A Pipeline for Innovation

When Newell set out to transform itself from a holding company to a brand-driven operating company, establishing a dedicated Design Center was an important step in the right direction. Our state-of-the-art Design Center in Kalamazoo, Michigan, complemented by new design hubs in Chicago and Hoboken, places Newell in the exclusive club of companies that use design and innovation as competitive advantages. The Design Center’s unique structure brings together not just industrial designers, but also engineers, usability experts, prototypers and color and trend consultants, allowing for evaluation of each new product from multiple viewpoints.

Our design approach considers four factors: function, form, fit and finish. These characteristics allow our products to command premium pricing, and they’re yielding meaningful and positive outcomes in the marketplace. We have an exciting new product lineup in 2017. Take EXPO Dry Erase Markers with Ink Indicator, the whiteboard marker that lets you know when you’re about to run out of ink. Or Elmer’s Re-Stick, re-stickable glue that gives you the opportunity to fix a project within the first five minutes of gluing. Or Rubbermaid Brilliance, with its airtight 100 percent leak-proof seal for no leaks.

There’s more where these ideas came from. Currently, we have close to 70 projects in the works, each with the potential to generate incremental revenue of $10 million or more. In the fourth quarter of 2016 alone, we tested 71 new concepts for Yankee Candle, Coleman, Crock-Pot and other brands. Of these concepts, 83 percent cleared our acceptance criteria; of those, more than half cleared with high differentiation, suggesting that these products could be offered at premium prices to drive margin development.

Newell will never stop pushing the boundaries of innovation. Our Design Center and hubs are proof. We look forward to unlocking the extraordinary equity latent in our brands for growth acceleration in 2017 and beyond.

Meeting Consumers Where They Shop

Consumers’ growing preference for e-commerce is reshaping the retail landscape. Anticipating this shift and adapting our plans to emerging buying patterns is key to consistent delivery and growth. To stay ahead of this shift and further strengthen our advantaged position, Newell is disproportionately investing in e-commerce talent, capabilities and infrastructure.

In 2016, we established a new scaled, industry-leading global e-commerce division at our corporate headquarters in Hoboken, New Jersey. This division has responsibility for the online sales activities of all of our brands and will bring together a team with specialized skills to drive our activity plans and create a differentiated capability for Newell.

As we exited 2016, our eCommerce business had net sales of over $1 billion and has grown over 30 percent compounded over the last three years. We expect e-commerce to drive 50 percent of our growth by 2021, which represents over $1 billion in incremental net sales, as we extend our capabilities across our categories and around the world. E-commerce will continue to capture share of consumers’ wallet, and as it does, Newell will further strengthen our already advantaged position. The scale of our company makes these continued investments possible—and will bring outsized benefits as we win with retailers and consumers.

A Strategic Approach to Brand Building

At Newell, capturing consumers begins during product development. By distinguishing our products through innovation, design and marketing support, we can win share in the marketplace. Given the nature of the categories we operate in and the competitive peer set, we enjoy a low cost of growth and have a relatively high share of voice. As an example, in 2016 we spent only 3.9 percent of our net sales on advertising and promotion, yet achieved over 80 percent share of voice across the legacy Newell Rubbermaid businesses.

To support our growth, we established a new brand development organization responsible for the strategic development of brands and categories, including insights, advertising development and production, media strategy and planning, innovation development and execution, R&D and packaging development. Brand activation, meanwhile, is managed at the division level, overseen by a brand-building leader who reports to the head of each division. This increased focus and resourcing within divisions strengthens the commercialization of our brands and our innovation in the marketplace.

By significantly increasing investment in consumer research, we develop a more in-depth understanding of our categories and are able to identify consumers’ unmet needs. This in turn, allows for a stronger innovation funnel. With intense focus on consumer insights, innovation and marketing, we are making bigger, more strategic investments in our brands to drive accelerated growth. We are focused on developing in-depth, locally relevant consumer insights, building an innovation engine, creating outstanding brand communications and winning with design and product performance.

Another upgrade to our customer development process is scaled selling with retailers in the U.S. With our broadened product landscape, we are the largest general merchandise partner for many of our customers, and among the largest across the total store. To capitalize on this scale, we have established integrated selling teams for our largest retail customers in the U.S., allowing for more strategic interactions regarding inventory, merchandising and new product offerings.

We are dynamic in our allocations of advertising and promotion dollars. Measurement and data are essential tools, allowing us to continually invest in what works and abandon what does not. While our presence is already strong, we see further opportunity to grow through building our brands, equity, household penetration and awareness and will refine our strategies to advance in that direction.

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