Here's how Newell Brands is working to keep consumers spending on names like Rubbermaid, Sharpie, and Yankee Candle
- Competing for consumers' cash has become more challenging because of higher prices for necessities.
- Newell Brands owns hundreds of brands including Sharpie, Elmer's, and Yankee Candle.
In the game Yahtzee, players get to roll the dice more than once to try and boost their score. When it comes to selling products to consumers, companies that hold numerous brands can also have a greater chance of finding a winning combination.
That's the strategy at Newell Brands, the company behind household names like Sharpie, Elmer's, and Yankee Candle. Consumers worried about rising costs for food, gas, and rent are favoring must-haves like school supplies and cutting back on extras like scented candles.
Ravi Saligram, Newell Brands' CEO, is confident that consumers will continue to spend on the company's broad product line despite high inflation.
"Our brands are resilient," Saligram told Insider. "The diversity of our portfolio is an advantage that we leverage in this environment."
Yet whatever benefits the company's product diversity brings, they won't spare Newell from all challenges.
The company's second-quarter revenue fell short of analysts' forecasts — though profits were ahead of expectations — and Newell lowered its full-year revenue and earnings outlooks. The company pointed to the strength of the US dollar, which has the effect of making US companies' products more expensive in foreign markets.
Despite the headwinds, some Wall Street analysts see a positive overall outlook for the company, noting it's the type of business that tends to hold up against inflation and rising interest rates.
American consumers are still spending despite higher costs, though what they're opening their wallets for is shifting. This means competing for consumers' diminished discretionary budgets is proving more challenging.
"Last year, you had the government stimulus and the childcare tax credit, which buoyed consumer balance sheets and spending power," Saligram said. "That's not there this year."
Newell Brands is leaning on the diversity of its stable of more than 100 brands to keep customers coming back. Here are some of the ways the company is hoping to navigate a tougher economic environment.
School reopenings are driving back-to-school sales
Back-to-school spending is on track to match last year's record of $37 billion, according to the National Retail Federation.
Newell Brands' school supplies — things like Sharpie markers, Paper Mate pens, Elmer's glue, and Expo dry-erase markers — continue to line parents' shopping baskets as students gear up to return to the classroom.
"We had both a good quarter and a good first half," Saligram said. "We're expecting a strong back-to-school season."
A prediction from Deloitte suggests the season will be strong: The consultancy's 2022 back-to-school survey indicated parents could spend up to 8% more this year — roughly $661 per student — on technology tools and traditional supplies.
"Our writing brands are necessities," Saligram said. "And when people are making hard choices, they're going to pay for what they consider a great value."
More people are cooking at home
During the days of pandemic lockdowns, consumers had little choice but to cook at home or, eventually, get takeout. Those extra hours in the kitchen forged a habit for many. Now, for some, rising prices are undercutting some of the excitement of going out to eat.
With brands including Rubbermaid food-storage containers, Ball canning jars, and FoodSaver vacuum-sealing systems, Newell Brands' food division can accommodate consumers who are forgoing takeout and restaurant tabs for homemade dishes and leftovers.
"There are several category trends that should benefit the food business in a more challenging and highly inflationary macro environment, including greater at-home-cooking occasions relative to pre-pandemic levels with hybrid work only accentuating this behavior," Saligram said on a recent conference call following the company's earnings report.
Given higher grocery bills, avoiding food waste is a priority for some consumers.
"We're seeing where FoodSaver and Rubbermaid are meeting consumer's needs in food storage," Saligram told Insider.
Cleaning has become a more serious affair
The onset of the pandemic changed the public's expectations of cleanliness, and that focus has consumers and commercial buyers snapping up more cleaning supplies.
With restaurants and hotels, office buildings, and schools reopening, Newell Brands' commercial division — which includes Rubbermaid industrial trash cans, Quickie mops, brooms, and dusters — benefits. The commercial division was Newell's top-performing business in the second quarter.
"As America and the world is opening up, our commercial business had a splendid quarter with about 10% growth," Saligram said.
Cleaning-industry insiders predict a desire for more intense cleaning will remain, just as dispensers of hand sanitizer are now fixtures in public places such as office buildings, schools, and airports.
Melissa Hockstad, the CEO of the American Cleaning Institute, told Chemical & Engineering News that many consumers' stepped-up attention to cleaning would likely endure even after the pandemic ends.
Some Gen Z consumers are spending big on wellness
While Saligram is leaning into Newell Brands' strengths amid economic headwinds, he plans to continue working to boost names that face a harder time when consumers become choosier. These include the company's home-fragrance business — names like Yankee Candle, WoodWick, and Chesapeake Bay Candle. The division saw strong growth last year as consumers spent more time at home. But the business suffered in the second quarter.
"As the pandemic recedes, there's more mobility — people are on the go. They're not using as many candles," Saligram said. As inflationary concerns persist, people see candles as discretionary, he added.
"Now they're minding their dollars," Saligram said. "Maybe if they were going to put it in all five rooms, now they may be putting in three rooms or four rooms. So that business has taken a little backstep."
Yankee Candle plans to unveil a line of candles in August called "The Friday Collective" to attract Gen Z consumers.
Gen Z consumers tend to prioritize wellness, research has shown. Health and wellness is the second-highest category of Gen Z spending, behind electronics and technology, according to 5W Public Relations' 2021 consumer report.
"The brand is all about uplifting moods," Saligram said. "I'm very excited to engage a different population segment with this launch."
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