. As much as 71% of executives said their companies expect to move their manufacturing to be more localized over the next three years, compared to 19% who said their companies have already done so. The fact that 68% of the CEOs agreed that tech firms will need to take better efforts to reduce global emissions over the next three years is likely a linked aspect that also strengthens the case for near/reshoring.CHOOSING THE RIGHT OPERATING MODELExecutives recognize the need to continually and proactively update their operating models. They noted that they look for benefits such as higher revenue growth and employee satisfaction — the top benefits realized from operating model changes. However, many are also addressing tactical and functional issues, giving the impression that there is much more to do. Industry leaders were more positive about the advantages of implementing the right operational model. In terms of both financial performance and customer or employee satisfaction, these benefits should show a direct correlation between having the right operating model and significant improvements in business performance.The EY survey found that 65% of respondents have changed their operational model at least once in the previous 12 months. While highlighting the importance that the top technology businesses play in the effort to become adaptive digital enterprises, these technology executives nevertheless note that they still face difficulties. As a result, planning and evaluation paces are accelerating. Technology leaders reported that in light of the operational environment’s rapid change, they routinely examine their operating model either completely or in part. Nearly half of respondents claimed they now perform this assessment a few times a year.More than half of executives (55%) stated that they still think their operating models need to change while 50% are actively planning improvements despite more frequent evaluations of their operating models and more frequent revisions based on these reviews.Companies also became more certain that they had the right operating models, as their size and revenue increased. The majority of small- and medium-sized businesses or businesses with low to medium revenue believe they do not have the correct operating model and seek further enhancements, whereas high-revenue technology enterprises believe they already do. Executives in other sectors were evenly split or said they need to plan for future improvements, in contrast to the majority of executives in the autotech and technology infrastructure sectors who believe their companies have the correct operating model. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Rossana A. Fajardo is the EY ASEAN business consulting leader and the consulting service line leader of SGV & Co.

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22 August 2022 Warren R. Bituin

Embracing the power of technology beyond the COVID-19 crisis

As the pandemic slows down in many parts of the world, many companies will find that digital technology will be one of the most powerful options for recovery during this next phase of the COVID-19 crisis.Businesses will also undertake this challenge despite severe obstacles which include inconsistent revenue, disorganized workforces, broken supply chains, and a persistent lack of investment capital.In the Philippines, companies have been forced to adopt new business models, including managing a hybrid work environment, expanding on digital business channels, and providing customers with a more pleasant and holistic digital experience that increases engagement.Many organizations still struggle to embrace these new technologies. Their legacy technologies have been deemed a liability as they hamper their ability to quickly adopt new and improved way of operations. As the cyberattack threat increases, they are also now more susceptible to cyber incidents as cybercriminals exploit opportunities in these newly digitized operations.Because of the nature of this unprecedented environment, digital technologies are one of the most effective solutions for recovery. More specifically, a proactive technology strategy built around adapting operations and building resilience can equip businesses with a stronger competitive edge as they recover from the pandemic.ADAPTING BUSINESS OPERATIONS IN EVER-CHANGING CONDITIONSFacing uncertainty during this pandemic is one of the greatest challenges businesses must address. The impact of COVID-19 on the economy as well as in our daily lives continues to evolve. This presents an unknown operating environment for enterprises.The capacity to adapt to these challenges will be crucial in this new way of doing business during these ever-changing conditions. Although it will be difficult to predict how conditions may change, companies can utilize these key actions as discussed in a recent EY article on how embracing technology can bring success:• Reevaluate infrastructure to support a hybrid workforce. This includes a flexible communications plan that supports the return-to-office situation. New infrastructure will benefit the company more in the long run by helping facilitate collaboration, remote working and higher levels of automation in operations. Teams will be able to better manage resources, track production, and protect the enterprise through a collaborative software platform.• To ensure business continuity, cloud adoption will help business operations transition more smoothly to support an ecosystem-based approach. This will allow more collaboration and connection among various teams that will improve decision making. Using the cloud will also allow companies to ramp up and down its supporting infrastructure as economic conditions change, linking suppliers, customers, shippers and employees to gain a flexible advantage.• Automation remains a key pillar of any digital transformation for a business. This offers tremendous potential for leaders looking to drive transformation in their organization: from cost savings and increased delivery speed to new operating models, to higher-value efforts for their people.BUILDING RESILIENCY AND FLEXIBILITY INTO THE ENTERPRISENew business models are being introduced because of the pandemic, such as hybrid work situations where employees work from home and in-office, a digital experience that boosts customer engagement, and the acceleration of digital businesses at the expense of traditional physical channels.However, many organizations have struggled to catch up and be more digitally prepared. Traditional technologies — always high-cost and slow-moving — have become a much greater liability. Moreover, as hackers take advantage of newly digitalized activities, more companies are now frequently being targeted by cyberattacks due to their lack of adequate cyber protection.Focusing on the following three key areas can help companies build a more resilient and flexible enterprise where digital technologies will be critical:1. Restructure IT operationsUpgrading digital infrastructure can enhance digital sales channels, the virtual customer experience and direct-to-customer delivery methods. This is evident even in the case of public services where government agencies now allow a more seamless engagement with the citizenry. For example, the Bureau of Internal Revenue (BIR) now accepts not only tax returns but also payments via electronic channels. Soon, its e-invoicing facility will expand and further facilitate online interaction between the Bureau and the taxpayers, be it large or micro, small and medium enterprises (MSMEs).2. Reevaluate digital strategyNow is the time to assess which new technologies the company will need to improve on, such as expanding cloud infrastructure and contactless payments and adopting 3D printing and augmented and virtual reality. In addition, companies will need to make difficult decisions around replacing legacy technologies sooner than later.3. Double down on cybersecurityCompanies should ensure that the virtual infrastructure is secure and that their data is safe and backed up. Leaders should also review their cybersecurity infrastructure and improve where necessary. Moreover, they must consider how to better support the security of third parties such as suppliers, customers and contractors. Companies should also keep in mind that strengthened security measures across its ecosystem should complement and provide a more effective defense against the current generation of security threats without slowing the business down.ACCELERATING DIGITAL TRANSFORMATIONAccording to a 2010 Harvard Business Review study that looked into how business fared during the 2008 recession, less than 10% of companies emerged stronger than before the crisis. They did this despite the global crisis by balancing strategic investments that focused on new technologies while cost-cutting through divestments.With COVID-19 creating fundamental changes to how we live and work on a larger scale than in the 2008 recession, the gap will only widen between leading and underperforming companies. The successful businesses of tomorrow will be those that embrace and accelerate their digital transformation to fast-track recovery and create a competitive advantage in a post-pandemic world. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Warren R. Bituin is the technology consulting leader of SGV & Co.

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15 August 2022 Maria Kathrina S. Macaisa-Peña

Consumer values in a world in crisis (Third Part)

Last of three partsConsumers around the world are settling into life amid uncertainty, adapting by assigning greater importance to taking control over their finances and favoring sustainable practices.The EY Future Consumer Index, which examines shifting consumer attitudes and behaviors over a range of time horizons and across international markets, demonstrates how accustomed people are to living in a constant state of crisis and uncertainty.In the previous parts of this series, we discussed three key shifts in play that differentiate the current crisis from previous ones, and the key trends in consumer behavior as identified in the Index. In this final part, we discuss the four imperatives that businesses have to take into account.FOUR IMPERATIVESBusiness leaders will have to adapt to meet the needs of consumer values that have shifted during the pandemic experience. Consumers are actively seeking more control over their lives instead of simply reacting to events.To address this, businesses will have to review their operations to optimize for better pricing, approach sustainable products as a cost-effective option instead of a premium choice, explore new and targeted ways to engage consumers on multiple digital channels, and reconsider what their purpose is as well as what KPIs they want to set.1. Review portfolios and operations to ensure affordability.To get the products they want at prices they can afford, consumers are more and more likely to trade down. Companies must think about how to manage their product portfolios in this inflationary environment to improve pricing outcomes.Prior iterations of the Consumer Index have demonstrated how the pandemic has increased the willingness of customers to switch to private label products. Retailers now have the possibility to broaden their selection of private label products. To ensure that they can best optimize for pricing, brands must also look for alternate supply chains, ingredients, or components and experiment with other product characteristics, such as packaging and package sizes.Due to ongoing price and revenue worries, this necessitates and facilitates improved supply chains and industrial resilience, but it is also likely to be more than a temporary remedy.2. Tailor sustainability strategies to offer affordable fixes.Despite their increased resolve to live more sustainably, consumers are becoming more price sensitive. Many businesses will need to switch approaches and explore how to make sustainable goods and services become the affordable norm for consumers, rather than as premium alternatives.The need to look into business models like renting, reselling, and mending to keep goods in use for longer is at the heart of this mindset. This creates a need to scale up current sustainability solutions so they can be more affordable from a procurement standpoint.For instance, the increase in energy costs brought on by the increased price of fossil fuels may encourage more investment in alternative energy, enabling scalable and inexpensive green energy and providing a chance for innovation to produce more sustainable products.3. Adjust investment in engagement to take advantage of new digital opportunities.The importance of digital channels during the pandemic is likely to continue increasing. However, the physical world will not become subordinate to the digital one overnight. Brands will have new opportunities to interact online and in the still emerging metaverse as a result.Now that consumers are becoming less brand loyal in their buying decisions, brands that have been generally decreasing marketing budgets during economic downturns run the danger of greater disintermediation. Businesses need to step up their efforts to clarify and define their unique brand offer by looking at fresh, focused approaches to connect with and engage with consumers through a variety of channels. This entails testing new digital technologies as well as gathering and using consumer data in ways that improve both physical and virtual customer experiences.However, these initiatives must be weighed against customer worries about data privacy and cybersecurity. Not only is it crucial to protect consumer data, but businesses can also gain the trust of their customers by demonstrating how they responsibly use their data to benefit them in real ways.4. Set KPIs that take shifting customer values into account.The extent to which consumer values are shifting is highlighted by the current and previous waves of the Index. People are less driven by monetary gains, and sustainable behaviors rather than wealth are more used to determine status. The way that consumers use their time is changing, and they are searching for ways to alternate between saving time on the things they dislike and spending time on the things they enjoy. Instead of focusing on salaries and careers, people are now increasingly concerned by purpose and flexibility.Companies need to reevaluate their goals, KPIs, and purpose in order to align with these developing values. Non-financial indicators like emissions, diversity, and innovation are progressively taking the place of traditional financial measurements like growth, profitability, share price, and shareholder returns. Companies must consider and evaluate these indicators in the context of the clients and staff they serve, and they must create new KPIs that instill non-financial values into their corporate culture.ADAPTING TO CONSUMERS IN A WORLD IN CRISISWhen their finances are stressed, people look for ways to save money and companies may feel the same way. This is a typical response, and for many people, it is also their only possible option. However, having experienced a pandemic, many customers now approach crises differently.In order to keep a sense of control over their lives, consumer values have altered, and they are determined to abide by them. They are more concerned with acting sustainably than they are with purchasing things they do not believe they need. To stay aligned with these evolving consumer needs and behaviors, businesses will need to start taking action as soon as possible if they wish to remain competitive and relevant. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Maria Kathrina S. Macaisa-Peña is a business consulting partner and the consumer products and retail sector leader of SGV & Co.

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08 August 2022 Maria Kathrina S. Macaisa-Peña

Consumer values in a world in crisis (Second Part)

Second of three partsThe most recent edition of the EY Future Consumer Index reveals how accustomed people are to living in a constant state of crisis and uncertainty. As consumers continue to express concern about the future, they prioritize ideals that focus on more control over their finance and sustainable practices.In the first part of this three-part article, we discussed three key shifts in play that differentiate the current crises with previous ones. Consumers now have greater control over how they organize their time due to the rise in remote working, but they also want more control over other aspects of their lives including how they spend their money and disclose their personal information.In this second part, we discuss the key trends in consumer behavior that were identified in the Index.KEY TRENDS IN CONSUMER BEHAVIORLeaders must adapt since it is obvious that consumer beliefs and habits are continuing to change rapidly on many fronts. How effective is a “Sell more items” strategy when many customers claim they wish to make smaller purchases? There are four imperatives that leaders will have to take into account, starting with some of the key trends that the most recent Index has shown.Cost cutting: Consumers are substituting but not sacrificingCurrently, the “Affordability first” consumer category is the dominant one, but the cost of living is a concern for all consumers: 79% of respondents express concern about their financial situation; 35% worry about having enough money for expenses other than basic necessities; 66% are concerned with getting value for their money.Many consumers would consider buying private label packaged food (49%), while 48% are purchasing cheaper alternatives. Consumers are, in many respects, returning to what worked for them in the last two years when they were able to save money by working from home, spending more time at home, cooking their own meals, and not feeling the need to buy new clothes or use cosmetics regularly. For many brands, this creates a challenging environment.People typically reduce their expenditures in a limited number of categories when money is tight while still rewarding themselves with “treats.” However, customers are now using their money-saving strategies in all areas. For instance, there is a thriving social media culture in the cosmetics industry where influencers share “dupes” — cheaper versions of luxury goods that, in their opinion, perform just as well and offer better value.The findings from the study demonstrate that this isn’t only about cutting back on spending; rather, it’s a continuation of pandemic-era habits. Some of the brand attributes that have historically conveyed prestige no longer appeal to customers as much. A deep-seated yearning to live and spend more “authentically” exists. Instead of replacing things, more people are committed to mending them. Seasonal fashion trends are less popular, with 79% of “Affordability first” shoppers and 55% of the more hedonistic “Experience first” consumers ignoring them.Sustainability: People are clinging to their principlesMany consumers struggle to balance their desire to live more sustainably with their need to live more inexpensively, especially as many believe sustainable goods to be expensive, with 67% of consumers claiming that the high cost considerably discourages them from purchasing sustainable items. However, resistant shoppers are looking for more affordable ways to achieve their goals of sustainable living rather than simply giving up on them.Many claim they are working harder to reduce trash and purchase used goods. By maximizing for both economic and environmental benefits, consumers are taking charge. As much as 87% are attempting to reduce food waste and 85% are attempting to reduce their energy use. Meanwhile, 36% report increasing their use of used goods, while 24% have either ceased buying or have bought less from a company that is not doing enough to protect the environment.This shows that attitudes toward sustainable goods and products have changed for the better. Not as many consumers still believe these products to be of poor quality or lacking in durability. Importantly, people place more and more faith in the information they receive about sustainable products from the manufacturers.Customers do not believe information from just any sources. They look for information that they believe to be trustworthy and transparent, and they value ways to filter and personalize the information they are exposed to. This broader trend can be seen playing out regarding sustainability, with over a third of customers having registered for an app or service that tracks aspects of their carbon footprint or environmental impact. Consumers are increasingly seeking reliable sources to help them make informed judgments about the things they buy.Consumer-facing businesses are also searching for reliable suppliers because they are applying “sustainability tech” to enhance their products. Many already collaborate with sustainability tech firms to gain access to data and insights that bring them closer to the consumer. New consumer insights are being produced by these relationships, which aid businesses in interacting with customers, promoting sustainable innovation, and achieving sustainability objectives.Digital: Customers value alternative experiences and products more and moreA small but expanding segment of customers is interested in investigating cutting-edge technologies and digital platforms, according to the Index. The metaverse, digital currency, or buying virtual goods have all been used by almost one in 10 consumers. It’s interesting to note that this baseline level roughly corresponds to where e-commerce was in 2005. Its 10% retail market share from 2017 has since doubled. Some analysts predicted the demise of high street shopping at that level of retail penetration. Could the retail sector be reaching a similar turning point?Due to the pandemic, many aspects of daily life are now “digital first.” Consumers are once more turning to digital as they want greater financial control. For instance, people are substituting lifestyle choices rather than making lifestyle sacrifices by balancing digital and physical experiences.The use of more recent digital products and services opens up new business options for firms. It becomes a question of whether they can invest in digital in ways that distinguish their brand experience, foster creativity, gather more customer data, allow for digital product line creation, and promote innovation.Trust will be a critical factor, as consumers express great concern about who they share their data with. They want to know how it will be used and protected, expanding their post-pandemic, always-on emergency posture to include a safety-first component.In the last part of this article, we will discuss four imperatives that consumer companies must consider to meet the needs of consumer values that have shifted during the pandemic experience. Maria Kathrina S. Macaisa-Peña is a Business Consulting Partner and the Consumer Products and Retail Sector Leader of SGV & Co.

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01 August 2022 Maria Kathrina S. Macaisa-Peña

Consumer values in a world in crisis (First Part)

First of three partsThe past three years have been an unwelcome rollercoaster ride for consumers everywhere. People prioritized their health when the pandemic initially broke out and drastically changed their actions and attitudes towards purchasing goods and services. As the pandemic’s effects on the economy became more pronounced, consumers began to focus more on accessibility and living expenses. As the crisis slowed, people began to give more importance to a new set of “post-crisis” ideals, particularly those related to sustainability.However, the post-crisis period has not yet begun. Inflation has returned on a scale not seen in decades, interest rates are rising, the global economy is slowing down, geopolitics is being played out on a grand scale, and new COVID-19 variants keep appearing. It’s unclear if this confluence of events is ushering in a new crisis or merely escalating what we currently have, but the distinction will not likely matter in the eyes of customers.The most recent edition of the EY Future Consumer Index demonstrates how accustomed people are to living in a constant state of crisis and uncertainty. Consumers globally are concerned about the future; as much as 63% do not see economic recovery within the next 12 months, and 62% anticipate an increase in living expenses during the following six months.The EY Future Consumer Index examines shifting consumer attitudes and behaviors over a range of time horizons and across international markets, revealing the emergence of new consumer segments.The Index has been tracking five main consumer segments since the pandemic began. These five segments describe the consumers that organizations will have to engage with beyond the pandemic. They reflect the different ways that people make their choices, how they will live their lives, and what truly matters to them.Of these segments, two highlight the way consumers focus on living within their means and looking after the health of their families and themselves (“Affordability first” and “Health first”). Two other segments refer to the way some consumers prioritize environmental and social concerns (“Planet first” and “Society first”). The final segment identifies those who focus on living within the moment and maximizing their experiences (“Experience first”).As people react to a chaotic world, the proportion of customers who fit into each sector has fluctuated over the past year. They are actively responding to — or at least attempting to respond to — the never-ending waves of change and uncertainty rather than merely reacting passively. Even while the world keeps presenting them with new obstacles, people are becoming more and more motivated to take charge of and mold their lives around their own wants and objectives. In fact, 58% of people say they feel more in charge of their lives, a situation they wish to maintain and sustain.FUNDAMENTAL CHANGES IN THE CONSUMER LANDSCAPEConsumers now have greater control over how they organize their time due to the rise in remote working, but they also want more control over other aspects of their lives including how they spend their money and disclose their personal information. While they are growing more frugal with their money, they are also feeling more confident about acting to defend their lifestyles and values. There are three key shifts in play that can be identified compared to previous financial crises:1. Customers are more adaptable due to the pandemic experience.People are becoming accustomed to instability and uncertainty. Nowadays, many people have what is known as the “always on emergency mindset.” They are more willing to give up long-held habits and adopt new ones because they are accustomed to making significant changes to how they live, from daily decisions to long-term objectives. They have discovered levels of resilience they were unaware they possessed.2. They have more options thanks to the digital world.The online world was a startlingly undeveloped place in 2008 and 2009, during the previous major financial crisis. The smartphone was a basic device and broadband connections moved slowly. Today, consumers can obtain information, discover alternatives, share their experiences, collaborate, and learn from one another much more easily. However, the digital age can simultaneously increase anxiety, intensify uncertainty, and overwhelm people with too much knowledge, ideas and new concepts, especially given the speed of digital transformation.3. Consumer values have fundamentally changed.Previous versions of the Index demonstrated how drastically consumer values have shifted as a result of the pandemic. Particularly, people’s interest in material possessions has diminished as they became more committed to leading ecological lifestyles. The most recent data demonstrate that despite the impact on their household budgets, people are unwilling to simply give up on their new beliefs. Instead, they want to find new ways to convey them.What ramifications do these shifts pose for corporate executives? When a company’s ideals and activities are in line with the customers it hopes to serve, it succeeds; when they are not, it fails. Customers want to see their concerns and priorities mirrored back at them when deciding which brands to purchase. They increasingly focus on the company behind the brand rather than just the product, asking questions such as: what influence is it having on the globe, and is that impact consistent with its values?In the second part of this three-part article, we discuss the key trends in consumer behavior identified by the Index: cost-cutting, where consumers substitute instead of sacrifice; sustainability, where consumers prioritize their values in living affordably and sustainably; and digital, where consumers are increasingly turning to emerging technology to take control of their finances. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Maria Kathrina S. Macaisa-Peña is a business consulting partner and the consumer products and retail sector leader of SGV & Co.

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