Can Rubbermaid Inc. bounce back from its difficulties in overseas markets?
After decades of trying unsuccessfully to sell its plastic household products outside the United States, Rubbermaid has set a goal of generating 30 percent of its sales abroad by 2000, up from about 18 percent in 1995.In the past year, Rubbermaid has bought two companies, in Poland and France, started a joint venture in Japan, and opened an Asian-Pacific headquarters in Hong Kong. It also has hired Leavitt "Buzz" Ahrens, a veteran international marketer of Lee and Wrangler jeans at VF Corp., to shore up its brand name abroad and has revamped its international management.
But some critics say Rubbermaid's push comes too late. Entrenched local brands have locked up shelf space in European retailers. And at one rival, Tupperware Corp., foreign markets already account for 85 percent of sales. "In the late 1980s, there was rhetoric at Rubbermaid around going global, but not much action," says Wolfgang Schmitt, Rubbermaid's chairman and chief executive. "We are now paying our dues in many of these markets." Now, with stagnant domestic growth, the task is essential.
Rubbermaid has made sporadic efforts to sell its kitchen, bath, office and kids' products in Europe since 1965, but there have been some critical missteps along the way. First, there was resistance among Rubbermaid's American managers to tailoring its products to foreign markets, despite the many cultural differences. Most Americans like housewares in neutral blues or almond colors, for instance, but Southern Europeans prefer red containers; customers in Holland want white. And while Rubbermaid sold millions of open-top waste baskets in America, Europeans, picky about garbage peeking out of bins, wanted bins with tight lids that snap into place.
Meanwhile, Rubbermaid, which also sells plastic furniture and cleaning products, couldn't overcome resistance to plastic among European consumers who seem to prefer metal tool kits and wooden desks. "People tend to perceive plastic products as a bit cheap, really," says Gian Quaglieni, a London-based radio producer. And while the Rubbermaid name was highly regarded in the United States, it caused confusion at least in the key British market, suggesting to many customers a maker of rubber dolls.
Compounding the company's foreign woes were strategic mistakes, such as a 1990 joint venture with Dutch chemical company, DSM Group NV, which owns rival housewares firm Curver. Amid poor results, Rubbermaid bailed out in 1994 as DSM resisted Schmitt's desire to boost promotional spending in a weak European market. To leave the venture, Rubbermaid had to agree not to compete in Europe for nine months. The Curver "entanglement did put us behind," says Schmitt.
These days, Rubbermaid can point to concrete signs of improvement. In April, Schmitt hired Ahrens to increase Rubbermaid's visibility around the world. Following the lead of the successful Little Tikes toy unit, which has 101 retail stores in Korea, he may open a few retail stores, called Everything Rubbermaid, in key European cities.
Managers of the Little Tikes chain have found innovative ways around some of their initial difficulties. When European toy stores balked at displaying its large play systems such as backyard castles and swing sets, Little Tikes rented display space in malls and shipped them directly to consumers. When they saw that European parents weren't buying novelty children's beds, like its sports-car-shaped bed, they found out that the standard European mattress didn't fit the beds. The company approached a European company to design an appropriate mattress.
Under Larry Porcellato, a former Gillette Co. executive who runs Rubbermaid's European operations, Rubbermaid is using its French and Polish factories to design and introduce dozens of new products aimed specifically at Europe. Its multilingual catalogs are now awash with products that address color and size preferences among various European countries. As a result, despite its limited presence at the store level, Rubbermaid is now the No. 2 brand in European housewares, behind Curver.
To get into more stores, Rubbermaid is wooing European retailers.
Rubbermaid also is beefing up its international management.