Unilever ups focus on direct to consumer as online sales surge
The FMCG giant revealed ecommerce sales surged last year, accounting for 9% of total sales as consumers were stuck at home.
Unilever’s ecommerce business grew rapidly in 2020 as it capitalised on online demand, which grew as a result of lockdown measures.
It now plans to continue upgrading its direct to consumer operation – one of its five strategic pillars for growth – drawing on consumer insight to help it build the channel.
Ecommerce grew by 61% last year and it now accounts for 9% of Unilever’s business.
Speaking on an investor call this morning (4 February) to mark the company’s 2020 financial results, CFO Graeme Pitkethly said ecommerce “continues to perform strongly, outperforming the market significantly”.
Ecommerce sales for its Prestige portfolio of premium brands, such as Dermalogica, Murad and Kate Somerville, grew by more than 50%, for example.
Pitkethly said the company “rapidly pivoted” resources to suit in-home consumption of food too. It launched ideas such as Ben & Jerry’s Netflix & Chilll’d variant, to support its ‘Ice cream now’ home delivery service, helping its online ice cream business double in 2020.
Overall, in-home ice cream sales rose 17% last year, which helped to offset the 20% decline seen in out-of-home sales.
While Unilever pulled back on marketing spend when the pandemic hit, ceasing all major advertising in the first half of 2020, it invested heavily in the second half of the year, Jope said, with investment up €160m (£140m) across the full year.
“We stepped up investment in BMI (brand and marketing investment) strongly in the second half by brand campaigns and product innovation that had been tailored to be specific to the new environment,” he said.
“That includes more hygiene-based communication and in-home consumption opportunities. An example of this was the Hellmann’s ‘Stay In(spired)’ campaign. As a result, BMI spend was up by 100 basis points in the [second] half.”
‘We have kept some powder dry’: Unilever to invest heavily in ad spend as lockdowns ease
Five strategic pillars
Unilever has set out five strategic pillars for future development, which includes positioning brands in categories tipped for future growth. This will also be used as a guide for organic investment and acquisitions and disposals.
The FMCG giant sees ecommerce as another key driver of growth and says it will be looking to grow its direct to consumer business using “advanced shopper insight” to keep up with fast-changing consumer behaviour.
International expansion is also on the agenda, with Unilever looking to accelerate its presence in the US, India and China. More than a third (35%) of its turnover comes from these countries and it believes it can “bring sharper focus” to these markets and build “even stronger positions”.
As part of its ongoing focus on sustainability, Unilever will also continue to position its brands as a “force for good, powered by purpose and innovation”.
Lastly, the company aims to “build a purpose-led, future-fit organisation and growth culture”.
A difficult year
Unilever reported underlying sales growth of 1.9% during 2020, for an underlying operating profit of €9.4bn (£8.2bn). Its turnover was down 2.4%, however.
“In a volatile and unpredictable year, we have demonstrated Unilever’s resilience and agility through the Covid-19 pandemic. I would like to thank the Unilever team, whose dedication and hard work has delivered a strong set of results under the most difficult of circumstances,” said Jope.
“Early in the year, we refocused the business on competitive growth, and the delivery of profit and cash as the best way to maximise value. We have delivered a step-change in operational excellence through our focus on the fundamentals of growth. As a result, we are winning market share in over 60% of our business in the last quarter, on the basis of measurable markets.”