The struggling brand’s direct sales model

The struggling brand’s direct sales model

It had been a long time since Tupperware had something to celebrate.

What is happening: The food storage seller – known for Tupperware parties hosted by thousands of direct sellers – revealed a series of issues earlier this week, leading investors to lose faith in its turnaround plan.

  • Its stock has plunged more than 40% in the past five days to around $10 as the company grapples with China lockdowns, inflation, execution issues, effects of war Russian-Ukrainian and technological problems, among others.

Why is this important: The company’s many challenges revolve around its over-commitment to direct sales long after big-box stores and digital retailing took off, illustrating the risks of not adapting quickly enough to a new business model. .

  • Sales in 2021 totaled $1.6 billion, down 40% from their record high of $2.67 billion in 2013.
  • About 80% of the company’s sales come from direct sales channels, spokesperson Cameron Klaus told Axios.
  • “Tupperware parties are an iconic thing,” Doug Lane, director of Lane Research, which tracks Tupperware stock, told Axios. “The whole challenge with Tupperware is to go beyond that.”

And after: Tupperware tries to get out of its box.

  • In April 2020, the company hired a new management team, including CEO Miguel Fernandez, with a plan to diversify its sales model.
  • This will culminate in a plan to sell Tupperware products in retail stores across the United States for the first time beginning later this year.

What they say : “In the digital age, after several years of declining sales, it became clear that we needed to evolve to provide ways for consumers to access our products in the way they choose to buy,” said Klaus from Tupperware in an email.

Yes, but: It might get worse before it gets better.

  • COVID lockdowns in China crushed the company’s sales in March – and those lockdowns have gotten worse since then.

What we are looking at: How quickly Tupperware can abandon its reliance on old-fashioned sales tools like physical catalogs, which have made it difficult for the company to raise prices fast enough to keep pace with inflation raised in four decades.

  • “Much of our business still relies on physical print catalogs, which are only printed a few times a year in many markets, which is slowing change,” chief financial officer Cassandra Harris said on a conference call on Wednesday. .

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