Unilever’s continued reactionary price increase strategy yields lower volumes, says GlobalData – Retail Times
Following today’s release of Unilever’s figures for H1 FY2022; Gospel Obele, consumer analyst at GlobalData, a leading data and analytics company, offers his view: “As the cost-of-living crisis worsens, Unilever must consider whether increasing prices is a sustainable strategy in the face of falling volumes, and if a cost-saving approach to restructuring operations will yield better volume growth, as consumers adopt new shopping habits. The global inflation challenge has led to cost increases throughout the supply-chain, with manufacturing companies suffering more significantly from this setback.
“The organization recorded an 8.1% underlying sales increase in the first half of 2022, built on a consistent two-quarter price increase, with price growth reaching 11.2% in Q2. Home care saw the largest contribution to sales growth in H1 with high price growth of 14.5%, up from 12.5% in Q1, while volumes declined 3.4%, versus 2.9% in Q1. This pattern was also seen in the beauty & personal care, and the foods & refreshment categories.
“Despite supply constraints not fizzling out soon, this reactionary approach is unsustainable for growth for the FMCG giant, as consumers are now faced with limited and tougher spending choices given the pressure on the cost of living. This has influenced shopper habits with consumers committed to buying cheaper brands delivering the same level of satisfaction, or fewer items from the same brands owing to personal product affinity.
“Unilever may reach a limit to how far increased prices can go, because at some point, further lower volumes and consumer exit decisions will shrink margins and profitability below expectation. The company claims to have restructured for operational excellence by moving away from its matrix structure to five business groups namely Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. However, with this crisis set to continue through 2023, consumer-focused brands will need more than price increases and cost savings to strategically serve consumers and drive volume sales to stay profitable.”
Following today’s release of Unilever’s figures for H1 FY2022; Gospel Obele, consumer analyst at GlobalData, a leading data and analytics company, offers his view: “As the cost-of-living crisis worsens, Unilever must consider whether increasing prices is a sustainable strategy in the face of falling volumes, and if a cost-saving approach to restructuring operations will yield…
- Gain a Tactical Gaming Advantage with the Discounted Kishi iPhone Controller
- Actor Hrithik Roshan spotted with a Mercedes-Benz GLE SUV
- Look around Apple Maps feature launches on Zillow app
- Editable Tweets arriving on Twitter Blue Australia, New Zealand and Canada
- Apple Music reaches 100 million songs