Customers and sustainability
We work hard to continually expand our retail network to allow us to reach a wider, and increasingly diverse, shopper base. With our existing customers we seek to improve the way we work together to make our joint operations more efficient and effective.
In recent years sustainability has become a much bigger part of our relationship with all of our retailers. We have found many opportunities, both through industry programmes and through one-on-one activities, to improve the sustainability of our business and to help shoppers adopt more sustainable lifestyles.
Our network of retail customers
Our products reach shoppers through a network of customers, from multinational retailers, wholesalers and distributors to small independent shops.
International retailers such as Walmart, Tesco, Carrefour and Metro have market leadership in the US and Europe and also have a growing presence in developing markets. Around a fifth of our worldwide sales are channelled through ten major retail chains but we also sell products through a more diverse group of distributors, wholesalers and millions of small independent outlets and kiosks, particularly in developing and emerging countries.
Unilever has a long history of working in both developed and developing markets and our combination of global scale and local market knowledge positions us well to help all retailers, large and small, to meet the needs of their shoppers.
Unilever is now in the third year of a five-year strategic plan for working better with retail customers. Our aim is to work with the best retailers across our markets, to help build mutual, sustainable growth and to meet the needs of our consumers.
The importance of retailers is recognised at all levels of the company. Both our CEO Paul Polman, and our Chief Operating Officer, Harish Manwani, regularly meet with the CEOs and boards of our major customers.
The strategic plan for working with retail customers addresses our engagement with customers as well as our internal capabilities and organisation. Some examples of activities that are included in the plan are:
- Creating channel differentiation
Consumer buying patterns around the world continue to change. This is reflected, for example, in the growth of ‘e-commerce’ and the resurgence of convenience stores.
Addressing the needs of different types of retail channels requires us to take a flexible and responsive approach. To do this we have developed channel-specific strategies.
- Sharing insights & innovations
The success of our first Customer Insight and Innovation Centre (CiiC) in New Jersey has led to the establishment of six more state-of-the-art centres in London, Paris, Singapore, Shanghai, Sao Paulo and Mumbai.
These centres provide the opportunity to work more closely with retailers around the world to trial new strategies for merchandising, displays and packaging without having to run in-store pilots which are costly and time consuming.
We host more than 300 meetings a year with retail customers at these Centres.
Our Perfect Store programme is based on the concept that for every variation in geography and outlet size, from a US superstore to a small-town independent in China, there is an optimal merchandising layout for best meeting shoppers’ needs and presenting Unilever brands. It is a repeatable model which ensures the right products are available in stores and are marketed clearly to shoppers.
A better shopping experience leads to improved sales growth, as shoppers purchase our products more frequently. The programme has led us to develop our understanding of what works in different channels and store formats, and also encouraged us to develop a range of new IT systems to facilitate measurement of key parameters, that is improving the way we do business and helping us stand out from the competition.
In 2012 we supported the development of two million Perfect Stores and extended our programme to more than 30 new markets. This means that at the end of 2012 we had five million Perfect Stores in 75 markets – and we aim to have 20 million.
Next, we will roll out the next generation of the programme, Perfect Store 2.0, aimed at improving the way we market our brands to shoppers, improving shelf stand-out and ensuring we give shoppers more reasons to choose our brands in-store.
Working with our customers on sustainability
We estimate that 68% of our greenhouse gas impact comes from consumers using our products. We help customers engage with shoppers and consumers to adopt more sustainable lifestyles. An increasing number of our retail customers, both large and small, are now working to embed sustainability into their business.
They are setting ambitious targets in areas such as energy use, greenhouse gas emissions and waste. These targets impact their suppliers, including Unilever. This in turn has an impact on our own suppliers.
We welcome this increased focus on sustainability from retailers. Retailers can be powerful drivers for improving sustainability knowledge and performance across a wide range of companies and sectors.
Our long-standing activities in the area of sustainability give us an opportunity not only to respond to the growing requirements of retail customers, but to share our expertise and explore opportunities for joint initiatives.
We are increasingly engaging with retailers (and with our peer companies) on sustainability, sharing our knowledge in areas such as sustainable agriculture, and measuring the lifecycle impacts of products. We work together to deliver innovative in-store programmes that help to educate and engage shoppers.
Working with our retail customers – large and small
We have sustainability programmes underway with many of our large customers. For example, we have recently launched a joint programme with Walmart that will help 200 million shoppers every week make sustainable choices that are good for them, good for their community and good for the planet.
The programme, called The Living Project, started in 2012 and has now been implemented in Walmart stores in Brazil, China, and the US. The programme helps shoppers by:
- identifying small changes that our brands can enable Walmart shoppers to make
- creating offers that inspire and enable shoppers to make that change
- building in a mechanism to track the small actions of shoppers to show them how they make a big difference.
Walmart is our largest retail customer and the biggest retailer in the world. But we also work with the smallest retailers.
Our Shakti door-to-door selling operation started in India helping female entrepreneurs build small businesses through taking Unilever’s brands into rural environments not served by the usual retail network.
We operate similar schemes in Bangladesh, Sri Lanka and Vietnam which we are committed to expanding, thus creating employment and enhancing the livelihoods for thousands more entrepreneurs as well as bringing our quality brands to the hardest to reach consumers.
For the last three years, we have worked on ‘A Better Future Begins at Home’, a joint shopper programme with retailer Tesco, to encourage sustainable behaviour. It combines advice with promotions around our brands, all carrying a strong sustainability message.
By rewarding shoppers for making more sustainable choices, it is educating them in how small actions can make a big difference both to the environment and to their wallet. So far the programme has been implemented in nine markets from the UK to China. As well as growing our sales, it has delivered benefits ranging from consumers recycling more to people planting trees in the local community.
Working as an industry on sustainability
We actively engage in industry programmes at national, regional and global levels to help the industry as a whole bring about positive change.
The Consumer Goods Forum
The Consumer Goods Forum (CGF) is an industry association that brings together over 400 retailers, manufacturers, service providers and other stakeholders across 70 countries.
The CGF is governed by a board of 50 CEOs from the most important retailers and manufacturers in our industry. This includes major companies headquartered in Europe and America as well as companies headquartered in Asia, Latin America and Africa. The companies range from global businesses, such as Carrefour, Walmart, Coca-Cola and Unilever, to national leaders such as Sobeys from Canada and Pick ‘n Pay from South Africa.
The CGF aims to help the industry improve the way it meets the changing needs of the world's consumers. It does this through increasing industry collaboration on non-competitive matters, to bring efficiency and simplicity for our consumers and through supporting the exchange of knowledge and good practices.
Our CEO, Paul Polman sits on the board of the CGF.
Taking action on sustainability issues
Sustainability is one of the Forum’s focus areas and Paul Polman and Phil Clark, CEO of Tesco are co-sponsors of the sustainability programme.
For example, a Global Packaging Protocol, which provides companies with a framework and common language to discuss the role of packaging in sustainability and includes a glossary of commonly used sustainability terms, was published in early 2012.
The board of the Consumer Goods Forum endorsed two resolutions proposed by Paul Polman:
The first was to eliminate deforestation from the supply chains of all member companies by 2020.
The second was an agreement to begin phasing-out hydrofluorocarbon (HFC) refrigerants from 2015 and to replace them with ‘natural’ refrigerants that have a much lower global warming potential.
The Forum is working to achieve both goals using a combination of individual company initiatives and by working in partnership with NGOs.
GS1 is a global federation of national organisations that support our industry through setting standards and supporting services that improve efficiencies in our cross-industry supply chain. This includes, for example, the standards used for product identification through the on-pack barcode system.
Unilever actively supports the work of GS1 through participation on the board of many of the national organisations.
The Efficient Consumer Response (ECR) Movement
The ECR movement started in the mid-1990s to help our industry collectively improve our service to consumers. Unilever has actively supported the ECR movement since its inception.
Jan Zijderveld, President of Unilever Europe, was appointed as co-chair of ECR Europe in 2012. Responsible business is a cornerstone of the new strategy that Jan Zijderveld and his co-chair, Thomas Hübner from Carrefour are driving in ECR.
We believe that customer satisfaction is the single most important measure of success for us in the marketplace. And customers are more satisfied with us than ever. In 2012, Unilever was named supplier of the year in the drug store channel - in Boots and Superdrug (UK), Rite Aid (US), Shoppers DrugMart (Canada) and Farmacias Benavides (Mexico).
Meanwhile, in emerging markets in Asia, Africa and the Middle East, we were rated the number one supplier in seven markets. In Brazil and Argentina, our most important markets in Latin America, we are frequently evaluated in the top three, while in the UK Unilever was named supplier of the year by almost all our customers.