SN MARKET STUDY: ORAL CARE IN ORLANDO

ORLANDO, Fla. -- Supermarkets are trying to take a bigger bite out of the oral care category in this metropolitan area.With Wal-Mart Stores, Bentonville, Ark., the acknowledged leader, several supermarket chains have taken an aggressive stance on pricing and merchandising on this key health and beauty care category. One, Albertsons, Boise, Idaho, is targeting the drug chains in both its merchandising

ORLANDO, Fla. -- Supermarkets are trying to take a bigger bite out of the oral care category in this metropolitan area.

With Wal-Mart Stores, Bentonville, Ark., the acknowledged leader, several supermarket chains have taken an aggressive stance on pricing and merchandising on this key health and beauty care category. One, Albertsons, Boise, Idaho, is targeting the drug chains in both its merchandising and pricing.

Meanwhile, dollar stores, which typically dedicate eight linear feet to the category, are out to take advantage of impulse sales in oral care, but are not seen as a significant competitive threat by any of the local observers interviewed by SN.

"The only supermarket that considers the drug stores their competition [in HBC] is Albertsons," said a HBC merchandiser who works with one of the major grocery chains. "Publix, Winn-Dixie and Kash n' Karry all consider Wal-Mart or each other their competition."

This is reflected in pricing where Albertsons is generally higher than all the other players, even the drug chains, on many oral care items. "Their prices mirror Walgreens and Eckerds. They are a dollar higher than Publix on almost everything," the merchandiser said.

Executives at Publix, Winn-Dixie and Kash n' Karry declined to comment for this article. Albertsons executives were not available to comment. The service merchandisers interviewed asked to not be identified.

The total oral care category for Orlando-area supermarkets was $18.2 million for the 52 weeks ending Aug. 11, 2002, according to Information Resources Inc., Chicago. Reflecting the older population in Florida, ACNielsen, Schaumburg, Ill., reported in its Strategic Planner that for the 52 weeks ending Sept. 7, denture products had a higher volume in Orlando than in other parts of the country, while other oral care products were either close to the national index, or below.

Nationally, supermarkets in total still outsell Wal-Mart in the oral care category -- $1.683 million (according to the ACNielsen Strategic Planner for the 52 weeks ending Aug. 10) to $1.165 million (according to ACNielsen Wal-Mart Channel Service for the same period). However, Wal-Mart's oral care sales grew 17.4% for the period, while the supermarkets' only increased 2%.

In Orlando, Publix, Lakeland, Fla., is seen as the leader among supermarkets. "They have the best reputation for the biggest variety. They are the most customer-oriented stores. You just don't hear anyone say anything bad about Publix," said an executive in the merchandising trade familiar with the Orlando market.

"Wal-Mart is probably the biggest player of all, and Publix is probably right behind them. Anybody who wants to get a product in a Florida grocery chain wants an appointment at Publix," the executive said.

In terms of shelf space, the mass merchandisers and drug chains devoted more linear feet to the category, with Albertsons close behind. A Wal-Mart Supercenter visited by SN gave 40 feet to the category, the same as a Big Kmart. Meanwhile, a Super Target allotted 48 feet to oral care. All three presented the oral care products on both sides of aisles. SN noted that Kmart's prices were competitive with the other mass merchants, and no obvious out-of-stocks were seen.

Of the drug stores visited by SN, an Eckerd gave 40 feet to oral care, while a Walgreens devoted 36 feet. Although the product mixes of membership club stores were not directly comparable to other classes of trade because of the large sizes and multipacks, a Costco gave 40 feet to oral care pallets and a Sam's Club allotted 30 feet.

The largest supermarket oral care section was in an Albertsons store with 36 feet on one side of a long aisle. The other supermarket sections were similar in size: Publix at 26 feet; Winn-Dixie at 24 feet; and Kash n' Karry at 24 feet.

"People are either expanding space for the category or putting a lot more items in the same amount of space," said Jim Wisner, president, Wisner Retail Marketing, Libertyville, Ill. "It has gone from what used to be a fairly simple category to one that has a lot of new products, different types of products and different variations on existing products."

The variety of products and the need to drive sales from the low-margin staple toothpaste to the higher-profit secondary items, such as whitening products, floss, denture items and the new mechanical toothbrushes, has forced many retailers to get creative with the shelf design and product placement in this category.

For example, at the Publix store, the toothpaste was on the middle shelves, framing toothbrushes in a horizontal display, and with adjacencies to other products. Meanwhile, mouthwash was on the bottom shelf, and mechanical toothbrushes and whitening kits on the top shelf.

"Since toothpaste is the staple of that category, with mouthwash second, they are trying to creatively wrap toothpaste around the other products," said Don Bacon, senior analyst, Gladson Interactive Services, Lisle, Ill.

Almost every store visited by SN in Orlando used an endcap to promote oral care products, and Publix, Winn-Dixie and Kash n' Karry all were featuring private-label mouthwash items. In the case of Kash n' Karry, the top shelf of such an endcap near the store's pharmacy featured an attractive array of products from the category, including toothpastes, toothbrushes, floss, a mechanical toothbrush and whitening products. Whitening products are a fast-growing segment in the oral care category, and all the stores visited by SN had a wide variety of items addressing this need. Nearly all carried at least one stockkeeping unit of Rembrandt toothpaste, a few whitening system kits, and the recently introduced Colgate Simple White product. The Super Target featured this item on an endcap, promoting it for $13.99.

As part of the market study, SN visited three dollar stores -- Dollar General, Family Dollar and Dollar Tree -- and one with a similar merchandising and pricing strategy, Big Lots. All four had eight-foot sections for oral care, and most were toward the front of the stores.

Product assortments included toothpastes, toothbrushes and mouthwashes, combining a handful of national brands with private-label merchandise. In most cases, prices were lower than other stores; for instance, a 33-oz. private-label mouthwash was usually $1 at these outlets, while the lowest price seen elsewhere was $1.44 at the Wal-Mart Supercenter. But not all prices were this low. For example, Dollar General sold a Colgate Navigator toothbrush for $3, higher than six of nine other stores visited by SN.