Citi Commercial Bank 2024 Global Industry Insights Report

STILL HEMMED IN BY INFLATION Consumer companies are struggling to get past the impact of higher pricing. Three in five of them reported that inflation has been the single most impactful trend for their business over the past 12 months. That would stand to reason given their profits are often squeezed when competition prevents them frompassing on higher costs to customers. Of all the industries in this report, Retailers—84% of them—are most worried about the impact of inflation, and concern that is likely to persist into 2025. SUPPLY CHAIN CHANGE CONTINUES APACE The industry is still grappling with the pandemic’s supply chain aftereffects. Two in every five businesses sawmanaging supply chain security and efficiencies as their biggest challenge. The shift towards resilient supply chains, rather than lean ones, means that just-under two-thirds of Approximately 75% of respondents from the Consumer & Retail industry said that they were satisfied with their financial progress in 2024, while staffing problems have not grown worse. This positive outlook on progress may be because retailers have become more resilient to the pressures they have now battled for years: inflation and the need for resilient supply chains. Business leaders must navigate those headwinds while trying to avoid raising prices for Consumer & Retail mid-sized companies. This industry continues to search for greater access to capital and ways to scale up in new parts of the world as the trends of nearshoring and friendshoring continue apace. CONSUMER & RETAIL Steady financial progress and continued resilience in the face of a shifting landscape companies expecting to expand into another global region has remained level from2023, retaining Retail’s status as a more expansive industry. With geopolitical concerns remaining prevalent, the 37% of respondents expecting to expand into Asia may be looking at shifting production away fromChina. Many others are looking to consolidate current markets. NEED FOR REASSURANCE While Consumer & Retail have one of the highest financial progress satisfaction rates of industries surveyed, ongoing cost pressures and supply chain challenges has businesses looking for support from global banks. The current macroeconomic environment finds more than half of Retail respondents said they wanted to improve their working capital (an increase from2023’s 47%). As for easing friction in global markets, respondents want streamlined arrangements with partners and simpler, more scalable ways of entering newmarkets to improve efficiency and give businesses a greater sense of control. TECH IS A PRIORITY, BUT AI IS VIEWEDWITH SUSPICION Consumer respondents see digitizing and automation and keeping up with technological change almost equally as important as supply chains and staffing. Around a third cited the two factors as their biggest challenge. Despite this, only one in four participating Consumer companies currently uses AI solutions, ranking lower than any other industry polled. Respondents noted concerns about AI’s maturity, cost and the necessity of it in the Consumer space. An emphasis on digitization in a typically analog industry may precede a push into AI solutions to ease the pressure of supply, cost and talent issues, and offer insight into competition fromdirect-to- consumer sales. Some 40% of Retail respondents said direct-to- consumer was the most impactful trend of the past year. “We’re looking to simplify our business and optimize performance in the markets where we currently operate.” US-based Consumer client . Annual sales: $1 billion+. “The collective responses point to greater focus on AI and Generative AI as we move into 2024 to address a collection of challenges (supply chain, cost and talent) as well as offer greater insights into the customer (direct to consumer trend).” Timicka Anderson Timicka Anderson Global Head of Consumer & Retail, Citi Commercial Bank