Henkel Project - Digital Pathway for Laundry & Home Care in 2025

HENKEL
Digital Pathway for 2025
Bhavna SURESH
Navin MANGALAT
Pablo TRONCOSO
Mihika VERMA
21 August 2015

2
Agenda
November 21, 2015 MBA Digital Challenge
1 The Goal
2 The Need
3 The Plan

3
The Goal
Entry to the Middle East

4
The Goal
GLOBAL MARKET OVERVIEW
US$85bn
Expected revenue of
laundry products in
2017 (est.)
3.4%
Exp. annual growth rate of
household laundry products
worldwide (until 2017)
4%
Current annual
growth rate of Middle
East and Africa

5
The Goal
CONSIDERATIONS
US$85bn
Expected revenue of
laundry products in
2017 (est.)
3.4%
4%
Current annual
East and Africa
3-4 gallons of
water is wasted for
every pound of
laundry washed.
22% of water is
used in a typical
home for washing
clothes.

6
The Goal
CONSIDERATIONS
• US is saturated
• No strong presence in China (pulled out)
GLOBAL CONSUMPTION
US$85bn
Expected revenue of
laundry products in
2017 (est.)
3.4%
4%
Current annual
East and Africa
3-4 gallons of
water is wasted for
every pound of
laundry washed.
22% of water is
used in a typical
home for washing
clothes.

7
The Goal
CONSIDERATIONS
• US is saturated
GLOBAL CONSUMPTION
US$85bn
Expected revenue of
laundry products in
2017 (est.)
3.4%
4%
Current annual
East and Africa
3-4 gallons of
water is wasted for
every pound of
laundry washed.
22% of water is
used in a typical
home for washing
clothes. • Middle East:

8
The Goal
CONSIDERATIONS
• US is saturated
GLOBAL CONSUMPTION
US$85bn
Expected revenue of
laundry products in
2017 (est.)
3.4%
4%
Current annual
East and Africa
3-4 gallons of
water is wasted for
every pound of
laundry washed.
22% of water is
used in a typical
home for washing
clothes. • Middle East:
• Next largest laundry growth
• Increasing population & hospitality

9
The Goal
The Middle East Situation

10
The Goal
MIDDLE EAST
POPULATION
(millions)
• Water bodies are only 0.1% of territory (avg.)
• Population growth at 27% till 2025 (est.)
• Saudi Arabia has highest GDP / population ratio
• Commercial laundry to grow by 20% in 2015
• GDP to grow by 3.3% till 2025
• UAE Hospitality to grow at 5.3% CAGR
(2012-2022)

11
The Goal
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1
2
3
4
5
6
7
Iran Saudi
Arabia
Turkey Egypt
Detergent consumption vs Machine wash %
Per capita
consumption (kg)
Machine Wash %
MIDDLE EAST
POPULATION
(millions)
(2012-2022)

12
The Goal
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1
2
3
4
5
6
7
Iran Saudi
Arabia
Turkey Egypt
Per capita
consumption (kg)
Machine Wash %
MIDDLE EAST
POPULATION
(millions)
(2012-2022)

13
The Goal
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1
2
3
4
5
6
7
Iran Saudi
Arabia
Turkey Egypt
Per capita
consumption (kg)
Machine Wash %
MIDDLE EAST
POPULATION
(millions)
Saudi Arabia  high potential for B2C growth
UAE  high potential for B2B growth
(2012-2022)

14
The Goal
Major digital trends for the future

15
The Goal
Content remains
important

16
• Customers
require deeper
involvement
The Goal
Content remains
important
• “Stories” are key
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand

17
• Customers
require deeper
involvement
The Goal
Content remains
important
“Things”
become smarter
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand

18
• Customers
require deeper
involvement
• Devices are
always online and
connected
• Increased
generation of
consumer data –
allows for better
understanding
• Consumers can
get regular
updates from
devices online
The Goal
Content remains
important
“Things”
become smarter
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand

19
• Customers
require deeper
involvement
• Devices are
always online and
connected
• Increased
generation of
consumer data –
allows for better
understanding
• Consumers can
get regular
updates from
devices online
The Goal
Content remains
important
“Things”
become smarter
Shopping gets
smarter
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand

20
• Customers
require deeper
involvement
• Devices are
always online and
connected
• Increased
generation of
consumer data –
allows for better
understanding
• Consumers can
get regular
updates from
devices online
The Goal
Content remains
important
“Things”
become smarter
Shopping gets
smarter
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand
• Purchases can be
made anywhere,
any time
• Easier cashless
systems –
customers won’t
even need to
carry cards
• Replenishment of
everyday goods
will be automated
– one-click orders

21
• Customers
require deeper
involvement
• Devices are
always online and
connected
• Increased
generation of
consumer data –
allows for better
understanding
• Consumers can
get regular
updates from
devices online
The Goal
Content remains
important
“Things”
become smarter
Shopping gets
smarter
Sensors
everywhere
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand
made anywhere,
any time
• Easier cashless
systems –
customers won’t
even need to
carry cards
everyday goods
will be automated

22
• Customers
require deeper
involvement
• Devices are
always online and
connected
• Increased
generation of
consumer data –
allows for better
understanding
• Consumers can
get regular
updates from
devices online
The Goal
Content remains
important
“Things”
become smarter
Shopping gets
smarter
Sensors
everywhere
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand
made anywhere,
any time
• Easier cashless
systems –
customers won’t
even need to
carry cards
everyday goods
will be automated
• More data
generation –
consumer habits
• Needs can be
anticipated and
targeted for better
satisfaction
• Better
understanding of
customer triggers
and brand
perceptions

23
• Customers
require deeper
involvement
• Devices are
always online and
connected
• Increased
generation of
consumer data –
allows for better
understanding
• Consumers can
get regular
updates from
devices online
The Goal
Content remains
important
“Things”
become smarter
Shopping gets
smarter
Sensors
everywhere
The “new”
marketing
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand
made anywhere,
any time
• Easier cashless
systems –
customers won’t
even need to
carry cards
everyday goods
will be automated
• More data
generation –
consumer habits
• Needs can be
anticipated and
targeted for better
satisfaction
• Better
understanding of
customer triggers
and brand
perceptions

24
• Customers
require deeper
involvement
• Devices are
always online and
connected
• Increased
generation of
consumer data –
allows for better
understanding
• Consumers can
get regular
updates from
devices online
The Goal
Content remains
important
“Things”
become smarter
Shopping gets
smarter
Sensors
everywhere
The “new”
marketing
– customers want
brands to behave
like real people
• Customers want
to believe that
there is a real
connection with
the brand
made anywhere,
any time
• Easier cashless
systems –
customers won’t
even need to
carry cards
everyday goods
will be automated
• More data
generation –
consumer habits
• Needs can be
anticipated and
targeted for better
satisfaction
• Better
understanding of
customer triggers
and brand
perceptions
• Everything will be
“social” and
shared with the
world
• Marketing will
have bigger roles
to play in new
product dev
• Products will be
customized more
to cater to specific
consumer tastes

25
Agenda
1 The Goal
2 The Need
3 The Plan

26
The Need
Reducing energy and water usage

27
The Need
By 2030, more
than half of the
world will be living
under water-stressed
conditions

28
The Need
COMMERCIAL LAUNDRY
CONCERNS (MIDDLE EAST)
By 2030, more
than half of the
conditions
In the Middle East,
the laundry industry’s
top concern is
reducing utilities

29
The Need
COMMERCIAL LAUNDRY
By 2030, more
than half of the
conditions
In the Middle East,
top concern is
reducing utilities
UAE is a key B2B
market
(5.3% CAGR in the
hospitality industry)

30
The Need
COMMERCIAL LAUNDRY
By 2030, more
than half of the
conditions
In the Middle East,
top concern is
reducing utilities
Saudi Arabia
is a key B2C market
(Highest GDP /
population ratio)
UAE is a key B2B
market
(5.3% CAGR in the

31
The Need
COMMERCIAL LAUNDRY
By 2030, more
than half of the
conditions
In the Middle East,
top concern is
reducing utilities
Saudi Arabia
is a key B2C market
(Highest GDP /
population ratio)
Steady growth of
GDP in the region
(3.3% by 2025)
UAE is a key B2B
market
(5.3% CAGR in the

32
The Need
Key digital trends for Henkel 2025

33
The Need
The Internet of Things Smart Shopping

34
The Need
The Internet of Things
Smarter Homes: With the growth of technology, there
is a rise of smart home appliances.
Smart Shopping
Companies such as Nest, Amazon and Wink already
provide various smart home services today

35
The Need
IMPLICATIONS
• Increase in data generation, and better
understanding of usage patterns
• Direct integration and communication with personal
devices (mobile)
• Actions can be programmed and automated to occur
without direct customer interaction
Smart Shopping

36
The Need
IMPLICATIONS
devices (mobile)
Smart Shopping
Smart Wallets + Delivery
Services: Customers will
find it easier to make
purchases and receive
deliveries, through Google
Express, Amazon Dash,
Tesco, etc.
Companies such as FacePay and PayTouch are also
developing new processes to simplify purchasing.

37
The Need
IMPLICATIONS
devices (mobile)
Smart Shopping
Smart Wallets + Delivery
Services: Customers will
find it easier to make
purchases and receive
deliveries, through Google
Express, Amazon Dash,
Tesco, etc.
IMPLICATIONS
• More customers will make local purchases, and
deliveries will be made quickly and easily.
• Recurring purchases will be made easier, and
accessible through a single click or device
Companies such as FacePay and PayTouch are also
developing new processes to simplify purchasing.

38
The Need
Customer’s point of view

39
The Need
Reduced consumption of
energy and water will continue
to be important to the Middle
East, especially as water
scarcity continues to grow at a
compounded rate

40
The Need
compounded rate
Stronger focus on recyclable
products in order to reduce
carbon footprint, with the
emerging sense of environmental
responsibility

41
The Need
compounded rate
Stronger focus on recyclable
products in order to reduce
carbon footprint, with the
emerging sense of environmental
responsibility
Xeros – Introduces Nylon beads, which
satisfies the needs of these consumers and
could be a technology that will be used
extensively in the future
(more in the following slides)

42
The Need
Nylon beads
What are nylon beads?
• Tiny, spheroidal plastic chips that are able to absorb
stains, stray dye, and soil, carrying them away from fabrics
• They need less water (20%) and chemicals than
traditional commercial washing machines
Benefits of nylon beads to customers:
• Recyclable by the customer, instead of polluting water with
detergents (50% less)
• Minimum use of detergent per load, which is a
massive threat for the laundry detergent market
• Minimize consumption of energy and water, the top
concern in the commercial laundry market
• Beads can be used and reused 100 times, but need
careful disposal, as nylon takes a long time to disintegrate.

43
The Need
For Henkel
Advances in the technology sector have already initiated a reduction in the usage of utilities
 Henkel needs to roll out initiatives to survive losing revenue
 Focus more on pivoting their strategy to leverage these new developments
Customer need to reduce
Utility consumption
Dealing with upcoming
technology innovations like
Nylon Beads
Being environmental friendly
= Sustainability
Continue penetrating new
markets, and growing
business
Solution
(Keeping digital
trends in focus)

44
Agenda
1 The Goal
2 The Need
3 The Plan

45
The Plan
The evolution of the solution

46
The Plan
WHAT SHOULD HENKEL DO?
Increased use of Nylon beads  Decreased water
usage  Decreased detergent use

47
The Plan
Anticipate/
Facilitate Xeros’
entry to the
Middle East
1

48
The Plan
Anticipate/
Facilitate Xeros’
entry to the
Middle East
Develop a
Henkel button
with the aid of a
tech startup
1 2

49
The Plan
Anticipate/
Facilitate Xeros’
entry to the
Middle East
Develop a
Henkel button
with the aid of a
tech startup
Henkel manages
the washing kit
along with Xeros
1 2 3
3 3
3

50
The Plan
Anticipate/
Facilitate Xeros’
entry to the
Middle East
Develop a
Henkel button
with the aid of a
tech startup
Henkel manages
the washing kit
along with Xeros
1 2 3
3 3
3
Retain and
increase
market share
4

51
The Plan
Anticipate/
Facilitate Xeros’
entry to the
Middle East
Develop a
Henkel button
with the aid of a
tech startup
Henkel manages
the washing kit
along with Xeros
1 2 3
3 3
3
Retain and
increase
market share
4
Generate
digital content
and grow in
the Middle
East market
5

52
The Plan
1. Xeros and the Middle East

53
The Plan
Nylon beads can be used up to a 100 times
before needing to be replaced. However, the
beads cannot be easily disposed of.

54
The Plan
Also, a very specific percentage of detergent
needs to be added.

55
The Plan
needs to be added.
Henkel partners with Xeros to be the only
supplier of nylon beads in the Middle East
region, and manage this service together.

56
The Plan
needs to be added.
Henkel partners with Xeros to be the only
supplier of nylon beads in the Middle East
region, and manage this service together.
 Opportunity for Henkel
Henkel partners with Xeros to be the only supplier of Nylon beads in the
Middle East region, and to collaborate to provide this service in the region.

57
The Plan
2. The Henkel button

58
The Plan
The Dash button takes on-demand services
to a new level, and provides the inspiration
for a Henkel-Xeros relationship.

59
The Plan
A Henkel button can monitor the usage of the
nylon beads, and indicate when a fresh
supply is needed. This button will need to be
created with a hardware partner.

60
The Plan
The button will call for collection of the used
beads, and delivery of a package of new
beads and 100 packs of Henkel detergent
(correctly measured) to use.

61
The Plan
The button will call for collection of the used
beads, and delivery of a package of new
beads and 100 packs of Henkel detergent
(correctly measured) to use.
 Action by Henkel
Henkel partners with a hardware firm to build this product.

62
The Plan
3. Henkel management

63
The Plan
The Henkel button is an integrated device that
connects to the users device, and makes the
usage and reordering process easier.

64
The Plan
Henkel collaborates to collect and replenish
the washing kit, taking the responsibility off the
customer’s shoulders.

65
The Plan
The button can be used to create a community,
and the stories built around it can be used to
develop a story around the brand.

66
The Plan
The button can be used to create a community,
and the stories built around it can be used to
develop a story around the brand.
 Propagate sustainability in Middle East

67
The Plan
4. Capture market share

68
The Plan
Commercial laundry services, especially in the
hospitality industry, will be early adopters. This
will help Henkel establish a strong presence in
a relatively untapped market.

69
The Plan
With increased adoption by domestic
consumers, detergent usage will decrease
drastically, creating a need to lock customers
into long-term plans.

70
The Plan
With increased adoption by domestic
consumers, detergent usage will decrease
drastically, creating a need to lock customers
into long-term plans.
Henkel can leverage this threat into a lucrative
opportunity if utilized well, allowing for growth
in the commercial segment (B2B) & retain the
market in the domestic segment (B2C).

71
The Plan
5. Digital content

72
The Plan
5. Digital content
Consumers will generate usage data, allowing
Henkel to target them at the time of purchase.
This allows for new flavours and products to
be pushed to them at the perfect moment.

73
The Plan
5. Digital content
Customers will be encouraged to participate in
community activities to promote sustainability,
in order to develop more eco-friendly habits.

74
The Plan
5. Digital content
Henkel can then leverage this to create stories
and experiences with its consumers, and
understand them as individuals. This allows for
more customization of services.

75
The Plan
5. Digital content
Henkel can then leverage this to create stories
and experiences with its consumers, and
understand them as individuals. This allows for
more customization of services.
 Propagate the data to create market
specific campaigns to each country

76
The Plan
Growth potential in Middle East
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Henkel's B2B Market (Billion
Euros)
Henkel's B2C Market (Billion
Euros)
*Assumption: Henkel’s 2015 laundry market value in the Middle East is 1.28 billion euros (based on data gathered from 2014 annual report)
*Growth calculated based on population growth and increase in B2B market

77
The Plan
Timeline of execution
Establish the partnership
with Xeros + Product
development and testing
for the button
Market testing, and
research for execution roll
out (market study) to enter
the Middle East
Country roll out for B2B,
establish business partnerships
and growth strategy for the B2B
market.
Suggestion: UAE is the leader
in this category
Country roll out for B2C
With the rise of the waterless washing
machines for domestic use, this is a segment
Henkel can target.
Suggestion: Saudi Arabia is the market
leader in this category
Full throttle roll
out, in the Middle
East for maximum
market capture
2016 2017
2019
2020
2021
2025

Henkel Project - Digital Pathway for Laundry & Home Care in 2025

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