Private Label Pads Its Share

July 2, 2010
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The latest sales figures from Chicago-based market research firm SymphonyIRI Group include both good news and bad news for retailers of feminine hygiene products. The bad news is that unit sales of sanitary napkins and tampons across food, drug and mass merchandise outlets (excluding Walmart) fell 2.6 percent to just under $1.5 billion over the 52 weeks ending March 21, 2010. A 10-cent increase in average price per unit (to $4.41) limited dollar sales losses vs. the previous year to just 0.5 percent, but no one’s celebrating what’s been described by many as difficult year for the category.

The good news, however, is that unit sales of higher-margin private label feminine hygiene products edged up 1.9 percent, while dollar sales jumped 2.7 percent to more than $172.4 million, boosting      store brand share across channels to an all-time high of 11.5 percent - a third of a point higher than last year.

“The poor economy was the spark that ignited private label growth,” says Jean Fleury, CEO of Drummondville, Quebec-based Fempro.

But it’s the quality of the products that kept it going, he continued, citing the efforts of many retailers to improve their store brand feminine hygiene programs. Still, private label’s share of the category remains well-below average, with store brand sanitary napkins grabbing about 12.7 percent of total subcategory dollar sales and store brand tampons taking 9.8 percent.

In a category as intimate as feminine hygiene, explains Rob Lippucci, marketing manager at Richmond Heights, Ohio-based Hospeco, “Women are very loyal to specific products and brands. Unless there’s a compelling reason to do so, there’s a lot of reluctance to test new products.” He adds, “That’s why it’s so critical for private label manufacturers and retailers to target younger users, including teens and tweens. Their buying habits have not yet been well-established, so there’s a real opportunity to engage them.”

Hook Consumers Early

The need to get consumers hooked on private label early on has become even more critical in the past year, given Kimberly-Clark’s launch of the U by Kotex lineup, a clear attempt to win over younger women. Backed by a series of non-traditional ads and a strong social media campaign, U by Kotex features bright, contemporary packaging and hip package copy, but little in the way of truly unique products.

Although Kimberly-Clark has poured a lot of money into the U by Kotex launch, it’s still too early to tell what, if any, impact the new line will have on private label, whose current consumer base skews toward mature women. As a result, most manufacturers are adopting a wait-and-see attitude, focusing instead on proven sellers.

For example, Lincoln, R.I.-based Rostam U.S. recently updated its Tampax equivalent to include the same cardboard grip as the national brand, eliminating the only significant feature remaining that differentiated the national brand from the store brand.

“The only thing left - Tampax’s skirt - is cosmetic,” explains sales and marketing vice president Dan Saylor, who expects continued erosion of Tampax sales as a result.

According to Saylor, Tampax sales have been declining for several years as consumers upgrade to tampons with plastic applicators, particularly category leader Tampax Pearl, whose dollar sales jumped 8.8 percent over the past year. Since the introduction of a private label alternative to Tampax Pearl in 2005, Saylor adds, store brand share has grown at a rate of about 1 point per year.

On the sanitary pad side of the feminine hygiene category, meanwhile, Hospeco recently rolled out individually wrapped thin liners, a product whose sales only recently reached the critical mass necessary to warrant a store brand version, Lippucci reports. Offered in compact shelf trays that make merchandising a breeze, “Thin liners in the lowest package count are a great low-price-point product,” often allowing retailers to hit the $1 mark, he adds.

Retailers are less likely to be able to offer those sorts of deals on ultra-thin products, which Fleury calls the fastest-growing segment of the sanitary pads subcategory.

“More consumers feel comfortable using a product that’s thin compared to a maxi with the same absorbency,” though P&G’s marketing efforts also deserve a lot of credit for the segment’s growth, he explains.

But because such products typically cost more, retailers need to be sure they offer a balance of both conventional and ultra-thin private label products. In fact, Fleury remarks, Always Infinity, a new ultra-thin item featuring microdots designed to channel fluid toward the back of the pad, hasn’t had quite the impact on the category that some retailers expected, thanks to its higher average price point ($6.09).

As a result, says Fleury, Fempro offers its private label customers three different coversheet options, the most advanced of which, Sensadry, was developed in response to demand for national brand equivalent performance.

Still, Fleury remarks, “It’s not always about what the national brand does. Retailers should allow the needs of their specific consumers to dictate the direction of their private label program.”

Promote Like a Brand

That’s good news because many features of branded products are protected by patents and trademarks, forcing manufacturers to focus on improving function instead. For example, says Lippucci, Hospeco’s winged products feature an additional colored acquisition strip made of a substrate that helps draw fluid into the center of the pad. As a result, he remarks, “We believe that in some ways our products surpass the national brand in terms of performance.” In fact, he adds, “Recent tests showed that some of our winged pads are as much as 30 percent more absorbent than the national brand.”

Unfortunately, Lippucci continues, in the feminine hygiene category at least, many private label buyers are unimpressed by private label products that outperform their national brand counterparts, preferring to stick with national-brand-equivalent items instead. However, he adds, some buyers have shown some willingness to venture beyond national brand equivalency in the area of package counts.

Also used by the national brands, “’Bonus’ or ‘value’ packs that include, say, 10 percent more pads than usual offer an incentive to the consumer and may boost store brand sales,” but the increase comes at the expense of already thin margins, Lippucci says.

A better approach is to catch the consumer’s eye with secondary displays, including endcaps and freestanding shipper displays featuring signage that promotes the store brand alternative and urges the consumer to compare it against the national brand.

“I believe the biggest mistake retailers make is doing nothing or very little to promote and merchandise their private label feminine hygiene products,” Lippucci remarks.

Saylor agrees.

“If they don’t have a merchandising and promotion plan that compares to the brands, then they need to re-examine their strategy,” he says. “Every week, you can find [national brand] tampons/pads/liners on sale or advertised at Walgreens, CVS and Rite Aid, as well as at Walmart and Target.”

So the bar is set pretty high. And in the end, Saylor says, retailers that don’t promote their private label programs at least as much as the national brands will never see store brand sales reach their potential.

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