September 19, 2022

5 minute read

 

A digital vision goes beyond talking about the share of sales coming from eCommerce.

 

It’s a compelling narrative that unifies the organization, recruits and retains top talent, and provides useful information to stakeholders.

 

To help retail leaders like you develop that narrative, I analyzed commentary from 19 consumer brands at the recent Barclay’s Consumer Staples conference to see if they are communicating a digital vision to Wall Street.

 

The analysis will:

  1. Help you efficiently stay on top of market trends
  2. Deliver unique data you can use when educating internally or with clients
  3. Provide three real-world examples of how big consumer brands are talking about digital

 

To summarize the three real world examples:

  1. Colgate-Palmolive shed light on why eCommerce is a competitive edge (re: it’s hard!)
  2. Unilever talked about how eCommerce can improve profitability
  3. Church & Dwight shared how eCommerce is changing its corporate development strategy

Conference Background, Methodology & Limitations

The conference involved presentations and Q&A sessions between senior management and investors. 

 

The methodology used in this analysis is straightforward - I analyzed word counts across common terms like eCommerce, Omni, Analytics, and so on to determine which firms most frequently discussed the examined topics.

 

Before we get into the results, there are limitations to the analysis.

  1. This is only one conference.
  2. Analyzing word counts is an indirect way to assess a digital vision inside a consumer brand. It is not meant to be a deep dive into the innovative things each is doing from a digital standpoint, nor does it necessarily correlate to a company’s level of investment or focus.
  3. Some sessions were presentation oriented, others Q&A, and others a mix. Thus, a consumer brand didn’t have full control over the topics discussed, thereby impacting word count.

 

Despite the limitations, the results shed light on what’s on the mind of consumer brands and investors, and it illustrates topics that are crowding out longer-term opportunities like digital.

Inflation Monopolizing Focus

Consumer brands and their investors are intently focused on inflation, pricing, and inventory levels.

 

These topics accounted for double the amount of discussion related to “technology” language and more than four times the discussion related to digital commerce or analytics.

 

Further, every company addressed the topic of inflation compared to just over half talking about eCommerce. Investors wanted to know how companies are managing inflation and their outlook. (Stratably+ readers can read that analysis here)

 

B&G, Nomad Foods and Unilever took the top three spots in terms of talking about inflation, pricing, and inventory.

 

While inflation was starting to pick up a year ago, the topic was discussed 18% more in 2022 on a Y/Y basis.

 

Consumer brands spoke less about eCommerce and technology this year compared to last, while increasing discussion around reorganizing or simplifying their organizations.

 

Data and analytics topics were an outlier, largely driven by P&G talking about it the most from a year-over-year perspective. 

Colgate-Palmolive Takes the Lead (by far) In Talking Digital

53% of consumer brands at the conference talked about eCommerce, Digital, Amazon or Omni-Channel.

 

Colgate-Palmolive was the clear leader as the chart below illustrates.

 

Even absent the quantitative analysis, it was clear reading through and comparing transcripts that Colgate-Palmolive was an outlier.

 

Noel Wallace, Chairman, President and CEO of Colgate-Palmolive had several quotes on eCommerce, which permeated the entire discussion.

 

These are great for eCommerce leaders looking to share case study examples to their colleagues on how eCommerce is reaching its way to the top of the C-Suite.

 

  • “This has been a fundamental change for us over the last three years to really accelerate our eCommerce share, which we see as the fastest-growing channel in most of the categories in which we compete.”
  • “The key is we want the entire organization to grasp the importance of this in order to drive the transformation that's required to be a key player in the future.”
  • “We brought in quite a few people into our North American organization over the last couple of years, people that have brought a different mindset to how we want to execute in that business against the core Colgate strategy. A big piece of that turnaround, in my view, is again the capabilities. You don't see a lot of that. You see it obviously in the results of the company, but you don't see it in the day-to-day, and there's a massive amount of sophistication that goes into running a digital enterprise.”
  • “…creating trust with your retailers that you can run their omni-channel business, and that's what our retailers are requiring. It's no longer a brick-and-mortar business. It's an omni-channel. And consumers have myriad of different choices on how they want to shop your categories. And we need to understand that and bring that knowledge to the trade, and more importantly use that as a competitive advantage to drive consumers into our franchises.”
  • I frequently tell our teams, you have to understand the digital world that we live in to connect the dots and effectively do your job.”

Unilever Sees eCommerce as Margin Accretive Growth Driver

Unilever ranked second in terms of talking about digital, ecommerce and omnichannel.

 

The most interesting commentary from the firm revolved around its viewpoint that eCommerce is a margin-accretive opportunity. This grinds against consensus thinking around Amazon and, more broadly, eCommerce being dilutive efforts.

 

“…when I first was told there's an opportunity for eCommerce ice cream, I thought someone had lost their mind. But actually, as we're increasingly persuading people who are having their Deliveroo or their Uber Eats delivery to include a pint of ice cream, it's a terrific and high-margin business.

Church & Dwight Using Amazon Strength as Rationale for $630mm Acquisition

Church & Dwight scored below average based on the ranking methodology. However, during the conference in the morning before the event, the company talked a great deal about how it gained conviction to buy Hero based on the brand’s dominance on Amazon.

 

Management knows that this dominance will make for easy conversations with retailers as they look to expand distribution for the brand:

 

“When retailers see the success of a product, both on Amazon and in a large retailer like Target, it becomes very appealing to them. As far as the next couple years though, we don't think there will be any difficulty in getting these, particularly the large retailers interested. So that's something once we close, we'll be chasing in just three or four weeks.”

 

C&D also talked about its big effort creating an in-house analytics team. This team is responsible for analyzing the impact from ad spend and promotional spend.

Digital = Competitive Edge

Hopefully this article left you inspired that even though inflation, pricing and inventory are dominating much of the focus, companies are continuing to shine a light on the growth and profits eCommerce can bring, and the corporate-wide effort needed to make that happen.

 

While any red-blooded eCommerce leader wishes digital took center stage at conferences like this, the fact that only half talked about it means a competitive edge opportunity persists.

 

If you can get eCommerce right, you’ll have a chance at capturing 50% of total retail dollar growth expected to come from digital, and possibly gain share from flat-footed competitors.

 

You’ll also have a great story to tell shareholders.

 

The share prices for brands that talked about digital-related topics at an above average rate, outperformed their peers by 113% basis points during the week of the conference.

 

While this relationship is tenuous, and an example of correlation and not necessarily causation (and frankly, I share with a bit of trepidation given the myriad number of factors involved), it does lend even more support to the value-maximizing benefit that comes from casting a compelling digital narrative, even when macroeconomic considerations are front and center.