While the mass channel continues to take its toll on detergent sales in supermarkets, retailers in the Center Store remain game in the face of opposition. Grocery merchandisers are focusing on competitive pricing in an effort to keep customers shopping the laundry aisle.
According to Kevin Copper, vice president of merchandising for Sterk's Super Foods, Hammond, Ind., the crunch from mass is most evident on normal turn items.
"The category has become increasingly driven by promotion, and we try to have something on ad at least two out of three weeks," he said.
Statistics from ACNielsen, Shaumburg, Ill., show that sales of dry detergent and liquid detergent for the 52-week period ended May 19, 2001, were at $1.2 billion and $2.2 billion, respectively, across all channels combined: food, drug and mass. These numbers reflect a 2.2 % decrease in dry sales and a 10.4% increase in liquid sales.
The food channel exhibited a 6.4% decrease in sales for the dry category and a 7.3% increase in liquids. The numbers speak to the mass channel's ascendency in the detergent segment as mass posted a 3.5% increase in the dry category and a 16.1% increase in liquids.
The sizable dent in supermarket detergent sales is also being felt in the sales of related laundry items. For the total laundry supplies category -- including bleach, fabric softener, stain remover and other laundry accessories -- mass shows an 8.2% increase in dollar sales while the food channel suffered a 0.1% decrease for the aforementioned period.
Despite the challenge from mass, some retailers SN spoke with have managed to effectively stanch the flow. Ross Nixon, vice president of merchandising at Dahl's Foods, Des Moines, Iowa, told SN his stores have done a decent job in the detergent category with direct buying initiatives, eliminating costs in an effort to stay competitive. While the labor involved in truckload deliveries can be cumbersome, Ross maintains the eventual payoff is worth it.
"You either give up the category or procure product at a cheaper price," he said.
Nixon does not give all stockkeeping units in the segment such preferred treatment, and said the chain primarily focuses on Tide, which accounts for well over half of the detergent market share in Nixon's area. While laundry detergents are often found on special at Dahl's, Tide is carried as a loss leader with a fixed, everyday low price.
At Tidyman's, Greenacres, Wash., the category is showing signs of recovery, according to Mike Racine, sales and marketing vice president for the chain. Racine attributes the renewed vigor to more aggressive promotional tactics on the part of vendors who are not necessarily the top sellers for the category. However, the entire segment has looked relatively strong for the past six months to a year, he added.
"Tide is faring better in our area than it had been in the past," he said.
The general consensus favors Tide and Cheer as the brand name items that consumers trust, and, more importantly, are willing to pay for. Retailers witness a comparatively high degree of brand loyalty in the premium detergent segment, although the category remains highly price-sensitive when it comes to the value brands. While most chains join the fray with value brands of their own, the competition at that level makes it difficult to move private-label product.
Racine believes marketing to be the simple crux. He noted the effective promotional strategies and the perceived value of many products in the Procter & Gamble stable of products.
"Customers believe Tide is a better product," he said. "Private label on laundry detergent is a tough sell. You've got so many secondary brands out there that make the value of the private label less attractive."
Mike Madigan, pricing manager for Camellia Food Stores, Norfolk, Va., said he also has a hard time moving his stores' Rich Foods detergent offering, a label that generally performs very well in grocery.
"Our private-label detergent is slow at best," he said. "In this category, the national vendors offer such deep discounts. There's always something that makes private label not such a bargain. And Rich Foods doesn't promote their detergents very often."
Dahl's Nixon said his stores' private label will sell reasonably well with a steep enough discount. However $1 or $1.50 is generally not a sufficient incentive.
"There is extreme brand loyalty to a point," he said. "It depends on the gap in retail price. As you increase that gap you diminish brand loyalty."
Evident in the numbers from ACNielsen, the trend in detergents leans heavily toward liquids, although demographics play a significant role. At Camellia Foods, Madigan caters to two completely different markets. The Northern market -- extending into Delaware -- is 80% liquid. Yet south into Virginia, the numbers are reversed, with approximately 70% of consumers preferring powder.
At Tidyman's, powder has been the historical detergent of choice; however, liquid has been gaining ground, said Racine.
"There is an overall trend from powder to liquid," said Nixon. "In metropolitan areas, that trend is moving faster."
While the liquid introduction appears to have taken well, some retailers expressed frustration with the method and frequency of conversions in the detergent segment. Camellia's Madigan believes the category's soft sales in his stores are due in part to the inherent difficulties of conversions at retail.
"The manufacturers are actually losing sales because of this," he said. "If they take the whole line and completely convert that line, it takes the average retailer three months to be fully back in business. They are changing their methods more so than most other categories."
Madigan is not alone in his assessment of the situation.
"The method and the activity in the past couple of years has been ridiculous," said Racine. "There is a problem any time you have to reset a department, particularly if the price point changes."
Copper feels the detergent segment to be fairly standardized at this point, and does not anticipate much in the way of future activity for the category.
Laundry tablets are available as a possible alternative to detergents, yet they are by no means a dominant force at this point. Reasonable price points may help the product move over time.
"It's considered a convenience item," said Madigan. "It's more expensive than the regular detergents, but not much. Certainly not to the extent you might expect for a convenience item. Maybe the difference is 10 or 20 cents on a box. For 100 ounces, that's not much."
Laundry detergents overall can be a tough sell when it comes to merchandising, although the retailers SN spoke with said they try to make the most of solution-selling opportunities with Febreze, Static Guard and other laundry accessories. At Dahl's, merchandising decisions are made at the store level, and most managers will try to coordinate the detergents with a more profitable extra if possible.
"We can tie in detergents with Febreze or wrinkle-removing sprays," said Nixon. "We try to get that additional impulse buy to get back to even, or maybe even for a small margin."
At Sterk's, Copper also makes use of stain removers, dryer sheets and the like, but display activity is not the primary mover.
"Your opportunities are limited," he said. "We try to use detergent as the draw to the laundry aisle, and hopefully they'll see something else they need."