P&G to Grow DTC Presence as E-commerce Sales Jump 50%

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P&G to Grow DTC Presence as E-commerce Sales Jump 50%

By Lisa Johnston - 10/20/2020

Shifts in consumer behavior as a result of the pandemic continue to drive sales growth at Procter & Gamble, which reported a net sales increase of 9%, to $19.3 billion, in fiscal Q1.  

E-commerce sales for No. 2 consumer goods company rose approximately 50% during the period, ended Sept. 30, to represent 11% to 12% of its total sales.

Organic sales also increased 9%, with growth comprised of 7 points of volume growth, 1 point increased pricing and 1 point of positive mix impact.

The company experienced organic sales growth in all of its core segments: beauty (up 7%), grooming (up 6%), health care (up 12%), fabric and home care (up 14%) and baby, feminine and family care (up 4%).

As it navigates the new retail landscape, Procter & Gamble will increase its DTC presence, though not at the de-prioritizing of other channels. Jon Moeller, vice chairman, COO and CFO, said in an earnings call that the company prefers to be channel agnostic and focused on serving customers wherever they decide to shop.

“Within that, DTC clearly can play a role,” he added, noting that it’s already a significant part of the company’s operating model. “It allows us to get closer to consumers to understand, to have an even better understanding of their needs and their habits, including their purchase habits, and that all can be very complementary and important in the broader context.”

Among the highlights:

Growth in beauty was in part driven by innovation-led growth in skin and personal care in North America and Greater China. Personal cleansing grew over 30% globally, with double-digit growth in every region.

Appliances organic sales in grooming increased more than 30% due to innovation, increased demand for dry shaving and styling products, and increased pricing.

Fabric care organic sales grew high single digits driven by growth in North America via new innovation, incremental brand communication, and disproportionate growth of premium products.

Home care organic sales increased more than 30%, spurred by rising consumer demand for home cleaning products during the pandemic that resulted in double-digit growth in every region.

Consumers spending more time at home also drove double-digit organic sales growth in the family care segment. Organic sales increased high single digits with innovation-led growth in North America and Greater China and more than 20% growth in adult incontinence products.

Baby care organic sales, meanwhile, did drop in the low single digits, as growth in North America was offset by category contraction and increased competitive activity in other regions.

In a post on LinkedIn, P&G CIO Vittorio Cretella credited the company's IT team in their work to lead tech initiatives supporting the company's "ongoing strategic choices – portfolio, superiority, constructive disruption, productivity and organization."

"Looking ahead, we are accelerating our digital transformation to deliver even more agility and speed, with technology at the center of how we are transforming the consumer experience," he added.

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