Unilever to accelerate growth in the US, China and India
Despite what has been a volatile and unpredictable year for all business, one of the world’s largest consumer goods businesses, Unilever, has shown “resilience and agility” reporting underlying sales growth of 1.9%, according to the company’s recently released Full-Year 2020 Financial Results.
In light of Unilever’s growth in certain areas and markets in 2020, including its 61% growth in ecommerce and 1.2% emerging markets growth, the company has laid out its strategic goals for 2021 and beyond.
Unilever refocuses business in 2020
Having refocused the business earlier in 2020 on competitive growth, and the delivery of profit and cash as the best way to maximise value, Unilever managed to deliver a step change in operational excellence through its focus on the fundamentals of growth.
This resulted in the company winning market share in more than 60% of its business in the last quarter of 2020, generating an underlying operating profit of €9.4 billion and free cash flow of #7.7 billion, an increase of €1.5 billion.
More than that, however, Unilever also progressed its strategic agenda, building on its existing sustainability commitments with ambitious new targets and actions, most recently “our plans to help build a more equitable and inclusive society”, states CEO Alan Jope.
Moving into 2021 in good shape, and with what the company describes as a “purpose-led, future-fit business model”, Unilever has set out its plans to drive long-term growth.
As well as the company’s continued and long-term strategic goals of building a purpose-led, future-fit organisation, being powered by purpose and innovation both in company thinking and through its brands, Unilever has outlined a number of goals that in light of the changes of 2020 will take the 130-year-old business into 2021 and beyond.
Develop portfolio into high-growth spaces
With its powerful portfolio of leading category and brand positions, Unilever’s goal is to position the company in the categories that will drive future growth, a strategy that will guide its investments and acquisitions moving forward.
While the company hasn’t confirmed which categories or growth areas it will focus on, those that grew in 2020 are likely to guide the company’s decision-making.
Unilever’s home and hygiene brands delivered high-teens volume-led underlying sales growth with demand for products with germ-killing and antibacterial benefits. Lifebuoy hygiene brand grew 50%, while Domestos, which was launched in China and introduced spray and wipe formats, grewover 25%. The company’s retail foods business grew double digits, as restricted living led to more in-home eating occasions for consumers, and its plant-based brand The Vegetarian Butcher grew over 70%.
Lead in the channels of the future
Unilever further outlined its strategic goal to position its business for success in the channels of the future with a focus on ecommerce and digitising the distributed trade, underpinned by advanced shopper insight as the consumer and customer landscape continues to evolve. Unilever’s ecommerce grew by 61% in 2020 and is now 9% of all Unilever sales worldwide.
Accelerate growth in US, India and China
Unilever further outlined its strategic goal to accelerate in the US, India and China and leverage its emerging markets strength. The company has strong brand and category leadership positions in all three countries with around 35% of its turnover coming from those three countries alone and “we believe we can bring sharper focus in those geographies and build even stronger positions”.
While the strict lockdowns in China and India led to market declines for Unilever in the first and second quarters of 2020, respectively, the company saw both markets return to growth with China having normalised in many categories and economic activity in India picking up.
“Emerging markets grew 1.2% as China and India returned to growth,” commented Jope, with China in particular “delivering high single digit growth in the second half”.
Meanwhile, developed markets grew 2.9%, led by particular strength in North America in-home foods.
Unilever acknowledges that there is also significant opportunity beyond these markets and “we will continue to build on our strong operating businesses in the world’s fastest growing economies”.
UK office space slashed as hybrid working looks set to stay
With hybrid predicted to be the working model of the future, and businesses both large and small announcing that WFH will continue for employees into the future, the traditional office space is being re-thought.
Businesses are both questioning how much space they need for a hybrid working future, especially if it means they can potentially save money, and what form that space should take.
UK firms slashing office space
Back as early as February, HSBC – whose real estate footprint currently stretches to around 112 football pitches worldwide – said it would be cutting its post-COVID office space by half globally and by 40% in London over the next few years, as it looks to implementation of a hybrid working model in light of the pandemic.
Lloyds Bank followed suit. Following an internal survey where 77% of employees said they wanted to continue to work for 3+ days a week post-pandemic, the bank announced it was also moving to a hybrid model, and so looking to cut its office space by 20% over the next two years.
In fact, the latest research from consulting firm PwC reveals that a third of organisations surveyed (258 of the UK’s largest companies) believe they will reduce their office footprint by more than 30%.
The findings of PwC’s Occupier Survey indicate there is likely to be a sizeable fall in occupied office space with half of executives surveyed saying that despite taking into account mass vaccinations, employees will continue to work virtually 2-3 days a week.
And companies continue to announce the hybrid working model for their employees. Accountancy firm EY has just announced that its 17,000 employees are moving to a hybrid way of working, WFH for at least two days a week. This follows PwC which in March said workers could stay at home for half the time and KPMG which this month said it would expect employees to only work two days in the office every week.
More collaborative work spaces
However, what’s also clear from PwC’s research is that the role of the office is not going to disappear completely, but instead adapt to a new way of working, with half of all organisations with more than 100 employees saying they have a real estate and workplace strategy that considers the long-term impact of COVID-19.
“We may see an increased demand for flexible space as many businesses operating models may well need that option if holding dead space is to be avoided,” says Angus Johnson, UK Real Estate Leader at PwC UK.
According to the survey, more than three quarters of respondents said they are likely to reconfigure existing office with 43% of financial services firms stating that they are extremely likely to do so as a result of the pandemic.
“It’s also clear that the nature and purpose of office space is going to change. As occupiers seek new, different space to meet their accommodation needs, environmental aspects will be increasingly important. If the real estate sector is to truly succeed as a more dynamic, greener industry it’s imperative that creative thinking comes to the fore.”
And companies are already thinking creatively how they can utilise office space in a hybrid future. So while HSBC is cutting a significant amount of office space, it is not downsizing its prestigious Canary Wharf headquarters, and instead reimagining the space. In April, CEO Noel Quinn announced the firm was embracing an open plan floor, with no designated desks or private offices, and instead using hot-desks in line with the future hybrid working style. “My leadership team and I have moved to a fully open-plan floor of the building in east London with no designated desks,” he said on LinkedIn.
Lloyds also reported it was adapting its office space, so that rather than individual offices, it will have a more collaborative workspace. And just last month, KPMG announced it too was ditching desks and individual offices, and replacing them with meeting rooms and conference halls for a more collaborative workspace.