It happened in entertainment, it happened in apparel and nowit’s happening in food.
That’s the mile-high view from Mark Alexander, US President from Campbell Soup Company. The ‘it’ in question is e-commerce in particular and online platforms in general - and it’s an opportunity that the 148 year old US firm doesn’t intend to miss out on, setting out an ambition to see $300 million in e-commerce revenue within five years. Alexander declares:
E-commerce is a significant growth opportunity for Campbell’s. It represents the future of food commerce. Only those who get there in a fast and smart way will win and Campbell’s intends to do just that. We have an accelerated strategy to invest and grow in this space.
This objective has been brewing for some time. CEO Denise Morrison noted a few months back that:
The retailer environment continues to be very aggressive, with e-commerce and value players applying increased pressure on grocery and mass channels and we do not anticipate this trend to abate anytime soon.
See AlsoTraditional French Cassoulet RecipeFettuccine With Braised Mushrooms and Baby Broccoli RecipeOptions Trading: A Recipe Book with Ingredients Part 7After 10 Years, We Finally Hit Upon the Perfect Cinnabon Cinnamon Roll RecipeSuffice it to say that we have always run a multi-channel business and so this isn’t the first time that the retail landscape has morphed, although I have to say that I personally have called the shift to digital and e-commerce a seismic shift. So we are definitely making longer term plans to address that.
What is now emerging is a more structured approach to this rather than some of the seemingly more piecemeal initiatives that have been in evidence to date. These have included:
- Upgrading the Campbell’s Kitchen skill for Amazon Echo, allowing users to see and hear step-by-step cooking instructions and recipes in the so-called ‘Connected Kitchen’.
- Setting up a dedicated team to work on partnering with Amazon, a savvy move which occured before the recent takeover announcement of Whole Foods was public. This has included rolling out Dash buttons for reordering Campbell’s products.
- An agreement with The Sage Project to partner on digital disclosure of ingredients using Sage’s food data platform. Sage is creating online food labels for the digital world, making information about calories, nutrition, ingredients and attributes open, accessible and easy for consumers to understand.
- A $10 million investment in Chef’D, a meal kit start-up, that makes Campbell’s the biggest stakeholder in the firm. The rationale for that was to tap into insights around e-commerce and data analytics.
Getting serious
For all that, Campbell’s has had limited success to date online, with e-commerce accounting for about 4% of total food sales. While inevitably consumers most associate Campbell’s with its range of canned soups, the $8 billion turnover CPG company also owns a number of high-profile US food brands, including Pepperidge Farm, Bolthouse Farms, Swanson, Pace and Prego. It’s currently in the process of buying organic produce provider Pacific Food.
With that sort of retail portfolio on tap, Campbell’s has decided that the time has come to drill down on getting that 4% figure much higher. In its most public declaration of intent to date, the firm earlier this month announced that it has hired Shakeel Farooque as Vice President and Head of Digital and E-Commerce to lead the unit. Reporting in to Alexander, Faroque will head up a dedicated e-commerce unit representing all three Campbell divisions in North America.
Faroque’s background in e-commerce and retail is gold-plated. He was most recently SVP of e-Commerce at Kohl’s, instigating data analytics to understand consumer behaviors and heading up the design and execution of Kohl’s digital business strategy. He’s also done time at eBay, where he revamped the firm’s eBay Deals Program, tripling revenues in one year. He’sevengot Amazon credentials, having led global strategic planning across the US, Europe and Asia.
In other words, this guy knows what he's doing. As Alexander observes:
It starts with talent. Shakeel is a builder of organizations, partnerships and solutions. That’s exactly what we need him to do here.
As outlined at Campbell’s recent investors meeting, the e-commerce strategy that Faroque is charged with delivering against is built around four specific objectives:
(1) Scaling digital marketing capabilities. This will involve investing in the creation and distribution of brand and product-specific content at more and more customer journey points. This will be supported by a revised marketing technology infrastructure that is built around building and maintaining consumer relationships. The third component will be an increased focus on data analytics with a view to understanding better the behaviors of Campbell’s consumers.
(2) Creating an integrated e-commerce approach. That means pulling digital marketing, sales, supply chain and e-commerce activities under one umbrella an having a unified worldview.
(3) Driving digital and e-commerce innovation. This will be achieved through the creation of an in-house Accelerator Unit with a “tech company mindset and a test-and-learn culture”. As well as assisting Campbell’s to scale its own digital capabilities and develop cross-portfolio e-commerce solutions, this Accelerator arm will also be charged with finding and incubating new business models and revenues streams across the Campbell’s estate.
(4) Developing a new supply chain model. This willunderpin online commerce and has the flexibilty to support new channels and partners. The graphic below represents the vision here:
My take
A bold vision from a company that’s about to celebrate its 150th birthday, but a necessary one. As CEO Morrison told investors:
One need not look any further than Amazon’s proposed acquisition of Whole Foods, the expansion of Aldi and Lidl, or the Blue Apron IPO for evidence of the changing retailer landscape.
The other point in play of course is whether Campbell’s wants to be a provider of product sold via third party e-commerce firms or to be an e-commerce platform in its own right. The former option probably isn’t that much of a longer-term strategy as, despite its stellar brand in the US grocery market, Campbell’s has been under pressure.
An investor note from Zach’s Investment Research paints a downbeat picture:
Campbell Soup has lagged the broader industry in the last three months. The company is bearing the brunt of a tough macroeconomic scenario in the food industry, with soft consumption patterns. This, along with intense competition from e-commerce giants dented top-line in the third quarter.
Against that backdrop, Campbell’s has outlined a turnaround strategy that’s built on the twin pillars of quality food - touting a can of tomato soup as comfort food only gets you so far in an organic, health-conscious age - and technological investment.
As a five year plan, there’s a lot to achieve in a relatively short space of time. But as Morrison noted:
In this environment, companies and brands must differentiate themselves or risk extinction.
