New Ways for Grocers to Clean Up
A pullback on promotion has hurt incremental growth in the household cleaning category. Dollar sales for most segments in this mature category remain flat, according to multichannel data from Chicago-based IRI for the 52-week period ending Oct. 8.
Two bright spots in the category are household cleaning cloths, with a dollar sales increase of 5.3 percent, and laundry care, with a 4.7 percent dollar sales uptick for the 52-week period.
Further, cleaning cloths, which offer convenience along with a higher price point, are here to stay. “There does not appear to be any significant letup in the popularity of wipes,” says Kurt Jetta, founder and CEO of Shelton, Conn.-based TABS Analytics. “Manufacturers seem to be finding ways to make them more retailer-friendly by making them more space-efficient.”
Supermarket chains routinely promote laundry care. Parsippany, N.J.-based Kings Food Markets, for example, recently ran a $7 price break on Procter & Gamble’s Tide with Bleach and a two-for-$5.99 deal on Colgate-Palmolive’s Ajax laundry detergent on an end cap promotion. North Haledon, N.J.-based Nicholas Markets Foodtown, meanwhile, heavily promotes laundry detergents in its household cleaning department.
“Everybody wants a deal,” notes Jetta, adding that nine out of 10 consumers use at least one promotional tactic when shopping for household cleaners, and nearly two-thirds of consumers use three or more deal tactics to shop. “Household products are much more receptive to bulk packs and value sizes relative to other promotional vehicles than we see in other sectors,” he says. “These are the types of promotions that deserve high-visibility display space because [of] the sales and transaction sizes on these products.”
Heavy shoppers and heavy deal buyers in this category, tending toward households with five or more members, and African-American and Hispanic households, are motivated by passive deals rather than coupons. This means that deals are more focused on load versus incremental transactions. For almost every other sector, incremental promotions are a function of the extra transactions. “Bonus packs are a dud in most other categories, but not this one,” observes Jetta.
TABS research reveals that while the grocery channel has the second-largest share of sales in the category, behind Walmart, the channel isn’t attracting heavy shoppers or heavy deal buyers, so focusing more heavily on this consumer population could grow sales.
At the Seabrook, Texas-based Arlan’s Market chain, specialty products help offset eroding margins in a chronically promotional category. “We integrate specialty products to raise our gross margins,” explains Buyer Perry Hallett. “Mrs. Meyer’s Clean Day does really well for us.”
In addition to Mrs. Meyer’s and Method, Kings stocks other specialty brands, including Ecos, from Earth Friendly Products; Earthworm; Common Good; and Better Life.
While popular with some consumers, organic household products remain a niche category. The segment has “a long, long way to go before it becomes mainstream, so retailers need to be prudent on the amount of space they allocate to these products,” cautions Jetta. “It’s also hard to get these products parity-priced in a category where deals are still very important.”
Jetta believes that natural and organic household cleaning products have another five to 10 years before the segment could become a meaningful category. “Organics have low productivity, but if retailers take the products out of the store, they lose those sales entirely,” he says, and the stores risk losing that attractive younger, upscale customer.
“Most CPG companies are vying for the middle-income or lower-income consumer,” says Steve Zeitler, co-founder of Danbury, Conn.-based Citra Solv, which markets the Citra Solv, Home Solv and Air Scense brands. “Brands like Citra Solv help pull in that upper-income consumer who buys less on promotion and spends more per item.”
According to Seitler, natural products, which generate more profit per square inch, help retailers realize better margins and are “a small but important part of the category.”
“Given that margins on the high-tonnage items are so thin, the specialty cleaning products are very important as margin drivers,” asserts Jetta. “They are what enable retailers to invest in traffic-driving programs with more mass appeal.”
For Arlan’s Market, specialty products with a Mexican heritage and products targeted to Latino consumers are profitable parts of the category. Hallett carries products from Mexico-based AlEn to appeal to his Hispanic customers. “Products such as Choralen and Colgate’s Fabuloso fabric softener have a higher margin and are popular with our consumers,” he notes.
Innovation can also be key driver in the category, with the ability to offset margin erosion that occurs with chronic promotion, but the category hasn’t seen much innovation recently. “The category doesn’t have the technological innovation it should, since the big players are spending money protecting their market share rather than on research and development,” points out Mike Eaton, CEO and founder of Miami-based Hero Clean.
The company’s line of technologically advanced home-cleaning products is specifically formulated and fragranced for men’s gear and homes. “We built the brand on technology to create high-performance, ease-of-use products for the tougher stains, odors and dirt that guys create,” says Eaton.
He adds that the market for the brand is ripe: 47 percent of the adult male population is single, and more men are sharing chores, buying their own groceries and doing their own cleaning. The Hero Clean line “smell[s] the way guys would like it to smell, look[s] the way guys would want it to look, and ha[s] the technology to handle all the manly odor, stains and messes we can throw at it,” notes Eaton.
The brand’s best-selling products are laundry detergent and odor-eliminating spray, both formulated with a patented malodor technology. “The stain wars are over,” says Eaton. “Now it’s all about odor. Our fabric spray has a probiotic microbe that goes into a fabric to eat away at the food source of odor. The product has outperformed all other products in the category.”
To Promote, or Not to Promote?
Some retailers are still promoting the category heavily, while others say that they’ve long avoided promotions and still find the category a strong performer. According to Doug Bender, director of merchandising at Mechanicsburg, Pa-based Karns Quality Foods, the eight-unit chain hasn’t pulled back on promotions.
“We’re still promoting that category pretty heavily,” says Bender. “Traditionally, we’d run promotions in the fall and spring, but now they are spread out over the whole year.” The chain uses on-packs and bonus packs to lift sales.
At Plainwell, Mich.-based Harding's Friendly Markets, however, buyer Dave Lynam has resisted the promotion trend. “Our category produces pretty steadily,” he says, “so we aren’t depending on promotions.”