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MarketScreener Homepage  >  Equities  >  Xetra  >  Henkel    HEN3   DE0006048432

HENKEL (HEN3)
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Unilever confronts the ‘chairdrobe’ as consumers rethink laundry

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09/05/2018 | 07:54pm CEST
FILE PHOTO: Traffic and people pass by the front of the Unilever building in central London

LONDON (Reuters) - On any given day, the chair in Raven Rose's Ewing, New Jersey, bedroom might be draped with shirts, pants or pyjamas.

"It depends on how exhausted from work I am and if I plan to wear them again," said the 35-year-old retail clerk.    

Marketers at consumer goods giant Unilever are calling it the "chairdrobe" - the heap of lightly worn clothes that often ends up crumpling one's go-to garments.

It's a familiar sight in the bedrooms of some 60 percent of millennials – 22- to 37-year-olds earning more than a quarter of the world's income - who approach laundry differently from other age groups, Unilever's market research shows.

That's a pain point for the company, maker of Omo, the world's second-biggest detergent after Procter & Gamble's Tide. Tide, also known as Ariel, has 14.3 percent of the global laundry care market versus Omo's 5.2 percent, Euromonitor International says.

For decades, Unilever and P&G have pitched new and improved laundry detergents and fabric softeners, primarily to women using washing machines. But millennials are less loyal to traditional brands and have new demands, including that products save time and be environmentally sustainable.

Many, like 36-year-old Olivia Tusinski, want to spend as little time as possible on laundry. Plus, washing too often wears your clothes out faster, she says.

"I don't like to waste water or energy," said Tusinski, a government employee in London.

P&G tested a line to woo the wash-weary a decade ago after discovering how common re-wearing clothes was. The Swash brand was parlayed into a $499 de-wrinkling appliance in partnership with Whirlpool but two products made it to market as Downy Wrinkle Releaser spray and Tide Stain Pen.

Now, Unilever is having a go with Day 2, an aerosol spray that went on sale online only last week that it says refreshes, reshapes and dewrinkles clothes on the chairdrobe, using technology like fabric-stiffening molecules.

There are versions for denim and delicates, in addition to the original. Denim jeans are by far the most reworn garment, Unilever says. "That's a high pride point for a lot of millennials, you know, ensuring that their denim is as pristine as possible," said Day 2's co-founder and marketing head Nathan Olivieri.

Denim aficionados have warned for years against washing jeans. Levi Strauss CEO Chip Bergh, a 28-year veteran of P&G, told a conference in 2014 that the jeans he was wearing that day were a year old and had never been washed.

LIKE A START-UP

Unilever's home care president Kees Kruythoff calls catering to millennials' mindset a way of "future-proofing" the portfolio. In addition to Day 2 in the United Kingdom, Unilever is testing a portion-controlled detergent in the Netherlands called Less. Both projects have been structured as if the developers were small and agile start-ups, not a multinational.

The global laundry detergent market is expected to reach $205.2 billion by 2025, up from $133.3 billion in 2016, according to Grand View Research, which predicts 4.9 percent annual growth fuelled by the rising penetration of washing machines in developing countries.

In more developed markets, growth is helped by eco-friendly brands like Seventh Generation, now owned by Unilever, and Method, Grand View said.

These upstart brands, which boast fewer chemicals and packaging with recycled plastic, are part of the wave of disruption that earlier slammed food and personal care and has finally shaken up home care.

Laundry leaders P&G, Unilever and Henkel are aiming to save consumers time with pre-measured or all-in-one offerings. Meanwhile, start-up subscription brands deliver soap to consumers' homes, while new mobile apps offer laundry services on demand.

Unilever's detergent Skip has partnered in Paris with the mobile app Cowash to connect people with neighbours willing to wash and iron their laundry for a fee.

Cowash says about 80 percent of its customers have washing machines and wash some of their clothes, but use the service to avoid time-consuming items like shirts that need ironing.

"They don't do it because they don't have washing machines, they do it because they don't have time," Cowash founder Adrien Hugon said.

Indeed, the project brief Unilever handed down to Olivieri some 10 months ago was to create a product that would give millennials more confidence to rewear worn clothes, since there was nothing on the market that explicitly targeted the issue and addressed smell, wrinkles and shape, the 25-year-old told Reuters.

While P&G's Febreze spray can be used to remove odours from clothes, for example, it more often focuses on hard-to-clean fabrics in the home or car such as upholstery and curtains.

Over the course of one month last autumn, Olivieri's ten-person team developed the brand away from corporate headquarters in a rented house in a village outside Liverpool, frequently inviting consumers in for real-time feedback.

The project is representative of how Unilever is approaching new brand development with research that engages consumers early in the process.

The premium all-in-one product is delivered in packaging meant to be attractive enough to be displayed in a bedroom, Olivieri said. It's a proposition that was never going to be cheap: a 200-ml can that can treat 25 garments costs 7.50 pounds ($9.68), compared to the roughly 7 pounds it costs to buy enough of Unilever's Persil Powercaps to wash 30 loads of laundry.

"We know the chairdrobe is a universal concept ... but as we move into a modern age where we're more time-poor than ever, that's becoming an even more relevant consumer problem," Olivieri said.

($1 = 0.7765 pounds)

(Additional reporting by Melissa Fares in New York; Ediitng by Sonya Hepinstall)

By Martinne Geller

Stocks mentioned in the article
ChangeLast1st jan.
HENKEL -0.86% 103.45 Delayed Quote.-5.44%
PROCTER & GAMBLE COMPANY -1.81% 84.27 Delayed Quote.-8.28%
UNILEVER -1.57% 4202 Delayed Quote.1.85%
UNILEVER (NL) -1.27% 47.495 Delayed Quote.2.45%
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Financials (€)
Sales 2018 20 144 M
EBIT 2018 3 527 M
Net income 2018 2 252 M
Debt 2018 2 138 M
Yield 2018 1,81%
P/E ratio 2018 18,21
P/E ratio 2019 16,92
EV / Sales 2018 2,22x
EV / Sales 2019 2,08x
Capitalization 42 644 M
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 118 €
Spread / Average Target 14%
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Managers
NameTitle
Hans van Bylen Chief Executive Officer
Simone Bagel-Trah Chairman-Supervisory Board
Carsten Knobel Chief Financial Officer, EVP-Finance & Purchasing
Michael Kaschke Member-Supervisory Board
Jutta Bernicke Member-Supervisory Board
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