Trials of Rubbermaid, a well-loved American brand

Trials of Rubbermaid, a well-loved American brand

by Pininvest Analysis

Consumer Staples, a troubled partnership on pininvest.com

  • 23 constituents
  • 5.3% 1y performance
  • 25.1% volatility
Check the investment theme exit_to_app

In discussing Rubbermaid, once a proud and ‘best known’ American brand, an uncompromising stand against powerful retailers is almost expected

Although the company indeed went bankrupt in 1999 and Walmart had to do with its demise, we do not believe a moral interpretation of conflicting interests between manufacturer and distributor will suffice

But we do believe careful straining of historical facts just might help in isolating the nuggets, a few guiding principles for a more balanced relationship with distribution – Walmart but also Amazon today

Rubbermaid easy find lids
Rubbermaid easy find lids

A short 7 minute video by Hedrick Smith is recommended and, although closure feels sadly inevitable in the running comment, the choices made by Rubbermaid are reported with fairness

The well-known guiding principles of ‘best value for the American consumer’ and ‘everyday low prices’ featured by Walmart were the drivers, but short-sightedness and lack of strategic anticipation must have been the main factors ultimately bringing Rubbermaid down

As discussed in our Vlasik note, there is only one way for a manufacturer to counter impossibly low prices for ‘star’ products and that is a continuous effort of innovation, adding value for the consumer and burnishing the brand

The strategy might – or might not – have been successful for Rubbermaid in the ‘90s – there is no way of knowing of course – but implications are clear

  • Some products simply do not lend themselves to the type of innovation the consumer may support at a higher price point
  • We assume R&D leading to ‘innovative’ products will always remain a long term effort rewarding the most persevering teams. For this reason, firms priding themselves of a large portfolio of brands might do well
    • to assign pride of place to research
    • to structure their organization in a way setting apart divisions with innovative potential and divisions dedicated to mass production, low cost staples
  • Mass production at low cost is no less of a challenge than research but the manufacturer is confronted with a ‘make-or-break’ decision, a decision Rubbermaid was reluctant or unable to make
    • Transfer of production lines to low-cost countries, a road well-trodden and much criticized today in public and by politicians
    • Robotization in high cost domestic markets, probably less of an option 25 years ago, but still a solution as complex to implement as it is easily bandied around (see our article on Japanese robotics firm Fanuc for details)

These choices belong primarily to the manufacturer but a firm commitment of the largest US retailers will be a must as we will discuss in our next note