By Saabira Chaudhuri and Sharon Terlep
Consumers are cooking and cleaning more while spending less time
and money on grooming and makeup, the world's biggest
consumer-products companies say, as a picture emerges of how the
coronavirus is reshaping lifestyles.
The question executives and investors now face is which
behaviors will stick when restrictions to fight the pandemic lift,
and which will fade.
"People we know will continue to wash their hands more. Probably
they'll have more concern for surface hygiene in homes," said
Unilever PLC Chief Executive Alan Jope on Thursday. "That whole
hygiene thing will carry on."
P&G last week said Americans were doing more laundry loads
every week, washing garments after each wash. The company also
reported higher demand for disposable cleaning products like paper
towels and plastic wipes rather than sponges or cloths.
Its Chief Financial Officer Jon R. Moeller flagged what he said
"will likely become a forever altered health, hygiene and cleaning
focus" for shoppers in the U.S. "There may be an increased focus on
home, more time at home, more meals at home, more cleaning at
homes."
Unilever, the maker of Dove soap and Ben & Jerry's ice
cream, offered a broad look in its results Thursday at how the
pandemic is impacting consumers around the world.
Chief Financial Officer Graeme Pitkethly said people are using
personal-care products such as shampoo and deodorant less,
estimating 11 fewer uses in a typical week. Makeup giant L'Oréal
last week said the global cosmetics market was down 8% in the first
quarter as consumers pull back on skin care and beauty
products.
On the flip side, people are cooking more at home, buoying
demand for brands such as Knorr soup cubes, Hellmann's mayonnaise
and Pot Noodle instant noodles, Unilever said.
"We underestimated initially the positive impact this would have
on our business for at-home cooking," said Mr. Jope. "Those
center-of-the-grocery-store businesses that have been a bit flat
for many years, all of those are seeing a rejuvenation."
Spending time at home has driven up demand for toilet paper,
propelling Cottonelle owner Kimberly Clark Corp. to start
repurposing its manufacturing capacity to make more of the softer,
thicker toilet paper used at home versus what's typically used in
offices.
One change seen as likely to be long-lasting is the shift to
online shopping. Online sales -- which make up about 6% to 7% of
Unilever's business -- grew 36% in the quarter, as consumers under
lockdown ordered more via the internet. Unilever said it plans to
ramp up investments in selling directly to consumers.
"I think we will be able to look back and see this as a point of
inflection for online grocery shopping," said Mr. Jope.
Target Corp. this week said traffic to stores had slowed
considerably as states imposed lockdown orders, with consumers
shifting to online buying. Target has seen strong sales of food,
household goods and, more recently, office supplies and cooking
appliances, while sales of apparel and accessories have fallen.
Longer-term, shoppers will "embrace routines developed during
these weeks at home with their families," said Target Chief
Executive Brian Cornell. Target's model of using stores as online
delivery and pickup hubs "will continue to serve us well," he
said.
Domino's Pizza Inc. on Thursday reported a rise in U.S. sales in
recent weeks as consumers ordered pizza to eat at home rather than
go out. Last month, it said it would hire more than 10,000 workers
to meet rising demand amid the pandemic.
Lockdowns have forced restaurants to close in many countries.
That has hurt sales for Unilever's food-services arm, which sells
ingredients to restaurants, and executives at the company signaled
they think sales could be slow to return.
In China, 70% of closed restaurants have reopened but are
running at between 50% and 70% capacity because of
social-distancing protocols, said Mr. Pitkethly. He signaled some
form of social distancing would likely remain in place through the
end of the year in many countries, which would continue to cap
sales.
Another shift has been the decline in ice cream sales at parks,
beaches and other locations that aren't grocery stores. These make
up 40% of Unilever's ice cream business, the world's largest with
EUR6 billion of annual sales. The company reported a 1.7% drop in
underlying sales for its food-and-refreshments unit. It is ramping
up partnerships with food-delivery companies to allow consumers to
order ice cream along with their takeout.
Evian owner Danone SA on Thursday said its bottled water sales
for the quarter had dropped 7.4% as it, too, was hurt by similar
closures.
Overall, Unilever said sales for the first three months of the
year were flat, at EUR12.4 billion ($13.4 billion).
Unilever's performance contrasts with that of P&G, which
last week reported organic sales growth of 6% as stockpiling of
laundry detergent, toilet paper and other essentials in the U.S.
more than offset a slump in China.
What companies sell and where they sell it explains some of that
diversion in performance. Unilever sells food, while the others
don't. It also makes most its sales from emerging markets where
consumers haven't stockpiled like they have in the West.
Unilever reported strong sales in North America, with underlying
growth of 4.8%, driven by stockpiling.
"People have got bigger houses, bigger pantries, everything's
bigger in the States, and they certainly went for household
stocking in the biggest way around the world," said Mr.
Pitkethly.
"There is no such thing yet as a new normal," said Mr. Jope.
"Businesses and commentators who have professed too much wisdom and
insight on what the world will look like on the other side of
coronavirus have come to eat humble pie."
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and
Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
April 23, 2020 13:45 ET (17:45 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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