New norm for oral care shoppers is to trade up, down and out of the middle tier, supermarket retailers observe
The middle ground reportedly is eroding in the oral care category.
Retailers report sales movement is either toward higher-priced niche items or down the price scale to store brands. They recognize consumers seek good deals on certain products, but also want a broad selection of items that are both health-oriented or replicate a visit to the dentist. Meanwhile, niche products continue to be cut into the planogram to lure shoppers who are interested in maintaining their health.
Al Jones, senior vice president of procurement and marketing, Imperial Distributors, Auburn, Mass., points to a market shift he has noticed of late.
“In the past, everyone has tried to trade the market up and the base [low-priced] brands lost space. But let me tell you, those items are now selling,” he said. “Now you have to look at the mid-priced products and cut them back to make room.”
Toothpaste, he said, is moving in two directions — either to higher-priced “super premium” products such as Colgate Advance and Crest Pro-Health or to low-price goods.
For the 52 weeks ending Jan. 25, 2009, Chicago-based Information Resources Inc. reported a 2% decline in dollar volume sales of toothpastes at supermarkets. Category units were down 4.4% during the same period. Of the 20 toothpaste brands that IRI tracked, only six brands increased sales, and five increased unit volume. Top-performing brand Colgate Total Advanced Clean, introduced last year and carrying an average price per unit of $3, was up 19% in dollar volume. The biggest dollar volume toothpaste decliner for the year was Crest Whitening Expressions, with an average price per unit of $2.86.
Brands at lower retails, $1.29-$1.89, also posted sale losses for the year, according to IRI.
Consumers may be investing in higher-priced products because of health reasons, according to Sven Risom, managing director of Cannondale Associates, Evanston, Ill. “Shopper segments in today's economy are more willing to invest in oral care for preventative and/or health reasons, both of which may eliminate or postpone costly dentist visits. Price may not be an issue for those people who have health-related dental conditions.”
POWER BRUSHES DROP
Meanwhile, the economy appears to be taking a toll on the power brush segment that carries double-digit retails. Jones reports a clear move away from expensive gadgetry in favor of manual brushing.
“People were once willing to spend the money for power toothbrushes, but that seems to have stopped quickly and dramatically,” he said.
IRI reports both power and manual brush sales down for the year. Dollar sales dropped 7% for power brushes and 8% for manual brushes sold at supermarkets.
Retailers are closely monitoring shifts in oral care sales.
Maria Brous, spokeswoman for Publix Super Markets, Lakeland, Fla., said Publix concentrates on the lowest-performing items in each segment and “weeds them out” to make room for new items.
Phoenix-based Bashas' plans is to optimize oral care space with SKU rationalization to meet consumer needs, according to Sue Vodika, health and beauty care manager.
“A retailer does not need to carry every size a manufacturer may want in our sets,” she added. “You need to look at what you are to your consumer base and make your selection upon that cluster of customers.”
For shoppers who are economically challenged, a good private-label assortment is essential in the aisles of today's supermarket chains, noted Tom Vierhile, director of product launch analytics for Datamonitor, Naples, N.Y. He predicts that grocers will increase their private-label shelf allotment and make more room for the top two or three leading national brands.
Jones agreed: “With this economy, retailers have to pay attention to private label. The numbers I just looked at, which were from the end of January, show that private-label mouthwash was up 7.3%. That's a big number.”
Jim Wisner, president, Wisner Marketing, Libertyville, Ill., said if he were advising a grocer on shelf assortment for the oral care category in 2009, the expansion of private label would be a prominent part of the plan. Within each category segment, he would recommend that retailers look to create what he calls “destination opportunities” for customers.
“I would look at some extended, break-the-market values, perhaps on a leading mouthwash, or, in this economy, utilize my private label to do that.”
Supermarkets rely on promotions to stoke interest in oral care and draw budget-minded shoppers.
“Oral care products respond well to hot retail ads,” noted Brous of Publix. “We have had numerous value/bonus packs available on display for consumers.”
Vodika said that Bashas', along with competing retailers, uses oral care as a draw in its ad vehicles because of high consumer usage. To help promote new items, Bashas' will host health and beauty care demos “a few times a year,” and will continue to do so in 2009.
Alan Smith, category manager, health and wellness, Bi-Lo, Mauldin, S.C., said Colgate and Crest are driving sampling activity. “Colgate continues to promote its ‘Healthy Mouth. Healthy Body’ campaign, and Crest has seen great success with regimen selling,” he said.
When it comes to new items that represent an improved technology or purpose, Smith said a strong temporary price reduction is necessary to encourage trial.
David Biernbaum, a business development consultant to the consumer packaged goods industry who is based in St. Louis, recommends the use of “information marketing,” whereby retail chains and suppliers provide point-of-purchase information in the form of brochures, companion websites and counter displays with take-ones.
“Another form of promotion I recommend is trial offers to bring new consumers into the market,” he said. “I do not recommend the usual TPRs or feature ads where price is the only motivator — not for specialty, solution-based or niche oral care. Keep your promotions efficacious and make profits.”
Biernbaum said that the smaller, entrepreneurial niche brands are responsible for reinventing the category, and that the industry would “probably be in the Stone Age” if not for them.
Many retailers expect growth from “natural” oral care products.
For example, Publix, like most supermarket chains, carries an assortment of Tom's of Maine products alongside standard oral care brands.
“Sales on these items continue to grow every week as consumers understand more about this natural segment,” said Brous.
But the demand for natural depends on the market. “Our customer base has been slow adopters on the natural side of oral care,” said Smith. Bi-Lo carries a few best-selling Tom's of Maine items.
IRI reported sales of Tom's of Maine dropped 8% in dollars and 10% in units for the year-end period.
Vodika said Bashas' is integrating a few natural items such as Tom's of Maine, and believes there is a place for them beside standard brands.
New products will continue to be the future of the oral care category, observers say, even though new launches have slowed in the last few years. In 2008, there were 238 new oral care SKUs, down slightly from 242 in 2007, according to Datamonitor.
Retailers look forward to more innovations.
Bashas' Vodika expects a new convenience item from Colgate for travelers, as well as whitening products that will not harm the enamel. Brous of Publix cited the launch this month of Crest Whitestripes Advanced Seal, with a suggested $45 retail price. Jones of Imperial expects that the move toward benefits-based products will continue.
“Those are the ones that are able to break into the shelf space because there is either a need or a perceived need, and whitening products are included in that,” he said. “Whitening is the current major buzzword, just as tartar fighting was years ago.”
Timothy Dowd, senior analyst, Packaged Facts, Rockville, Md., predicts that products claiming to replicate a visit to the dentist, such as Crest Weekly Clean, will proliferate, alongside dedicated whitening kits.
The analyst is particularly optimistic about natural and organic oral care, even though the segment's growth has slowed. “I think that natural and organic will shine in the future,” he said. “They will be the bright spot in oral care.”