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Digital Transformation Strategy Research, Part 2
Key Takeaways
- Founded in 1903, Newell Brands is an Atlanta Georgia-based global consumer good giant that operates seven (7) business units for its 100+ brands, with over 32,000 employees. These business units cover writing, food, home fragrance, commercial, baby, home appliances, and outdoor and recreation.
- Under its Outdoor & Recreation unit, Newell Brands aims to energize "consumers’ enjoyment of the outdoors and promote an active daily life." This business unit hosts about eight (8) popular brands, including Aerobed®, Marmot®, Contigo®, Coleman®, Stearns®, and bubba®.
- The Outdoor & Recreation business unit generated net sales revenue of $1.48 billion in 2021, compared to $1.3 billion in 2020, witnessing a 13.5% core sales growth.
- In May 2020, The Motley Fool reported that Newell Brands experienced major challenges in the face of intense competition. As a result, competitive pressure and the need to address costs constituted the two overarching challenges that caused the company's turnaround efforts to fall short.
Introduction
We have provided Newell's Outdoor & Recreational Brand's Digital Transformation Strategy in this report. Our presentation has been summarized under three main headings; Overview of Newell Brands: Outdoor & Recreation, Digital Transformation Strategy, and Corporate Challenges. Specifically, each challenge identified has been described and justified, why it is a challenge for Newell Brands. Following our extensive search, we could not find information on the company's funding history. We have presented our findings and additional information in the Research Strategy section below.
I- Overview of Newell Brands: Outdoor & Recreation
1. About the Company, Funding History, Annual Revenue, Products, and Services Offerings.
- Newell Brands is an Atlanta Georgia-based global consumer good giant that operates seven (7) business units for its 100+ brands, with over 32,000 employees. These business units cover writing, food, home fragrance, commercial, baby, home appliances, and outdoor and recreation.
- In 2021, the company accrued net sales revenue of $10.6 billion, a 12.8% increment from revenue earnings and a 165.9% net profit margin growth compared to 2020.
- The company's Outdoor & Recreation unit generated net sales revenue of $1.48 billion in 2021, compared to $1.3 billion in 2020, witnessing a 13.5% core sales growth.
- Under its Outdoor & Recreation unit, Newell Brands aims to energize "consumers’ enjoyment of the outdoors and promote an active daily life." This business unit hosts about eight (8) popular brands, including Aerobed®, Marmot®, Contigo®, Coleman®, Stearns®, and bubba®.
- The company's Aerobed brand sells stylish and tech-advanced airbeds, the bubba brand offers drink-ware products like sports bottles, mugs, and kid's bottles, and the Campingaz brand specializes in cook-wares like stoves, lanterns, and Gas BBQ, while the Marmot brand produces "technical equipment and apparel for outdoor athletes" such as sleeping bags and rainwear.
2. Newell Brand's Corporate Values and Missions
- Vision: "Become a consumer-led, innovation powerhouse and growth engine that is a force for good and an amazing place to work, grow and thrive!"
- Purpose: "Newell Brands’ beloved, planet-friendly brands enhance and brighten consumers' lives at home and outside by creating moments of joy, building confidence, and providing peace of mind."
- Culture: "As we embrace and live our values every day, in all we do, together we will build a winning, One Newell culture in which employees feel a true sense of belonging, fulfillment, and satisfaction and act as a force for good."
- The company's values hinge on four Ts; Truth, Transparency, Teamwork, and Trust.
- Additionally, Newell Brands thrive on a 5C-inspired market strategy framework. These are "Culture of Winning, Consumer First, Customer Collaboration, Channel Management, and Continuous Improvement & Innovation."
- Under its Consumer First framework, for instance, Newell proposes that "consumers are at the heart of everything we do. Every business decision is laser-focused on the consumer-first mindset. We leverage advanced consumer insights to continuously meet the needs of our consumers which translates to a greater impact in the marketplace. Our history is deeply rooted in entrepreneurship and innovation and we strive to make our iconic brands relevant for today’s consumer."
II- Digital Transformation Strategy
3. Recent Strategic Initiatives Related to Digital Transformation.
- Projecting online sales to top $2 billion in 2020, Newell Brands renewed its focus on e-commerce in February 2017. This resulted in a deal with Yankee Candle owner, Jarden which resulted in the creation of an e-commerce division for the brand.
- As part of the deal, Michael Polk, CEO of Newell Brands said "Newell has created an enterprise-wide e-commerce division that will have responsibility for online growth across the company’s portfolio. As we exit 2016, our e-commerce business has revenue of over $1 billion, has grown over 30% compounded over the last three years, and we expect will more than double and grow by over $1 billion by 2020 as we extend our capabilities across our categories and around the world. 2016 has been the most transformative year in our history, and we’re very pleased with the scope, speed, and impact of the transformation."
- In 2022, Firstup reported Newell Brands contracted them to develop a mobile app, Newell Now to transform how the company's internal communications and employee engagements were conducted.
- Following the implementation, Christina Moylan, Manager, Corporate Communications, Newell Brands said, "Firstup has brought so much value to Newell Brands. With the launch of their employee branded app, Newell Now, employees now have one single hub to access all their company information where they are. In addition, employees are empowered to share content with other employees, creating a connected environment. Newell Now allowed the internal communications team to send the right content to the right group of employees."
- In 2021, SAP Insider reported that Newell Brands automated its "FICO processes to streamline, speed, and improve the financial close, by leveraging an Excel-based solution to overcome obstacles with their custom upload programs and automate their data entry processes."
- Representing Newell Brands, Laura Petrie, SAP Finance Project Manager (in a published webinar; 06:01) said, the implementation was undertaken to achieve "upfront validation, reduced IT support, improved business user experience resulting in a shorter close, ability to attach supporting document, ability to use excel formulas, and ability to post multiples documents at once (dropped header feature).
- Existing marketing tech stack: According to Slintel, Newell Brands deploy over 523 technologies across 22 categories. However, the specific technologies deployed for marketing purposes include WhosOnLocation, Yieldbot, Hootsuite, Instagram Advertising, Facebook for Business, and the Bronto Marketing Platform.
- Among these marketing tech stacks, Yieldbot for instance augments the company's efforts to "capture and organize web publisher intents and makes them available for advertisers to match offers and ads with the content." Additionally, Newell Brand leverages the Bronto Marketing software to create email, mobile and social media campaigns, and marketing automation for its e-commerce and internet platform hosts.
- According to G2 Stack cited by Crunchbase, Newell Brands uses about 33 tech products and services including Google Analytics, HTML5, and jQuery, and additional 72 technologies like Viewport Meta, and IPhone/Mobile Compatible for its websites. With these tech stacks, Newell Brands receives 71% (about 32% slump in monthly visit growth) of its web visitor traffic from the US every month, followed by 10%, 9%, and 6% from Paraguay, France, and the United Kingdom respectively.
III- Corporate Challenges Faced by Newell Brands.
- One of the key challenges facing the company is that "Newell Brands Has Multiple Brands and Multiple E-commerce Challenges" says Mike Geller, the President of e-commerce & Digital, Newell Brands.
- In May 2020, The Motley Fool reported that Newell Brands experienced major challenges in the face of intense competition. As a result, competitive pressure and the need to address costs constituted the two overarching challenges that caused to company's turnaround efforts to fall short.
- Additionally, a SWOT analysis conducted by Oak Spring University, the challenges associated with Newell Brands relate to the company's "ability to respond to the competition, employees’ less understanding of Newell Brands strategy, no frontier risk strategy, products dominated business model, high operating costs, lack of clear differentiation of Newell Brands products, slow to harness new channels of communication, interest costs, capital spending reduction, increasing silos among functional specialists, aligning sales with marketing."
1. Multiple Brands and E-commerce Challenges
- The Newell Brand operates more than 100 brands under seven business units. This means that the company must ensure the constant operability of multiple e-commerce platforms for its standalone brands.
- Additionally, changes in consumers' buying experiences especially in taste and trendy preferences mean that "the buying experience is becoming more and more of a puzzle that comes together differently for every consumer. How they discover something might be different from how they purchase something and how they purchase it might be different from how it gets fulfilled."
- As a result, Newell Brands must optimize every touchpoint of the customer experience from how they "find something in a store, buy it online, and have it delivered via an app" and so on, giving rise to independent consumers with more authority and choice over product or service purchase decisions. Thus, each Brand under the company's umbrella, including those in the Outdoor and Recreation unit "to cater to this kind of consumer and create buying experiences and touchpoints that are consistently excellent. It is only through exceptional service and experiences that brands will win consumers in the future."
- Recognizing this challenge, Mike Geller, the President of E-commerce & Digital, and Co-chair of Omni-Channel Council, Newell Brands said, the company “grew into the e-commerce post was very much… brute force. It was through dollars and people, etc. It wasn’t necessarily through technology or data, etc. I thought there was a real opportunity to come in and take this amazing asset of the brands, the amazing asset of the e-commerce work that they had done, both in Amazon and other pure plays, but also in the D2C space. I was shocked to hear how significant the D2C business was here, and that there was so much opportunity. That was all very exciting because it felt like real opportunity to similarly transform, grow, do some really interesting things on the back of these phenomenal brands.”
- However, the company consulted Brightspot, a customer service management solutions company, to design a new website that reflected the Newell Brand. Among other tasks, Brightspot was expected to deliver and "maintain all digital properties from one platform, thus gaining more control over digital experiences and helping to unify the brand portfolio."
- The company now has "a single unified brand presence for 200 brands, 16 global divisions, and are 33% faster in mobile app development time with React Native." Thus, from a single channel, consumers can access all brand portfolios under Newell Brands.
2. Competitive Pressure
- According to The Motley Fool, Newell Brands operate in the ever-changing personal and household products' industry environment, with a many nimble upstart competitors, with the company struggling as new entrants take away niches of its business. Consequently, "many consumers have shifted their buying preferences away from large brands to private labels, a direct hit on Newell's portfolio of well-known brands."
- In May 2020, NASDAQ reported that competitive pressures from online offering is a challenge for the company, calling for management focus on innovative products to beef up its online business offerings.
- In the face of this challenge, Motley Fool in 2020 added that "Newell has found top-line growth much more challenging. Last year, its core sales declined 1.9%. Those sales generated less profit too as adjusted gross margin contracted from 34.3% to 33.8%, driven by less profitable items and higher costs."
3. Challenges related to costs
- Compared to its competitors in the personal and household products' industry, Newell Brands borrow money from the capital market at higher rates, coupled with ill-advised cash-and-stock acquisitions.
- On May 15, 2020, NASDAQ published that shareholders tend to suffer from the consequences of such cost-inflicting moves.
- The stock is traded at "just one-quarter of its value from three years ago. This comes after Newell completed an ill-advised $13 billion cash-and-stock acquisition of Jarden in 2016. The deal added a bunch of well-known brands such as Coleman, First Alert, and Yankee Candle to Newell's Paper Mate, Sharpie, and Graco, among others. Obviously, this did not have the intended effect on profitability" added Lawrence Rothman, CFA at Motley Fool.
- Recognizing the enormity of the challenge, Ravi Saligram, CEO of Newell Brands opined, "I appreciate the board recognizing the urgency of the situation, but turnarounds are risky, leaving investors questioning how much success the company will have from these efforts."
- Additionally, Newell Brands in its 2021 Annual Report (page 15) recognized that an increase in interest rates yields a material adverse effect on the Company’s business. In sum, "increases in interest rates increase borrowing costs and would increase the cost of servicing our debt and could reduce our profitability and cash flows."
Research Strategy
For this research on Newell Brands' digital transformation strategy, we leveraged the most reputable sources of information available in the public domain, including Forbes, SAP Insider, Bezinga, and Oak Spring University's resources. Additionally, we scoured the official websites of the assigned company, including the individual brands under its Outdoor and Recreation business unit, such as Aerobed, Coleman, Marmot, and bubba. Also, the company's funding history was available behind paywalls and subscription channels, including Pitchbook, and CBSInsights. Again, the company’s tech stack, including some marketing platforms used by the company were available behind paywalls, such as Slintel and Crunchbase. Consequently, we have provided information that were available in the public domain, including Yieldbot and Bronto Marketing Platform. Finally, we could not identify specific corporate challenges for the Outdoor and Recreation business unit. As a result, we have provided related corporate challenges for the Newell Brands.