Point of View

Industry Impact—The Retail and CPG Operations Value Chain

February 2, 2018

HfS is expanding its industry coverage in 2018 to include detailed IT and business process research on 11 core sectors, powered by extensive buyer research with Global 2000 firms. The transformation and challenges posed by digital disruption and changing competitive environments differ by industry. Subsequently, the solutions and services enterprises in different industries need to cope with change and to shape transformation journeys differ as well. Over the past few years, HfS has created in-depth industry research coverage that focuses on the rapidly changing needs of buyers and the ability of service providers to meet these needs with services built on domain expertise, industry talent, intellectual property, solutions that tackle sticky industry problems, and investments in industry-specific practices, startup ecosystems, and partnerships. We will build on this foundation in 2018, bringing expanded industry coverage, focused on key industry-specific processes and change agents, updated annually.  Our coverage sectors include:


Exhibit 1: HfS Industry Coverage 2018


Banking and Financial Services




Travel, Hospitality and Logistics


Retail and Consumer Packaged Goods

Pharmaceuticals and Life Sciences





Source: HfS Research, 2018


In order to give you a taste of what to expect for research in the retail and consumer packaged goods (CPG) sector, this Point of View report previews our retail and CPG sector-specific value chain and the in-scope processes and change agents we’ll be examining throughout 2018. We will release retail and CPG-focused Blueprint Spotlight reports in Q3 on business process services and in Q4 on IT services; these will be supplemented by periodic voice of the customer case studies, point of view analyses on change agents, and buy-side research. For more insight into our master research agenda for 2018, please refer to our recently published report on planned blueprint research.


The Retail and CPG Operations Value Chain


HfS developed the industry value chain concept to graphically depict our understanding of the processes and functions that specific industries engage in to operate their businesses. To truly understand the services needs of an industry, you must understand its industry-specific and horizontal processes and the relevant change agents enabling transformation. 


The industry value chain for retail and CPG operations provides a comprehensive overview of services for the combined retail and CPG markets. Given the substantial overlap in business processes and blurring of lines between the traditional manufacturing and distribution roles of CPG companies and the channel sales role of retail companies, we’ve opted to combine them. We’ll be including sub-sector elements in our Global 2000 survey research this year, including online, brick and mortar, and consumer goods, which will help us gain a more granular understanding of buyer behavior.


Retail and CPG Industry-Specific Processes


The retail and CPG value chain includes the following industry-specific processes:


  • Online and mobile operations—Services focused on the set-up, operations, and optimization of online and mobile retail sales;
  • Brick and mortar operations—Services focused on the set-up, operations, and optimization of physical retail store locations;
  • Merchandising and replenishment—Processes focused on the planning and management of inventory;
  • Supply chain—Various services designed to manage the supply of products or services to be sold through retail channels;
  • Sales and marketing—Processes focused on enabling the promotion and sale of products and services through retail channels.


These functions represent the range of unique processes undertaken by retail and CPG firms to conduct their core business. Our research will evaluate the depth and breadth of service providers offering industry-specific services in these categories and the impact of critical change agents such as the internet of things (IoT) and intelligent automation. In particular, we have Points of View planned around the trends of omnichannel in retail as well as exploring the role of augmented and virtual reality in retail organizations.


Horizontal IT and Business Processes


Enterprises in all sectors have a range of consistent business and IT processes that are essential to running their businesses but are executed similarly regardless of industry. We refer to these as horizontal processes and have segmented them by IT and business functions as outlined in Exhibit 2. Horizontal business processes include elements such as customer engagement and HR. IT processes include functions such as application development and infrastructure management. Our industry-specific coverage of these areas will focus on instances where something unique has been developed for the industry such as cloud-based trade promotion services or personalized offers enabled by IoT beacons (i.e., proximity marketing). In addition to industry coverage of these horizontal topics, they will also be well covered as part of our functional research dimension.


Enabling Technologies


Lastly, but of vast importance, we have included a value chain section dedicated to enabling technologies, depicted in Exhibit 2. So much of the change that is taking place in retail and CPG is driven by these technologies. They include elements such as RPA and AI, blockchain, and artificial intelligence. We view them as horizontal as they can be used across retail and CPG enterprises and leveraged for both horizontal and industry-specific processes. Our research on these topics will focus on how they are being utilized within retail and CPG, which service providers are bringing them to the table, and what real business impact is being realized.


Exhibit 2: The Retail and CPG Business Operations Value Chain


Source: HfS Research, 2018


Bottom Line: Enhanced Retail and CPG Research to Help Make an Impact


As we dive into 2018, HfS’ enhanced research coverage of major business operations trends by industry will help identify and articulate business impact in motion. Our coverage of the retail and CPG sector will examine core value chain processes across industry-specific and horizontal functions with an emphasis on the impact of critical change agents.

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