Supermarkets are working diligently to prevent mass merchandisers and warehouse clubs from leaching sales in the detergent category.
While the vast majority of laundry detergent is still sold in supermarkets -- more than two-thirds, according to Information Resources Inc. -- mass merchandisers continue to make inroads, primarily by targeting the category with hot front-page features using detergents as loss leaders to draw shoppers into stores.
Laundry detergent sales in supermarkets amounted to 615.9 million units, a decline of 4%, while drug stores sold 51.8 million units, a 0.5% slide, according to Chicago-based IRI, for the 52-week period ended Nov. 23, 1997. Discounters, however, saw unit sales jump up 8.1% to 257.9 million units.
Astute supermarket operators are taking steps to win back their sales. Many pore over their competition's weekly circulars and set their retails accordingly. Others are looking to broaden their product selection and add the massive 200-ounce bottles and boxes that are sold in the mass and club channels.
Mike Ellis, vice president of merchandising at Fred Meyer Inc., Portland, Ore., said winning back market share from the mass merchandisers and club stores is a real challenge for the supermarket industry.
Although Fred Meyer operates a chain of department stores in the Pacific Northwest that sells everything from coleslaw to chain saws, its laundry detergent is merchandised on the supermarket side of the store.
"You have to be competitive and display it well, so that when customers come in they see it as a good value and buy it at the grocery store," he said.
Ellis said Fred Meyer carefully studies the competition and sets its price points accordingly.
Industry consultants say supermarkets need to take a cue from the changes they have made in the pet and baby food departments and also turn the laundry detergent aisle into a destination category.
"In the pet aisle a lot of retailers have installed kiosks and service counters. This creates a pet-store atmosphere and a solutions mentality," said Donald Stuart, a partner in Cannondale Associates, a consulting firm based in Wilton, Conn.
Because of its high-volume, high-ring and high-profit status, laundry detergent is key to the survival of the supermarket industry, said Jonathan Kramer, president of J. Brown/LMC Group, Stamford, Conn.
Supermarkets are fighting back because when high-profit categories like detergent start to migrate to secondary channels, supermarket operators are forced to move back to their lower profit categories for survival, Kramer noted.
One way retailers can maintain sales is to take a solution selling approach to the laundry detergent category, said Kramer.
"Supermarkets need to sell themselves as a solution center rather than as an ingredient center or a place where you can buy specific items," he said. "They have to be creative with coming up with solutions to the consumer's problem."
Retailers need to pay attention to detergent by pricing and advertising it right, he added. "You can't just sit back and ignore [the competition]. I think the grocery channel did that for years and that is why they are in the position they are in today with these categories," Ellis said.
A leading Southeastern chain carefully studies what the mass merchandisers are doing, according to a top-ranking official there.
"Laundry detergent is a big issue with mass and we do have programs in place and measure our results based off those efforts," said the source, who requested anonymity.
Western Supermarkets, Birmingham, Ala., has been effectively competing against the mass merchandisers by featuring laundry detergents at "real competitive" prices, said Butch Smathers, vice president of merchandising.
"We have been doing some multiple pricing, like two-fers," he said, adding that he ties into whatever promotional assistance the manufacturers offer.
D&W Food Centers, Grand Rapids, Mich., is considering adding giant 200-ounce bottles of liquid detergent to its offerings to appease shoppers who rush to Target and the other mass merchandisers to stock up when there is a sale, said Nancy Landry, category manager.
"Mass merchandisers advertise those large bottles quite a bit. We used to have a good supply of them, but they were dropped a few years ago," she said.
D&W is in the midst of a category review to determine which items it needs to carry to make the laundry aisle more competitive. Landry said that frequent advertising of the category and endcap displays help to build sales.
"We tie-in the bleaches and fabric softeners with the detergents to build sales," she said. "A lot of time when we feature a detergent we will put a bleach and fabric softener that are not on sale on the same endcap at the full price and get the additional sales," she said.
Landry is also stocking more spot removers, household cleaners and other cleaning items in the aisle to try to boost sales. For example, the Carbona line of spot cleaners has performed well, she said.
Mike Rothwell, a co-owner of Pennington Quality Markets, Pennington, N.J., said advertising as part of the Fleming Cos.' Thriftway/Shop 'n Bag group of stores has enabled him to become more competitive with the mass merchandisers on his detergent offerings.
"We continue to promote the category heavily through our advertising," he said. "Our everyday pricing is going to be reflective of who we are competing against. More important, our detergent ads are as competitive -- if not more -- as the best advertised price in the market that week."
The downside is that competition cuts into margins.
"We have to be competitive to protect our image and the price image that we either have or don't have," he said, adding that he tries to make up margins elsewhere in the store.