Upon hearing news of Newell Rubbermaid’s pending acquisition of Jarden Corp., I was reminded of a conversation some 20 years ago with a housewares CEO who predicted a consequence of Walmart’s surging national clout and the resulting vendor consolidation.
“One day, we’ll be left with one retailer and one vendor, and there will be big problems if they can’t get along,” the CEO said, tongue firmly in cheek.
It was a joking reference to a serious matter for many in the industry who at the time were buying into a prevailing thought: Consolidate or lose.
Fast-forward two decades. Walmart has given back some of what once was a runaway lead. E-commerce (spearheaded by Amazon) has opened new outlets— while raising new marketing and logistical hurdles— for small and midsized vendors whose creativity and determination still generate plenty of business against their biggest rivals.
The consolidation wave that began to surge in the 1990s no doubt saved many companies from obsolescence. And it no doubt made things more difficult for vendors without the scale and deep pockets to deep-discount and service massive accounts. But it didn’t wipe out a still-sizeable core of smaller and midsize housewares companies that are developmentally, operationally and fiscally nimble.
The Newell Rubbermaid/Jarden deal, though, shows there is no letup in the effort by the biggest companies in this industry to get bigger through consolidation. And it will trigger more rollups of varying scope by strategic and financial buyers who figure wider selection and scale provide the only meaningful leverage in today’s unforgiving retail economy.
A combination of Newell Rubbermaid and Jarden encompasses virtually every housewares category, as well as a diverse range of consumer-branded goods outside the housewares sphere. It’s hard enough for a small cookware company to compete against a big cookware company. Try negotiating when the big cookware company can throw in pens, playing cards and baseballs.
Put to rest any thought that today’s biggest retailers would fear the exposure of putting more of their supply eggs into bigger vendor baskets. They will if the price is right. So, you can’t blame companies with the foresight and financial fortitude to continue the consolidation charge.
The Newell Rubbermaid/Jarden deal redefines what big means in the housewares business. It is yet another shot across the bow of an industry whose small and midsized vendors are going to have to work harder to reaffirm their full value to today’s resellers.
This remains an industry made up largely of smaller parts, proving that inventive spirit, organizational willpower and financial dexterity can sustain stout competitiveness for companies of all sizes.
It might feel to some like we’re heading once again toward one vendor and one retailer. I’m fairly certain that won’t happen, but there is still something to glean from such hyperbole. And it’s no joking matter.