Nonfoods Talk: Righting the ship
By Seth Mendelson
Johnson & Johnson is looking to get healthy with a new leader at the helm. I do not know Sandra Peterson, but from what I hear through the media and people who work with her and for her, she is definitely someone worth getting to know. In fact, she might just be the savior for Johnson & Johnson’s consumer health care products division and a great example of what all major HBC vendors should be doing. Okay, so this may be a bit of hyperbole on my part, but there is no doubt that Peterson has done some wonderful things at J&J, and she is moving the giant New Jersey-based company in the right direction, especially on the over-the-counter medication front. For those who do not know, J&J has run into some trouble in recent times with its health care products. After purchasing a bevy of well-known products from Pfizer, J&J’s consumer health care division fell on some not so good times with a combination of some pretty serious recalls—including Tylenol and Motrin—confusion in the marketplace and more intense competition. A lack of imagination certainly did not help. The word on the street was that J&J had lost its focus, not surprising after a major merger. It became a company that had too much bureaucratic red tape, too many bosses and too many products to efficiently compete. Morale, I hear, was not too good either. Almost two years ago, Peterson showed up, an outsider with a long pedigree for getting things done elsewhere. Apparently, she was given carte blanche to turn this giant ship around and as an in-depth article in the Newark Star-Ledger last month pointed out, she went right to work. Peterson placed a big emphasis on the growth brands like Tylenol and improved the manufacturing process to reduce—hopefully eliminate—those recalls that can keep company presidents and CEOs up all night. The Star-Ledger article points out that she imposed a uniform global quality program for every product in the pipeline. Whoever came up with the concept that bigger is better should be rode out of town. Today, more and more companies realize that it may help profits by concentrating on the brands that make them the most money. Peterson seems to agree. She got rid of some under-performing brands. So where does this leave J&J today? It looks like a leaner, more agile company that has a better go-to-market strategy. Instead of overwhelming retailers with a bevy of products—some of which are no longer top-of-mind with shoppers—J&J can focus on the products that do matter most, which in retail-speak means more sales and more profits. Thus far, it seems to be working. The Star-Ledger article pointed to an impressive uptick in sales volume from the division. On the eve of the annual NACDS Total Store Expo in Boston this month, what can the rest of the industry learn from this? First, every company—large and small—should take a close look at their own products. They need to determine which ones are relevant and which ones have seen better days. Then they need to focus on those items that matter most. Retailers do not want to clutter their shelves with items that do not move. I hope to meet Peterson at Total Store Expo. She seems like the fresh blood this industry needs, especially as retailers and suppliers look for more efficiencies to cut costs in the HBC section and still attract consumers down the aisles and get them to purchase more products. More importantly, I hope that other suppliers learn from what she is trying to do at J&J. The end result should be a better run HBC category that creates more sales and profits for all involved.