Economy
18 July 2022
The Week Ahead: J&J, Kimberly-Clark earnings, CHPA meets in DC
Check out what The Current is tracking in ecommerce for July 18-22.
Summer views. (Photo by Vivek Kumar on Unsplash)
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Welcome to a new week. The dog days of summer are officially here, as Prime Day is in the rearview and back-to-school season is just gearing up. It’s a time to take a break (highly recommended!), or get caught up and reconnect. It can also be a time to look for lessons and insights beyond your own inbox. Here’s a look at what we’re watching in the wide world of ecommerce this week:
Events
- CHPA Marketing Conference: The Consumer Healthcare Products Association is in DC for a marketing-focused conference featuring speakers from Colgate-Palmolive, Johnson & Johnson and NielsenIQ. (July 19-20)
- Grow NY: Retail brands will be at the Knockdown Center in Queens, NY, for two days of talks, workshops and networking. (July 19-20)
Earnings
After a big week of consumer-focused data, government economic indicators shift mostly to the housing market this week, second quarter earnings season is kicking into full gear, as some of the largest consumer goods companies provide an update on their performance and a look at the dynamics shaping the economy. Here are the key reports from companies who are part of the ecommerce ecosystem coming up this week:
- Tuesday, July 19: Johnson & Johnson, Hasbro, Tootsie Roll Industries, Omnicom
- Thursday, July 21: Mattel, Kimberly-Clark, Crocs, Snap Inc.
- Friday, July 22: Twitter
Stories we’re following:
- Ecommerce’s role as inflation rises: Is ecommerce becoming a destination for price relief? Early data from last week’s Amazon Prime Day showed inflation played a role in how shoppers approached the massive deals event, while monthly retail sales numbers from the US Commerce Department showed a bump for ecommerce in June.
- What’s the Fed thinking? Last week offered key economic data on inflation, demand and consumer sentiment that says a lot about how the consumer economy remains in places it hasn't been in decades. It will also help the Federal Reserve make a decision about whether to once again raise interest rates at the end of the month, following last month's 0.75% increase. Expect more clues this week.
- A new class of retail CEOs:Leadership changes announced last week at Victoria’s Secret, Gap Inc. and Dollar General join Under Armour, Bed Bath and Beyond, Glossier and The RealReal among companies replacing CEOs. There will be a new crop of top execs in retail, and they’ll be taking the helm with plenty of macroeconomic headwinds already blowing. In some cases where only resignations were unveiled, we will be watching to find out who the new leaders will be. In others, we’ll be on the lookout for signs of how the already-named successors will lead.
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Marketing
09 June
'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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