Spin Cycle

JEFF WELLS

With the recession in full force, consumers are trading down and turning the laundry detergent category on its head.

Doing laundry will never be much fun, but detergent manufacturers have tried over the past several years to make the experience as painless as possible. They've infused formulas with pleasing scents, added extra stain-fighting power, and concentrated everything so that it can be contained in a smaller package. They've developed eco-friendly lines that replace synthetic chemicals with plant extracts, and have even introduced premium detergents aimed at maintaining high-quality fabrics.

The category has proliferated in all sorts of value-added and premium directions. But now the recession is here, and many consumers are returning to square one.

“This used to be mainly a Tide store, but now people are trading down,” said Charlie Coward, grocery manager at Pennington Quality Market, a one-store independent in Pennington, N.J. “They're buying private label and whatever is on sale. They're buying obscure brands that normally we wouldn't even carry.”

Research reports bear this out. Mintel, Chicago, recently revised its laundry detergent forecast from 2008, which predicted that premium brands with added benefits would drive growth in the industry. The new forecast, issued in April, stated that shoppers will consider a detergent's price per ounce without taking into account whether the formula is concentrated. The firm downgraded its growth prediction for the detergent industry from 2.2% to -0.2%.

“With the recession in full swing, a portion of home laundry users are likely trading back down to value brands, mitigating sales growth,” the report stated.

This frugal mindset presents a rare opportunity for private label in a category that normally enjoys a high level of brand loyalty. Data from Information Resources Inc., Chicago, for the 52-week period ending April 19 shows a 17.7% increase in unit sales for store-brand liquid laundry detergent.

“There is no question that our private-label brands have benefited from the slow economy,” said Steve Carlson, grocery business manager for Richmond, Va.-based Ukrop's Super Markets, which carries the Full Circle private-label line of detergent, which Carlson believes “has national brand appeal.”

It's also a chance for value brands like Purex, Biz and Xtra to gain market share. One star performer, Sun, which is manufactured by Huish Detergents, Salt Lake City, saw sales of its liquid detergent increase 132%.

Many mainstream brands, meanwhile, particularly those featuring added benefits, experienced double-digit dropoffs. Tide Simple Pleasures liquid detergent, which features soothing natural scents like “Vanilla & Lavender” and “Water Lily & Jasmine,” saw a 46% dollar sales decrease. Dollar sales of Wisk detergent dropped 24%

Results for the powder detergent segment are similar. Dollar sales of value-priced Purex powder detergent, for example, shot up 38%, according to IRI data, while the more expensive Cheer brand dropped 16%.

At Pennington Quality Market, sales of White Rose private-label detergent are way up, according to Coward. He said that customers are seeking the most bang for their buck, eschewing concentrated formulas in favor of larger bottles that they believe will last longer, even though the cleaning power is comparable. They're also clipping coupons and following ad circulars more closely.

“They'll ask me two and three weeks out, ‘When is this going on sale, when is that going on sale?’ Usually we have the information and we're happy to share it, especially if they're a good customer and are in here consistently,” he explained.

Many consumers are also switching to value channels in order to save money on detergents, according to Susan Viamari, editor of IRI's Times & Trends report. Doing this saves them money on both the low- and high-end brands.

“The value channels are doing exceptionally well,” she said. “We're seeing that there are a lot of premium products like Tide Total Care being purchased in the value channels. So they're getting the premium products, but they're going to the cheapest place to get them.”

At Meijer, the message to customers during the recession is posted prominently on its website: “Buy in Bulk. Save by the Caseload!” The Grand Rapids, Mich.-based retailer offers an array of detergents in bulk quantities, including a two-pack of 150-ounce Tide 2X Ultra detergent with Downy for $42.92, and a six-pack of 50-ounce Purex Ultra Concentrate detergent for $26.94.

To keep customers in their stores, traditional retailers like Dahl's Foods of Des Moines, Iowa, have centered their advertising and marketing efforts on value-priced brands.

“We've been doing more promotions with the Xtras and Purexes out there because of the cost factor,” said Ross Nixon, president of the 12-store chain. “We're trying to appeal to the customer who wants to save a little money, all the way down to those who are unemployed.”

Nixon said that, while his stores have seen some shift toward low-price detergents, the change hasn't been dramatic. Many of his customers are loyal to the Tide brand, and are reluctant to trade down.

It's off of loyalty like this that mainstream companies have tried to build a following for new premium and value-added lines. Procter & Gamble, which controls close to 60% of the household laundry segment — more than five times the share of its nearest competitor — has been a leader in this movement, leveraging its considerable R&D clout to come up with variations on its portfolio of brands. Tide, for example, now comes in more than 15 different formulations that feature everything from pleasing scents to enhanced performance. There's even a line called Loads of Hope that donates a portion of its proceeds to victims of natural disasters.

Viamari said that detergents which make doing laundry easier or more pleasurable hold considerable promise, despite the economy. Although they're pricier than many value brands, they hold their own value propositions, like making clothes last longer.

“It's sort of like bringing professional laundry cleaning power into the home,” said Viamari. “Consumers want to take things into their own hands, but not give up on the end quality.”

Another selling point is convenience. Purex, a company that made its name as a low-price brand, recently released 3-in-1 laundry sheets that contain detergent, fabric softener and anti-static ingredients. Users place one sheet in with their wash load, then transfer it over to the dryer along with everything else.

This is a new concept for the category, and a potentially tough sell since Purex Complete 3-in-1 sells for twice as much as its value offerings. But Brad Casper, chief executive officer of parent company Dial, said the new product represents a different kind of savings for the consumer.

“If you were to buy all the bottles that cover what these new sheets accomplish, you'd pay twice as much,” he said. “So we still represent great value.”

Others aren't quite convinced.

“That's a hard sell to have something that has detergent and that also goes in your dryer,” said Coward of Pennington Quality Market, who recently began stocking the 3-in-1 line. “I'm waiting to see how that does.”

One proposition that isn't hard to sell is preserving the environment. Retailers said that brands like Seventh Generation, which saw sales increase 100% vs. last year, according to IRI, as well as Ecos and other offerings, have a following that belies their higher price in a down economy. Because laundry detergents rely heavily on chemicals, enzymes and other compounds, “green” detergents and other alternative cleaners are often a first stop for health and wellness consumers. Recent data from Nutrition Business Journal shows that natural and eco-friendly household cleaners grew by 35% in 2008 to become a $737 million industry.

Indeed, eco-awareness is growing, and retailers are taking action.

Earlier this year, Wal-Mart Stores announced it would reduce phosphates in dish and laundry detergents in its Americas region by 70% by 2011. Comprising 2,300 stores in Canada, Puerto Rico, Mexico, Central America, Brazil and Argentina, Wal-Mart Americas is the retailer's second-largest business unit behind its U.S. operation.

Phosphates that drain off after washing can choke off waterways, killing plants and fish and promoting the growth of harmful algae blooms.

For Wal-Mart, this move comes on the heels of its decision to ban phosphates from detergent in the U.S. and to sell only concentrated laundry detergent — a decision that ushered in a slew of new concentrated introductions.

“Our reach around the world puts us in a unique position to drive sustainable change across national boundaries and into the global supply chain,” said Craig Herker, president and CEO for Wal-Mart's Americas division, in a statement.