Operations
24 March 2023
Nestlé's center of scale, content studios drive ecommerce efficiency
Nestlé's annual report outlines steps for ecommerce to reach 25% of sales by 2025.
Photo by Prasann Tank on Unsplash
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In 2022, 15.8% of Nestlé's sales came through ecommerce. By 2025, the world's largest food company wants to increase that share to 25%.
While the annual results tell a story, the company's recently-released annual report makes clear that it is the activities taking place across teams and technology that will ultimately push it toward that goal. In 2022, the Gerber and Purina owner prioritized building skills on its teams, focusing on digital shelf execution and advancing analytics.
The report illustrates a balance that the company is striking on the path to its 2025 goal: It is aiming to drive growth of sales across digital channels, while at the same time increasing efficiency in the operations that drive them.
Here are takeaways on this progress in ecommerce from Nestlé’s recently-released 2022 annual report:
Building community
Nestlé is working to build digital skills across the organization. To advance this effort, the Gerber and Purina owner created a global community of 3,000 employees who connect to share best practices, and even challenges. Webinars and trainings have reached 11,000 people across the company.
Perfect shelf execution
Nestlé’s vision for the digital shelf is called “Perfect Shelf Execution.” It measures by market and retailer, and down to the SKU level. With a standardized approach in place, Nestlé said it is able to improve the text, content, ratings and reviews that are major ingredients of success on ecommerce platforms.
Retail media
Nestlé is working to advance retail media, which is a fast-growing form of advertising that places advertising on ecommerce marketplaces, close to the point of purchase. With retail partners, Nestlé is focusing on both how teams work, and driving return on investment.
Amazon center of scale
As channels expand, Nestlé is also creating ways to do “more with less,” the report states. With Amazon, the company created a center of scale, in which the team outsources and automates routine tasks so that teams can focus on tasks that provide the most value.
Analytics are ‘critical’
The ability to use data to gain deeper insight into operations and make changes quickly is of growing importance to businesses. In 2022, expanding this capability was especially important to Nestlé as it navigated “an extremely volatile retail environment and rising costs of raw materials,” the report states.
Nestlé’s analytics activities include a strategic revenue management program, which now covers 95% of its markets. It is also tapping AI and end-to-end analytics on collaboration with customers, product assortment and promotions.
In marketing, the company is investing in proprietary solutions that are being deployed to increase effectiveness of marketing investment.
Nestlé also recently launched a data science hub in Bangalore to track return on investment and predict scenarios for particular channel strategies.
More efficient content
Nestlé said 55% of its media spend is directed to digital platforms. With this, the company has worked to build a more efficient model for creating and optimizing content that is tailored to each platform.
As a result of work to build out this model in 2022, Nestlé now has 37 content studios operating, and has reduced creation costs by 50%.
The company is also using AI to track and adjust the relevance of more than 500,000 digital assets across digital platforms. This produced a 66% improvement in return on ad spend on Meta-owned Facebook and Instagram.
Online recipes
The report highlighted one example of how Nestlé is reaching consumers with content that can be put to use as people prepare products from the company. Online recipe platforms are reaching more than 100 million consumers annually in Latin America.
Receitas Nestle features 20,000 recipes, tutorials and a feature that allows consumers to ask chefs questions. Working with retailers, Nestlé is also driving customers toward shoppable recipes that allow consumers to order ingredients that arrive at their home.
In Brazil, the platform helped to drive a 30% frequency increase in consumption of Nestlé products.
It's an example of how digital commerce can take familiar forms of content, create a more interactive experience, ease the path to a sale. When they enjoy this process, consumers are more likely to seek out recipes again and again.
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Marketing
09 June 2023
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.
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