If you haven’t seen this article published this week in The Economist, it is a must read for both Retailers and CPG’s. In the end it reaffirms the notion that building & maintaining strong brands is not simply a nice thing to do but a necessity. Retailers and manufacturers who choose to be brands must invest in creating those brands and in engaging the customers they so desperately need.
Consumer goods in the recession
The game changed
Just last year, when Alan Lafley, the boss at the time of Procter & Gamble (P&G) released his book “The Game-Changer: How You Can Drive Revenue and Profit Growth With Innovation”, readers flocked to understand the business strategy of the world’s largest consumer-goods firm, then worshipped as a paragon of strong management and profitability. Now, however, the company is confronting a game-changer that Mr Lafley had not foreseen: a global economic downturn.
Earlier this month P&G reported profits of $2.5 billion, down 18% in the most recent quarter from a year earlier. Sales of its products—which include such brands as Bounty paper towels and Tide detergent—were down 11%. Analysts worry that it might take years for the company to restore its profits to their former levels.
For most packaged-goods firms, recent earnings reports were grim. Unilever, the world’s third-largest consumer-goods firm by sales, announced this month that profits in the second quarter were down 17% from a year ago. Kimberly-Clark, the maker of Kleenex tissues and Scott paper towels, Sara Lee, a manufacturer of frozen foods, and Colgate-Palmolive, with its eponymous toothpaste and soap, all saw revenues drop in the past quarter. Firms that specialise in food, including Nestlé, Kraft and Kellogg, are holding up better than those that sell products for cleaning and grooming, but only because consumers are preparing more meals at home.
Read the entire article: The game has changed