Campbells Business Case
What is Campbells business case for the tags? Keeping or growing its share of the soup market. Wal-Mart, with annual sales of $244.5 billion, can make or break a suppliers year. Efficiency in moving its pallets could also help Campbells bottom line. Last year, the company recorded $595 million in net income, down from $724 million in 1999. If Campbell moves quickly, it could also gain favor withWal-Mart. Its chief rival is Progresso Soup, a unit of General Mills. General Mills gets 13 percent of its $10.5 billion in annual sales by doing business with Wal-Mart.Demand for its products has much more influence on the decision-making of a retailereven one as big as Wal-Mart, says Wright. Nevertheless, Wright fully intends to meet Wal-Marts deadline. Analysts say no Wal-Mart supplier will play radio-wave chicken with the retailing giant, especially a company in a competitive dogfight such as Campbell. Campbells condensed-soup business has been under intense pressure from Progressos ready-to-serve soups. According to Chicago-based research firm Information Resources, Campbell condensed-soup sales were down 5.4 percent in dollars and 7.1 percent in units for the 52-weeks ended Nov. 2, compared to the previous year. Meanwhile, sales of Progressos ready-to-serve soups were up 11.2 percent to $451.8 million. Campbell ready-to-serve products were up 4.7 percent to $1.05 billion. The total market for ready-to-serve soup was up 6.4 percent to $1.86 billion. Campbells share of all soup sales is about 67 percent, of the $3.1 billion a year market in North America, compared to 14.5 percent for Progresso. But Campbells share for the year ending Jan. 3, 1999 was 74.5 percentwhile Progressos was 9.2 percent, according to Information Resources. Next Page: Getting strategic and competitive with IT.
To be sure the stakes are high. But Campbell says its not worried if Progresso moves faster to satisfy Wal-Mart than it does. "Come on, I dont think [smart tagging] is a competitive advantageits a minimum [requirement]," says Wright.