A growing price gap between private-label and national-brand diapers was largely responsible for the latest pricing shuffle in the category, according to retailers contacted by SN.
Soon after Procter & Gamble declared that beginning Feb. 13 it would lower its case costs on Luvs by 11% and Pampers by 2%, retailers said Kimberly-Clark and private-label manufacturers followed suit.
"It was anticipated that everybody would follow P&G, and they did. Everybody will be out there with a consistent count on the packages," said Ned Meara, corporate merchandising manager for Grand Union Co., Wayne, N.J., noting that manufacturers reduced their package counts as well. "The gap got too big between national brands and private label," said Rod Boni, grocery merchandiser for Pay Less Supermarkets, Anderson, Ind. "Obviously, private label got [national brands'] attention, because they lowered their prices.
"We're seeing a movement to the everyday lows; the national brand companies are lowering their everyday costs and also decreasing the amount of deal money that they're offering," he said. "They're putting more into their everyday low costs of goods to close that gap between private label and national brands.
"Everything has a price-value relationship; if you're only going to pay a dollar more for a national-brand box of diapers, you'd pay it. But, when it gets up to two and three dollars more, you try private label."
Boni noted, "Private label got to the point where it's quality was fairly acceptable -- maybe not quite the quality of Pampers or Huggies; but when you get that much price difference, the quality becomes a little more acceptable."
The question now is: will people go back to buying the premium brands?
"I'm sure the brands are going to try to create the awareness that there has been a price decrease to get people to come back," said Boni.
Mark Azzolina, the grocery buyer for Middletown, N.J.-based Food Circus Supermarkets, is one retailer who conceded the new premium price structure could affect the sales of private-label diapers.
But it appears some retailers aren't about to let their hard-earned share slip away.
"We anticipate lowering our private-label prices as well," said Ed Buddy, a buyer with the New Orleans division of A&P.
Of course, said Danny Peters, paper goods buyer with Affiliated Foods, Amarillo, Texas, there is another option -- to make money on the premium brands.
"It won't affect private label if they go ahead and make a little profit on [premium diapers] for once. But if, in retail, they still sell them for cost, then it will probably greatly affect private label," he said.
Then again, the profit picture may not change too drastically, because, while the price is lower, consumers will be getting fewer diapers per package. According to Scott Stewart, public affairs manager for Procter & Gamble, the company will reduce diaper package counts by about 10%.
"So, there will be less expensive diapers, but it's fewer diapers," said Grand Union's Meara, adding that it was necessary for everyone to follow suit because it serves to confuse consumers if there's not consistent and like packaging across the category.