In an exclusive interview, leader of Lixil EMEA Jonas Brennwald talks about his first year in charge of the business, the impact of COVID, plans for Brexit plus he outlines the strategy for Grohe in 2021 and beyond
Q: How has business been over the past year?
COVID-19 has of course been a pivotal turning point for business this year. Whilst there was an initial decrease in international revenue due to the impact of the pandemic, we have found the European market to recover notably since June.
Currently, the Grohe brand is showing great momentum and we are pleased to see the first indications that we are emerging stronger out of the currently challenging market situation, achieving double-digit growth across the region.
Whilst COVID has and continues to present challenges, we believe we have managed to turn this crisis into an opportunity for our business, strengthening our customer relationships and engagements and proving more than ever that we are a reliable partner for our customers.
Whilst we remain vigilant as to how the COVID situation will evolve in the next few months, we feel that our engagement with our customers during these times of crisis will help to create the foundation for a strong rebound together and enable us to be future-ready for the “new-normal“.
Q: How does UK business currently compare to Europe?
A: We find that there are key global macrotrends within each customer channel which allow for some alignment across market regions however we are encouraging the UK market, and indeed all regions, to implement a further level of refinement and adaptation in order to best meet the needs of their market and customers.
The UK is quite a unique market in comparison to others, and therefore it requires its own strategy and direction.
This makes any business comparison difficult as the demand and the customers require totally different solutions and processes.
There are lots of differentiations; from products, particularly in the WC market, to more general widespread differences such as the UK’s low pressure requirements for water-fittings, and route to market for consumers.
As such, the UK market provides different product specifications to those in other markets, in order to satisfy demand and differing design tastes. This offering is then tailored further to meet the requirements of each customer channel: from retailers and residential, to commercial and hospitality.
The UK is a highly important market for us with lots of business potential and therefore it is imperative that we can tailor our brand offering accordingly when in the best interest of our customers.
Q: How have you navigated the pandemic? Have you experienced any issues with demand overwhelming supply?
A: As the enormity of the crisis began to take hold in Europe in the early Spring months, we made the decision to make adaptations to our production plants and procedures in order to ensure employee safety, both within the plants and in our offices.
All employees worked in a very disciplined fashion to comply with the regulations, so that we were able to resume production quickly at all sites.
This challenging time has also tested our supply chain and proven it to be very robust.
Thanks to a high degree of vertical integration of our manufacturing structure in Europe, we were able to ensure a high degree of continuity in production.
I am tremendously proud of all our employees and the fantastic job they have done, and continue to do, for our brand and business partners in testing times.
In the UK, as with many other markets in the region, there was an unprecedented demand for products that optimise hygiene – and our infra-red basin tap solutions were at the forefront of this growth.
We found that in earlier months, in the height of lockdown, that both our partners and consumers were seeking security in our products and services as they were reassured by our strong financial footing and our ability to be able to continue to deliver even in adverse market conditions.
The hygiene market remains strong as we come to the close of 2020 and we foresee that the coronavirus crisis will provide significant impetus for innovation, particularly in our industry.
The public have become much more aware of the issue of hygiene, and new technological solutions will be created to meet this shifting change in needs.
Q: What were your expectations when you took on the role of Co-CEO and how do they measure against the realities?
A: Prior to my current position as Co-CEO, I had already formerly worked closely with my counterpart, Thomas Fuhr, with myself leading the EMENA region in Lixil and Thomas heading up the Fittings category for Lixil International.
Our individual areas of expertise allow us to bring a reinforced strength to our leadership outlook; a divide and conquer approach, if you like.
Thomas oversees the Operations division whilst my focus is dedicated to all commercial aspects of the business.
It allows us to hone in on the intricacies of these key areas in more detail and be more tactile and engaged with our respective teams.
I have found this very beneficial as it means I can spend more time nurturing relationships and for me, the foundation for a truly successful business starts with people. Not only our current employees, customers, and partners but investment in others for the future too.
I don’t think I could have foreseen just how much the importance of people and relationships has been during this year and it has further cemented my beliefs that channelling efforts into people is the right course of direction for not only growing our business but creating a positive, welcoming and supportive environment for our existing employees.
Q: What have been the biggest challenges as a leader and for the global business?
A: I think my response will echo that of most business leaders on a global level: the events of this year and steering not only a business – but the thousands of employees that make it what it is! – through this pandemic has been a challenge. For most, it will be the toughest crisis we face in our career.
Throughout this pandemic, the safety and wellbeing of all our employees has been at the forefront of every decision I have made and has helped us navigate our way through these very unsettling times.
Additionally, we have had to really tune in to the needs and concerns of our customers and develop new measures that provide them with the support, trust and communication they depend on from their business partners in such uncertain times.
Developing a people-focused culture has always been intrinsic to our business and the events that have unfolded this year has challenged us to go further, do more and be even better when it comes to the welfare and relationships of our team, customers and business partners.
Q: What has been your biggest learning point over the past year?
A: Prior to COVID, my working weeks consisted of multiple meetings with stakeholders, business reviews and more flights and country-hopping than I could even begin to count.
Lockdown restrictions have meant the time spent not travelling and the integration of digital-only communications for a period of several months has allowed me to achieve several things.
Firstly, I was able to engage with more of my colleagues and have the opportunity to check-in with them on a personal level.
I had the opportunity to be able to participate in more internal communications, being a part of multiple different project discussions with different groups, which allowed me to see the business in a way I have never been able to before.
Digital communications have allowed me to broadcast regularly to all our teams, on an EMENA and global level, at regular Townhall meetings.
Colleagues have been able to ask me questions directly at these virtual conferences and build a mutual connection that just would not be possible under our “normal” business circumstances.
These changes have provided truly important insights that will shape our business in the future.
In light of this, transformation is key not only in going digital but in order to be future ready.
This marks the beginning of a more agile culture at Lixil that will foster swifter decision-making and empower everyone to share their views across the organisation and contribute to our ongoing growth and development.
With this, the process of decision-making will evolve; colleagues will be encouraged to lead to their own potential, be more entrepreneurial, share their views and contribute towards decisions.
As part of this journey we will adapt globally our current titles of managers to the simplified title “Leader”.
Q: How much of an issue will Brexit be for your business and how are you planning for this?
A: Our UK team has been working with a dedicated consultant over recent months to mitigate any impact to UK business and customers and ensure ongoing smooth operations and order processing procedures are in place.
The team are continuing to work to enable the implementation of import procedures and are carefully checking supply chain routes.
A three-month stock supply in local warehouse facilities has also been secured and maintained which will allow continuous and uninterrupted supply of core, high volume products to UK customers.
Q: What changes will you be making to your business in 2021 and why?
A: Over the course of the last few months, we have been working hard on evaluating our business model, to build for a stronger future.
Whilst Grohe is a top global brand, we call it an A-brand, in the past, we have not always fully succeeded in utilising this asset.
Admittedly, we did not always engage enough with our trade customers, the people who are actually selling our products, and our business to business performance has suffered from that.
Therefore, a significant focus of our work particularly for this year was to reinvigorate our existing three-tiered distribution model.
We are delighted that in 2021, we will roll out our new go-to-market strategy, the starting point for a comprehensive approach that will reinforce industry leadership by moving away from a one-size-fits-all approach.
Going forward, we plan to target our key channels more effectively to better serve individual customers as well as dedicated consumer groups.
Whilst the three-tier-distribution remains a central driver of success in the sanitary industry, we see the increasing importance that multi-channel has gained and will continue to adapt to this.
Our new go-to-market strategy is a ‘first’ for the sanitary industry, providing a greater focus, increased dynamism and attention to individual needs and requirements that have, over time, drastically changed.
Q: Having decided to withdraw from ISH, it has now become a virtual event, so do you feel more vindicated by your decision?
A: ISH 2019 left us with a huge appetite to further drive our business yet the decision to withdraw from ISH 2021 was in line with our overall efforts to manage our business in the best interest of the health and safety of our employees, business partners, their friends and family.
We are still seeing a fragile situation with regards to the ongoing global pandemic and significant uncertainty regarding future development therefore this is a decision we still feel is justified.
Q: Will you now be taking part in ISH as it is a virtual event? If not, what will you be doing in its place?
A: We have opted for an alternative fair concept that will reach out to all our business and media partners around the world, taking our audience on a never-seen-before journey through the Grohe brand and its latest innovations.
Undoubtedly, it will be different from what we have all become accustomed to over the years but you can be assured that it will still capture all the excitement, ambience and spectacle one has come to expect!
Q: What can UK retailers expect from Grohe in terms of products and support going forwards?
A: In the UK, Grohe was one of only a few brands in the industry fortunate enough to remain fully mobile and working with no furloughing of staff throughout the peak of the pandemic.
Over the past year, Grohe UK has also invested in new talent with particular growth in their projects team, as well as some new recruitments made during the initial lockdown period.
This has enabled the team to ramp up more support than ever for retailer partners and other trade customers, at a time when they needed it most.
This enhanced level of support will not diminish and in fact will become even more comprehensive as our new commercial strategy comes into place next year.
To align with this, not only will support become more dedicated and bespoke but so will the product solutions available.
Tailor-made product solutions will begin to become available for each customer channel in addition to UK specific products that meet the demands of the market; for example, low pressure solutions, deck-mounted bath fillers which are unique to UK bathrooms.
This will ensure that our customer needs are being met as early as the R&D and launch phases, providing solutions that deliver on convenience and market demand.
Q: What are your expectations of the global business and the UK from 2021 onwards?
At Grohe, we have aligned with three key macro trends which we believe are shaping the way we live today, particularly in the areas of the kitchen and bathroom. These are:
– Urbanisation: the idea that hybrid environments such as bedroom and bathroom will come together in response to space becoming sparse.
As a result, consumers will design these areas as living spaces according to their personal taste and kitchen and bathroom products will shift to become beautifully designed furnishing items.
– Health and Wellbeing: As a deliberate contrast to the hectic, loud outside world, the bathroom has become more and more of an oasis of wellbeing, a personal sanctuary.
The events of this year will undoubtedly heighten the demand for this trend and bring new connotations and expectations within the health and wellness sector.
– Sustainability: Consumers are more aware than ever of the consequences their actions are having on our planet and are desiring products which reduce water consumption and materials, with solutions such as our Grohe Blue Home filtered still and sparkling water tap driving this conversation.
In addition, our own corporate responsibility will continue to be key and we hope to make great triumphs as part of our Net Zero programme next year, achieving plastic-free packaging across the board.
These macro trends help us to understand consumer behaviours and in part dictate our direction and opportunities for growth potential across the global business.
For the UK, 2021 and beyond looks to be an exciting journey for the Grohe brand.
The UK is a breakthrough market for us and one we foresee to have capabilities to reach the top in terms of business performance.
Whilst we are still in a phase of recovery from Q1 of this financial year, the UK market has already seen double digit growth in Q3 in comparison to that of last year.
Q4 remains uncertain in light of the new lockdown measures however we are still predicting a steady YoY growth from Q4 last year.
Going forward, we as the global team will be making new and significant investments in the UK in order to ensure the full potential of this market is realised.
Q: What will be the biggest opportunities for the business, globally and in the UK?
A: Insight from both market data and our own orders tell us that customer demand for hygiene-relevant products is skyrocketing.
It is currently a driver across all sectors and it is clear that this demand is here to stay, even beyond Covid-19.
Whilst some may have tired of the ‘new normal’ and all the changes this has brought about when considering working from home, the acceleration of the digital experience cannot be ignored and it brings about a wealth of opportunity for communication, business and innovation.
As a brand, Grohe already integrates digitalisation into many of its product solutions and as a company, this is something we will look to build upon for 2021 in order to create an entirely new and unique approach to engaging with our different customer bases.