- RESEARCH & AWARDS
- CATEGORY REVIEWS
The bad news is that data from Chicago-based SymphonyIRI Group indicates a 2.8 percent drop in dollar sales and a 3 percent drop in units sold for the total diaper category (which includes disposable diapers and disposable training pants) for the 52 weeks ended Feb. 20, 2011. SymphonyIRI’s data include supermarkets, mass merchandiser outlets but exclude Wal-Mart.
The good news?
Private label’s dollar sales in the overall category rose 3.7 percent, increasing its dollar share of the category to 16.6 percent, a 1 percent increase year-over-year. In the disposable diaper segment, private label dollar sales increased by 9 percent (due to a 3 percent increase in units sold, and an average unit price increase of 0.59 cents) upping its dollar share to 13.36 percent.
In other words, the recessionary economy continues to be a private label advantage and price-conscious moms who switched from higher-priced branded products are not necessarily expected to switch back, even as the economy improves.
“Mothers are looking for a diaper that, first and foremost, works and doesn’t leak, is comfortable and doesn’t irritate baby’s skin. Consumers are more value-conscious than ever, which bodes well for a quality store brand diaper. If you have a quality product at a reasonable price, smart moms respond to that. The economy has forced all of us to be smarter, and moms especially understand that quality private label delivers a lot of value,” says Barbara Longchamp, who handles marketing services for First Quality Retail Group, Great Neck, N.Y.
Even though private label diapers are enjoying bright spots of growth within the category, the category overall is expected to grow only about 5 percent between 2010 and 2014, as forecasted by Chicago-based Mintel International in its report Disposable Baby Products – U.S. – February 2010.
“The disposable baby products category faces a growth challenge as the absolute number of new moms is not increasing,” Mintel reports. U.S. births fell 8 percent between 2007and 2010, partially driven by the arrival of the 2008 recession which caused some potential parents to hold off having children or delay having another child. In a segment that relies heavily on consumer volume and must contend with constant turn-over as their customers grow out of their product, diaper manufacturers and retailers must look for ways to entice first-time parents to their brands and encourage loyalty.
Although the overall forecast predicts flat to minimal growth in the category before the economy recovers and birth rates rebound, private label can maximize these opportunities to steal market share from the national brands in an uncertain environment.
Rising commodity prices have resulted in price increases during the last three years by major manufacturers Procter & Gamble and Kimberly-Clark, with Kimberly-Clark announcing recently that it will raise prices yet again on its top-selling Huggies brand of diapers and wipes, phasing in a 3 to 7 percent range this summer.
According to Mintel’s research, only about half of diaper consumers (48 percent) consider themselves to be brand loyal; that, coupled with price increases, leaves the door open for consumers to try less expensive private label brands as they search for better deals. Manufacturers and retailers are confident they’ll retain the loyalty of the converted consumers based on the high quality/high value proposition of their products.
Eric Smith, director, category management for Associated Hygienic Products LLC (AHP), Duluth, Ga., reasons, “The product works, and after all, the goal of the product is to, well, contain when a baby ‘insults’ the diaper. So why pay more if you are just going to throw the product away? The challenge is for mom to understand that she is still providing a quality product for her baby. It’s such an emotional purchase.”
Or as Longchamp puts it, “If the economy got more people to try store brand diapers, quality will keep them coming back.”
What about that 52 percent of moms who say they are not especially brand loyal? Mintel’s report suggests that consumers’ compensating behaviors of doing more with less and bargain hunting for the least expensive but still effective product are likely to remain after economic recovery. “Once a family has adjusted to using a less expensive or private label diaper, it will be difficult to convince consumers to trade back up to a more expensive offering,” the report predicts.
Moms who lean green are not necessarily converting to cloth diapers, though many are “conflicted over their use of disposable diapers,” Mintel’s research notes.
Although 99 percent of moms surveyed by Mintel said they use disposables at some point, and the vast majority use them exclusively. Two in three moms surveyed view disposable diapers as a necessary evil and expressed concern about the environment but not at the expense of convenience. Again, the poor economy comes into play with moms being less likely than a year ago to say they seek environmentally friendly baby products as immediate tight household budgets trump long-term environmental concern.
Still, Nappies/Diapers/Pants in the U.S., a May 2010 report from London-based Euromonitor International, indicates there is a small but growing number of U.S. consumers seeking more environmentally friendly choices when it comes to disposable diapers, with key product features including diapers that are chlorine-free, hypo-allergenic, fragrance-free, latex-free, and partially made from sustainable materials. While sales of green diaper brands like Seventh Generation and Nature Babycare USA are still relatively small (Seventh Generation Inc.’s retail share remained under 1 percent in 2009), it’s due in part to their higher price point and limited distribution, usually in specialty or health stores such as Whole Foods, Inc.
Eco-diapers went mainstream in 2009 when Kimberly-Clark introduced Huggies Pure & Natural Diapers, which mirror some of the same features of smaller brands in the existing natural diapers niche. Huggies Pure and Natural Diapers are sold at a 15 percent premium, and benefit from the existing Huggies distribution system.
Although the current economic landscape is a challenge for premium-priced products and has even the greenest of moms putting her environmental concerns on a temporary back-burner, Euromonitor predicts, “the potential growth of the green trend after economic recovery could prove favorable for manufacturers of diapers, both niche and mainstream.”
As mass merchandisers strive to become neighborhood shopping alternatives, and online shopping grows as a viable alternative to brick-and-mortar with its wide-range of product, low prices and free shipping, price-sensitive consumers are shifting their shopping habits in search of the best deal. It’s even more critical for manufacturers and retailers to reach through the mass-market clutter and grab potential customers.
Mintel’s research suggests younger moms are almost twice as likely as older moms to seek information from Web sites, blogs and social media. And more than a third of all moms surveyed say they will try a product if they see an ad or promotion.
“Promotions that generate trial are very important,” says Longchamp, “when consumers will understand quality only though use at home. Trial and sample sizes, cross-merchandising between wipes and diapers and having the right pack sizes are very important to engage the consumer and get her to try store brands.”
Smith agrees that the right packaging and promotion to compete with national brands is essential. “Merchandising and assortment has also changed as retailers have followed the national brand lead and are now focusing on two sizes: a small bag of diapers and a box of diapers. The in-between sizes are now gone.” In order to see growth in private label diapers, retailers should put as much effort into promoting private label as other brands, he says. “It’s tough when the brands are promoting aggressively and offering coupons that match the price of the private label brand. That’s why we feel retailers should promote private label at the same time as the national brand. It’s really not an either/or proposition. There are significant differences between the two buyers, so why not appeal to both at the same time?”