DIAPER CLASH

Pastel packaging, national and private-label brands, four shelves ... you've seen one supermarket diaper section, you've seen them all, right?Well, not quite.While it's true that diapers, like other grocery items, don't necessarily lend themselves to creative merchandising, there are subtle differences between retailers.Last month SN visited a host of supermarkets in Annapolis, Md., to see how the

Pastel packaging, national and private-label brands, four shelves ... you've seen one supermarket diaper section, you've seen them all, right?

Well, not quite.

While it's true that diapers, like other grocery items, don't necessarily lend themselves to creative merchandising, there are subtle differences between retailers.

Last month SN visited a host of supermarkets in Annapolis, Md., to see how the competition stacked up. In Annapolis, large retailers like Safeway, Oakland, Calif., and Food Lion, Salisbury, N.C., contend with the ubiquitous presence of Giant Food, Landover, Md., midsize chains such as Lanham, Md.-based Shoppers Food Warehouse, and independents like the four-unit Graul's Markets, Towson, Md. There are also drug stores, mass merchandisers and the ominous presence of Toys "R" Us.

"Toys "R" Us is probably the biggest competitor to grocery stores in the diaper market," according to John McGuinn, vice president of general merchandise and health and beauty care at McCready Marketing, a Columbia, Md.-based brokerage. "The Toys "R" Us [units] of the world sell at or below cost, because that's what brings people into their stores."

Indeed, this summer the Annapolis Toys "R" Us, like others around the country, has been flying a huge banner on the outside of the store that proclaims: "Check our low, low diaper prices."

SN did just that. While the toy store did have the lowest prices for Huggies at $6.77, it was beat out by other Annapolis area retailers on other brands. At $5.99, Food Lion beat the toy giant by 78 cents on Pampers. Giant Food's private label, at $5.39, was a dime cheaper than Toys "R" Us' store label.

In general, however, prices were comparable and competitive. It did not appear any one chain could grab the young mother sector with diaper prices alone.

The struggles of Luvs -- the Procter & Gamble brand that has seen diminishing sales over the years -- was evident in that the brand was not available at Toys "R" Us or Safeway. Meanwhile, the independent Graul's and Shoppers Food Warehouse offered no private-label products.

Graul's and Shoppers did, however sell third-tier diapers. Graul's offered Cuddles for $6.49, while Shoppers featured the Fitti and Comfee labels for $4.99. Safeway, too, offered Fitti at $4.80 and Cuddles for $5.98.

"Retailers don't make any money on national brands, but they can on private label and these regional brands," said Harry James, director of health and beauty care and general merchandise at KLF, another Columbia, Md.-based brokerage.

One thing is quite clear when strolling down the diaper aisle -- if a package is taken off the shelf, it leaves a sizable gap, compared with other grocery items. Thus, sections that aren't constantly restocked can look skimpy, short on selection and sometimes sloppy.

That wasn't the case at the new Annapolis Safeway, located on the town's busy Forest Drive. Its 40-foot diaper section was neatly stocked and gave the impression of variety, with about 50 stockkeeping units, including 10 private-label SKUs.

Private-label training pants retailed for $5.99, while regular private-label diapers were $5.69 and an economy pack sold for $4.69. Safeway also offered Fitti and Comfee products for $4.99.

Working in half the space with a 20-foot section, the Forest Drive Giant Food featured more than 60 SKUs. Private-label products were surrounded by Luvs and Huggies in roughly 80 facings of diapers.

Giant may have only needed 20 feet in the gondola because it also featured an endcap of diapers in another section of the store.

Shelf tags in the aisle told shoppers "Super Deals diapers available in aisle 13." Super Deals is an area in the middle of the store that Giant devotes to club sizes and cases. There, shoppers could choose a 128-count Pampers Ultra Dry Thins case for $24.98. A 96-count Huggies product was also on the display, but a price was not evident.

Shoppers Food Warehouse, situated across from Giant Food, featured the largest selection of third-tier diapers in its 16-foot, 45-SKU section of warehouse shelving. It did not have a private-label product.

The third-tier brands were found on the bottom two shelves and included Cuddles for $5.98, Fitti for $4.80 and a Fitti's 90-count case for $13.68.

"Comfees and Fittis are supposed to be sold below the private label," explained McCready's McGuinn.

A few miles away there's a brand-new Food Lion in the neighboring town of Edgewater. Of all the chains visited, this store offered the largest selection and product mix.

For example, Food Lion carried an expanded line of national brands such as the Pampers' newborn product. It also offered one SKU of Diaper Doubles, insert pads for extra protection manufactured by Paragon Trade Brands.

Food Lion carried three SKUs of Royal Ultra Cradles by Carolina Royal Disposables, as well as cases such as a 96-count Huggies for $24.99. SN counted about 100 diaper SKUs, a good deal of which were private-label products, in Food Lion's 40-foot section.

To further enhance sales of its store-brand diapers, Food Lion merchandised 14 facings of boy and girl diapers in a separate section in the same aisle, sandwiched between baby food and baby HBC products. Food Lion merchandised its baby wipes between seven facings of diapers for girls, which ran top to bottom on the shelves, and its counterpart for boys.

"Private label is an important part of the diaper category for Food Lion," said Chris Ahearn, the chain's corporate communications manager. "It's a good category for us and we do well in that area.

"We have always strived to offer consumers the lowest possible prices, and that philosophy has carried over into our diaper strategy," she said. "We have five different private-label lines, in addition to the national brands. And we're still trying to build on that number."

Ahearn said Food Lion has consistently seen growth in the entire diaper category, including the private-label products.

Graul's Market operates within a few miles of its heavy-hitting competition in West Annapolis.

The store fit some 50 SKUs -- none of which were private-label products -- in 16 feet of shelf space. In terms of price, the independent held its own, coming in under Safeway, Shoppers, Food Lion and Giant on Pampers with a retail of $6.95. It also carried Luvs for $5.99 and a Cuddles product for $6.49.

"We think we're just as competitive as everybody else," said a Graul's employee responsible for buying and merchandising its diaper section. "In fact, we have someone who routinely goes around and reports on what our competitors are doing with diaper pricing."

The buyer said convenience is as important as price. "People are here and they don't want to make a special trip, so they buy the diapers from us," he said.

The Price Is Tight

SN gathered retail prices of diapers in a sampling of retail outlets in the Annapolis, Md., area on July 7.

Here's how the competition stacked up on prices for standard-size packages:

Product Graul's Safeway Shoppers Food Food Lion Giant Food Toys 'R' Us

Market Warehouse

Pampers $6.95 $7.99 $7.80 $5.99 $7.29 $6.77

Huggies $7.69 $7.69 $7.59 $6.99 $7.29 $6.77

Luvs $5.99 N.A. $6.53 $5.99 $6.29 N.A.

Private

label N.A. $5.69 N.A. $5.59 $5.39 $5.49

Third-tier $6.49 $4.99 $5.98 $4.80 N.A. N.A.

(Cuddles) (Fitti & (Cuddles) (Fitti)

Comfee)

These price checks were taken at: Graul's No. 243, 607 Taylor Ave., Annapolis; Safeway No. 1460, 1781 Forest Drive, Annapolis; Shoppers Food Warehouse No. 17, 264 Solomon's Island Road, Annapolis; Food Lion No. 1315, 3211 Solomon's Island Road, Edgewater; Giant Food No. 194, 2323 Forest Drive, Annapolis; and Toys 'R' Us No. 5036, 41 Defense Highway, Annapolis.