About a year ago, a comedian must have written a sketch about people dying their teeth blue. And someone at Unilever must have watched it. Because in the $100bn personal care market, innovation appears to be driven by people taking jokes too seriously.
Some 109 years after King Camp Gillette invented the disposable razor, satirists at The Onion magazine imagined what his company’s design gurus could possibly do to improve on their triple-bladed and apparently supersonic Mach 3 model: “Five blades, two strips, and make the second one lather! You heard me — the second strip lathers!” Just 18 months later, Gillette really did launch a five-bladed razor: the preposterously named Fusion Power Stealth. With two lubricating strips.
A year later, British comedy duo Mitchell and Webb mocked toothbrush development: “1994: Putting a bit of a kink in the handle . . . 2002: Putting in some blue bristles to tell them when to buy a new one . . . What’s next? We could get them to brush their tongues!” Today, Colgate sells the “360°® toothbrush . . . a toothbrush on one side and a tongue brush on the other.”
What else, then, could explain why Unilever’s first-quarter trading update included news of Signal White Now toothpaste with “blue light” technology? Apparently “make-up artists and photographers say that there is no better colour than blue to enhance the perfect white radiance of skin and pictures. Why wouldn’t it be also true for my teeth? Delicate blue pigments in the foam release all their power when they come in contact with your teeth acting like a ‘colour filter’ and creating an instant visual effect.”
You couldn’t make it up. And you don’t have to, because Unilever’s got a whole department doing it for you. It has devised special Lifebuoy soap with “Active Silver formula for enhanced germ-protection” in Asia. And Sunsilk shampoo for Muslim consumers and other headscarf wearers — presumably horsey women in the Home Counties.
But innovation sells — and far beyond the Home Counties. Unilever’s organic sales growth in personal care was 3.1 per cent, outshining forecasts of 1.8 per cent. Innovation delivers pricing power, too. Although group underlying sales volumes fell by 0.1 per cent, total organic sales growth came in at 2.9 per cent — 100 basis points better than forecasts and proving that pricing was 3 per cent stronger. Tellingly, this pricing power was strongest in emerging markets, where sales growth hit 6.1 per cent on volume growth of just 0.8 per cent.
In addition to more favourable commodity prices and competitive environments, Unilever also suggested many emerging markets’ currencies were bottoming out — bringing a more normalised pricing dynamic. Might this inspire one more innovation: keeping hold of its still-growing spreads business in emerging markets, which it had planned to sell? Probably not — but it would be one product development no one has yet foreseen.
M&S: Hotpot > Hot pants
Bad news for those seeking gold hot pants in Slough or Portsmouth. But good news for those seeking profit growth from Marks and Spencer. Steve Rowe — the retailer’s chief executive who cited the discovery of tiny shiny attire in his Norwich store as symptomatic of past misjudgments — is continuing his strategic overhaul.
On Thursday, he announced plans to close six stores — including the two mentioned above — but open 36 new outlets, of which 34 will be food only.
How this move is received by the female staff of Berkshire paper merchants or Hampshire naval bases is unclear. M&S employees should be not be too uncomfortable, though, as the 380 of them affected by closures have been guaranteed jobs nearby.
But investors should be delighted, as it suggests the 3.1 per cent rise in clothing and homeware sales M&S achieved in the last quarter of 2016 is being studiously ignored. Rather like a rail full of Alexa Chung blouse designs.
Even with clothes sales improving, Mr Rowe appears undeterred in his aim of closing 30 UK stores and converting 45 more to food only. Already, his emphasis is pronounced: of M&S’s 959 sites in the UK, 615 are Simply Food stores.
This matters for margins. M&S Food is not as price and promotion sensitive as M&S clothing was. When Mr Rowe scrapped promotional pricing tactics in clothing, sales were hit hard. He should find it easier to achieve his pledged “improvement in full-price sales” with Lancashire hotpot, rather than East Anglian hot pants.
According to researchers at the University of East Anglia, some companies that combine financial and environmental reporting use long-winded accounts of the latter to conceal weak numbers in the former. “Greenwashing”, they call it. Further analysis may follow the researchers’ upcoming investigation into bears’ preferred lavatorial locales.
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