ENGLEWOOD CLIFFS, N.J. — Already one of the world’s leading CPG suppliers, Unilever is on course to extend the reach and bolster the impact of its diverse product portfolio. Terry Thomas, executive vice president and chief customer officer for Unilever U.S., is one of the individuals spearheading that effort.
Responsible for $12 billion a year in sales, Thomas’ responsibilities are almost as broad as Unilever’s lineup of products. He oversees interactions with all of the supplier’s customers in this country, including e-commerce companies; shopper insights and marketing; category management; and net revenue management. Thomas explains that all of those activities are brought together by “placing the shopper at the center of everything we do.”
Thomas has adhered to that consumer-focused orientation throughout his career, including stints at Coca-Cola, Procter & Gamble and PepsiCo. He joined Unilever eight years ago to lead the Eastern grocery, dollar/value, emerging and military channels. Four years ago he was chosen to head the company’s U.S. grocery business as well as the natural and direct-store delivery channels, and in August 2019 he assumed his current position.
Thomas recently sat down with Chain Drug Review editor-in-chief Jeffrey Woldt to discuss a range of topics, including Unilever’s plans to work with its retail partners to drive CPG sales and the company’s efforts to maintain a diverse and inclusive workplace that reflects the communities that it serves.
WOLDT: Unilever both develops and acquires products. What strategy are you pursing to make sure that your offerings excite consumers and energize the categories?
THOMAS: I will start off and say that we’re extremely, extremely excited about our strategy going forward. To dimensionalize your question, I’ll answer it across three of our divisions — beauty and personal care; food and refreshments; and home care. We do, for the record, have a fourth division in the U.S. — health and wellness, which is doing fantastically — but I’ll comment on the first three because of the scale they represent.
Beauty and personal care is our largest division. In this space, we will be focusing on three areas of transformation and consumer innovation. The first is that of holistic wellness, where the focus propositions will be on therapeutic, free-form, preventative wellness, and inside and out beauty. The second priority area is that of sustainability, where we will see introductions of formats such as refills and concentrates, and, additionally, a distinct focus is being placed on innovating with products that are water activated and packaged in alternative materials. The last pillar directly addresses inclusivity for all, whereby the needs of specific consumer segments will be met, with specific focus being placed on melanin-enriched skin and people of Black and Brown descent. So that’s our beauty and personal care.
Our second-largest division makes food and refreshments. We continue to drive our purpose for being a world-class force for good in food. This will be evident in both our core programs and assortment, as well as in our innovation portfolio. A key priority for us in this space will be expanding our plant-based offerings through, for example, our Ben and Jerry’s platform.
We have our Ben and Jerry’s nondairy frozen dessert, which simultaneously addresses the issue of social injustice through a partnership with Colin Kaepernick. Beyond that, we’re going to be expanding into vegan offerings in condiments and various nondairy-based frozen desserts., in addition to bringing out what I would call delicious, indulgent products through the Ben & Jerry’s, Magnum and Klondike portfolios.
The last area I want to touch on is our home care division, and specifically our Seventh Generation portfolio. We’re continuing to focus on sustainable innovation, which is an important issue for our consumers. There are two key launches that we’ll continue to focus on throughout 2021: One is the easy-dose ultra-concentrated laundry detergent; the second is our Seventh Generation zero plastics range of powdered tablet detergent products.
Those are our strategies, and we feel really bullish about where we’re headed. We had a strong finish in 2019. We were off to a great start in 2020, pre-COVID, and we were bullish about our performance for first half, and frankly, with a lens to the full year. Then COVID hit, and it further accelerated our plans. We expect to continue the positive trend as we move forward into 2021.
WOLDT: You also mentioned the health and wellness division. How is it evolving?
THOMAS: Our health and wellness division is really about two years old, and we have anchored it with the purchase of Olly nutritional supplements. It’s a beautiful brand that is growing in the high double-digits, and it relates to consumers both on an experiential level as well as on a performance level. I would say that’s the flagship of the division.
Since then, we’ve had two additional acquisitions — SmartyPants children’s vitamins and Liquid IV, which is a replenishment drink. We think those two businesses have tremendous upside. Ultimately, we feel that, although small in relative scale today, the growth contributions from the health and wellness division will be very significant and incremental to Unilever’s overall portfolio.
WOLDT: At this point, the division is focused on supplements. Do you foresee expanding the scope into more treatment products?
THOMAS: All things are up for consideration for us, as we stay close to what the shopper trends are and certainly look to address those trends as they impact the portfolio.
WOLDT: You acquired the health and wellness brands that you mentioned. Unilever also develops products. Is there any preference as to how you strengthen the portfolio?
THOMAS: We’ve always tried to build our portfolio off what shopper needs and demands are, so we let the consumer lead us. Shopper-led innovations, as well as acquisition strategies, are the true way for sustainable performance. Because of that, we’ve expanded our ability to stay as close to the shopper as possible, because needs and demands are changing really fast.
WOLDT: As you’ve noted, the needs and wants of your customers can change quickly. How have they evolved since the start of the pandemic a year ago?
THOMAS: I would say two things. First, for us, because we partner with retailers to get our products to consumers, we had to work even more closely together than usual. During the peak of the pandemic, our retail partners were leaning on us to help understand the dynamically changing behavior of their shoppers. And without an historical precedent — none of us had lived through a pandemic of this nature — we needed to learn, real-time, the how and why our shopper buying habits were changing, and most importantly, what was coming next, so the retailers could then adjust their operations accordingly. That was the context.
From there, what we saw was the importance of engagement with shoppers across all omnichannel platforms. We already knew that, but that was the biggest behavioral change, because consumers were homebound. The adoption rate of e-commerce during this time has been significant. The pandemic fast-tracked the behavior ahead by 10 years, so driving a need, really, for our retailers to have accelerated understanding of how to win at the digital shelf because more and more people were shopping from home. That was the biggest trend that transpired over the past year.
WOLDT: How much of this shift in behavior do you anticipate sticking once we get back to normal, whatever that might look like?
THOMAS: That is a question that we’re definitely trying to answer every day. We believe that there is not going to be a return to pre-COVID conditions. It will be a continuation of the new normal, so consumers will keep on exercising the new muscles that they’ve developed, and those muscles are essentially the habit of purchasing products whenever, wherever and however they want to. Shoppers will continue to leverage omni purchases — buying products online and having them delivered, or do they order them and choose to pick them up, or do they have items on subscription, or do they shop in-store. The purchasing habits that consumers have developed over the last year during COVID, we believe those habits are here to stay.
WOLDT: How does that change your thinking about category management in a traditional retail setting?
THOMAS: At Unilever we really believe the practice of category management is evolving beyond the category. We believe that shoppers are looking for solutions to their wants and needs, and those don’t always fall into our industry-defined category definitions. The need for hygiene solutions during the pandemic is a clear example of this, but we believe it’s also evolving to a territory of wellness and sustainable solutions, In the future, category management will look at a particular product segment in the broader context of how it fits into the overall wellness and sustainable and social solutions that are important to consumers. This will certainly change the way that manufacturers innovate and price products to meet category needs.
WOLDT: With shifts in consumer behavior and changing approaches to category management, what do you think the brick-and-mortar store is going to look like going forward? Will the purpose change a little bit, especially in light of auto-replenishment and the other things you touched on earlier?
THOMAS: We have to talk about supply chain in brick-and-mortar and the response that COVID has generated. Manufacturers at first really struggled to keep up with the demand, while prioritizing the safety of our employees in our communities. From the suppler perspective there’s going to be a greater focus on how do we enhance protocols around safety and cleaning at our sites and institute policies and procedures that are really going to help us mitigate safety risk, and then sharing those with our retailers so we’re on this continual learning curve together. How do we manage categories, how do we manage retail stores in a way that is — what I would call it — COVID friendly as we move forward, and link it back to our supply chain in a way that it can handle massive spikes in a healthy way.
WOLDT: There are a couple things you said that I want to follow up on. How are you structuring your partnerships with various retailers, and what can Unilever do to help them stand out in a crowded field?
THOMAS: We believe that all of our customers are really important and that it’s our job to understand this nexus of overlap in terms of what their shopper wants and needs, what is the retailer strategy, and then what is Unilever’s strategy. We need to pinpoint that nexus of intersection, which is where those three concentric circles come together. Our commitment to retailers is to bring the full power of Unilever’s resources to optimize that concentric circle, allowing us to work with our retailers from end to end — from supply chain efficiencies to the digital shelf. Our goal is to engage shoppers and optimize loyalty. That process involves looking at them looking from the lifetime value equation perspective. That’s what we’re partnering with our retailers to understand. In this new world, it’s much more about how do you optimize and retain over the lifetime horizon of the consumer.
WOLDT: Are brick-and-mortar retailers asking Unilever to help them develop an effective omnichannel strategy?
THOMAS: Every retailer, including Amazon, is trying to meet shopper needs, not only for products but also their experience. There’s a lot of work that we’re doing with our partners to understand how do we make the omnichannel experience seamless, so whether a shopper goes into a brick-and-mortar entity for their purchase or whether they’re at home in their kitchen, we want that experience to be seamless, and the same certainly for our retailers and for the purchasing of our product. We’re doing a tremendous amount of work in that space that requires us to be really clear about things like packaging content and value online versus traditional retail. We’re certainly looking at those with our partners and trying to find the optimum strategy.
WOLDT: How is Unilever using digital tools to communicate, not necessarily sell, directly to consumers?
THOMAS: We have several digital platforms that we use to communicate to our consumers. We use several social media platforms because more people are using social media than they are watching TV. While we still believe that TV is a very important part of building brand equity and awareness, we’re finding that the social media options are critically important, especially as we get to the younger generations. So we’re taking a holistic approach, based on which consumer targets we’re going after for the relevant brand.
WOLDT: You’ve touched on COVID a couple times. How difficult was it to keep the supply chain running smoothly at the start of the pandemic?
THOMAS: The experience really taught us three things. No. 1, all supply chain systems have to strike a balance between managing efficiency and maintaining ability to have dynamic responsiveness to changing consumer demand and behavior. With COVID, we literally saw consumers shift from purchasing in certain channels to other channels because they weren’t able to drive as far, for example. We need to recognize and understand those shifts quickly, so we can adjust how our supply chain follows the consumer.
Pre-COVID, we didn’t have that capability. Our experience over the past 12 or 13 months taught us that that was a critical capability that we needed to build going forward.
There’s also a great need within industry around logistics capacity. What we learned is that the gap between what is ordered and our ability to ultimately ship to our retailers is largely dependent on a finite logistics community. When there’s a surge like the one we experienced during COVID, that logistics community is out of capacity. With that, we’ve learned that we need to come up with a tremendous amount of options so that we can expand that capacity dynamically, as needed. We learned that our supply chain system has a huge opportunity going forward; of all the strategies that we have to implement, fixing supply chain has the most pressing need.
WOLDT: How will the improvements you just talked about benefit Unilever and its customers?
THOMAS: The consumer will be the big beneficiary. There’s a need for us as an industry to come together and address these issues, because ultimately we want to collectively meet the needs of the consumer. This is an industrywide question — being able to have supply chain systems that are flexible and can match consumer changes. If we all work together and come up with the right answer, we can create scale and get where we need to be faster. So I see it not just as a Unilever strategy, I see it as an industry must.
WOLDT: That’s a great point. Unilever is a global company. What sort of advantages does that give you in terms of insights or products that are developed overseas that you can leverage in the U.S. market?
THOMAS: Unilever being a global company, in which the U.S. is 20% of our business, gives us three really distinct benefits. No. 1 is our ability to scale our operations around the world. The fact that, for example, we make Dove and we can have the same packaging available for the brand across our global enterprise is a tremendous efficiency play.
The second is around innovation. We can take Dove, and because of different shopper needs and wants globally, we can innovate and address those local needs, but then make the products available globally in any country where shoppers have similar wants and needs. That is a big benefit, and it also allows our innovation portfolio to be robust.
The third benefit of our being a global company is that it allows us to be aware of emerging trends. For example, when COVID first emerged, it took place in China. We have a very large business in China, and so the insights of what our colleagues in China were doing with employees, in terms of safety protocols and in terms of partnering with retailers during COVID helped us tremendously. We were able to come together globally really quickly, and they were able to share best practices, enabling us to have a jump in our preparation to handle COVID protocols.
WOLDT: Both you individually and Unilever as a corporation worked hard to foster diversity and inclusion. How far along is Unilever on that journey?
THOMAS: Unilever, from our founding fathers on, has always had the belief that sustainable, equitable growth is only achievable if we can create long-term value by making social impact commonplace. With that — fast forward to today — we’re more committed than ever to ensuring that the diversity of our workforce really reflects the communities we serve and operate in. We’re trying to integrate diversity and inclusion into our business strategies, and not just our business strategies, but also talent acquisition, talent development, and our retention practices and processes. This type of broad strategy includes, but is not limited to, achieving parity and racial equity. In 2017, we committed to achieving gender parity and, as the father of three daughters, I was proud because we actually accomplished this goal in 2018, which resulted in 50% of our managerial roles across Unilever global business being held by women.
WOLDT: Very impressive.
THOMAS: So as we continue to reaffirm our commitment to diversity and inclusion we’ve set a higher bar, because we also wanted a commitment to achieving racial equality. To help us do so, we have really allocated both our talent and our financial resources to ensure that we have the right human resources processes and practices and programs in place.
The second was in offering kind of cultural immersions. Last year, we hosted a cultural immersion session that took an in-depth look at the complexities, lived experiences and, I would say, worldviews of underrepresented communities. As we continue to strive for an inclusive workplace, we will continue to develop the cultural competency of our workforce.
In addition, we’re building a network of diversity and inclusion champions. Their work at the regional and local levels is supported by the global diversity board. That’s how we’re bringing this initiative to life.
The last thing that I would say is that D&I work is a journey, and the private sector corporations must be open and honest about their challenges, and then determine their commitments from there. Organizations truly committed to diversity, equity and inclusion can address their challenges by ensuring they have fair and equitable programs, policies and practices for all people within their respective organizations. I’m very proud that at Unilever we recognize that there is much more to be done, and we remain deeply committed to building not only a diverse workforce but also an inclusive culture that allows all of our colleagues to thrive.
WOLDT: That’s another important source of strength as you look to the future.
THOMAS: Yes it is. We’re very excited about where our business is, and not only just from a shopper perspective and placing the shopper at the center of everything we do. Our retail partnerships have never been stronger. Together with them, we look forward to continuing to exceed the needs and wants of our consumer.