Unilever will sell its US seafood businesses and its Myhome cleaning service. As Unilever continues to streamline its brand portfolio, it will need to make tough decisions such as selling its major North American frozen fish brands. But the planned sale of its small home cleaning service operation may not be in its long-term interest. In fact, that kind of business may represent the future of consumer packaged goods.
Unilever’s five-year Path to Growth plan, designed to increase sales and profit margins, is the driving force behind a series of divestments aimed at reducing the brand portfolio from over 1600 to 400 by 2004. Most recently, the company has chosen to sell Gorton’s and BlueWater Seafoods frozen fish businesses and its service-orientated Cif Homeclean division of Myhome.
All three operations have been regarded as non-core to its business strategy. However, whereas the seafood businesses represent the typical sort of operations that Unilever has in abundance, Myhome represents a move away from product-based brands and is more clearly focused on the future of the consumer goods industry. Selling it may be a mistake.
Initially set up in March 2000, Myhome offers a domestic cleaning service using Cif branded products to consumers in South-West London. Currently, the business serves 2,000 customers and employs a staff of 160. The business has not been profitable. Set up at a cost of GBP6 million, the annual return is in the region of just over GBP1 million. However, the learning curve was expected to be steep – no one said it was going to be easy.
Rising private label penetration, increasingly rapid me-too product imitation and continuing margin erosion point towards a future that is moving away from branded packaged goods. In the future, value creation will increasingly focus on consumers demand for solutions which merge product, service and experience elements.
Unilever is right to focus on more, core brands, and inevitably this has to be done at the expense of a number of perfectly good brands and divisions.
However, Unilever has to be aware of the risk of harming its ability to be flexible and stay innovative. Whether Myhome represents an ideal consumer solution is not entirely important – it at least represents the sort of venture that enables manufacturers to experiment and learn in this area.
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