A POWERFUL FORMULA

RICHARD TURCSIK

Liquids are gaining in importance in the laundry detergent category.

Powder detergents are still the most widely used products. However, liquids dominate in the Northeast, and are slowly gaining momentum in markets where powders are still king, according to retailers.

"In our stores, the powders continue to be the strongest, with about 62% of the market, although liquids are showing the greatest percentage of increase," said Tom Fassbender, category manager at Kroger Co.'s Columbus, Ohio, division, headquartered in Westerville, Ohio.

"There has been a slight gain by the liquids. But, as of yet, we're still the land of the powders in these parts," said Peggy Ingersoll, a Lincoln, Neb.-based grocery buyer for Nash Finch Co., Minneapolis.

"In the Northeast we're extremely strong in liquids and not strong at all in powders," said Ned Meara, corporate grocery merchandising manager at Grand Union Co., Wayne, N.J.

"But in the Midwest, where our sister company Big Bear operates, it is a strong powder market and a weak liquid market. In the Northeast, we just have the type of customer that for some reason prefers liquids," Meara said.

According to Emily G. Holdstein, senior vice president at Wonder Market Cos., Worcester, Mass., "In our operating area of Massachusetts, the liquids outsell the powders; we are about 70% liquid and 30% powder."

Joseph Azzolina, president of Food Circus Supermarkets, Middletown, N.J., which operates 12 stores under the Foodtown banner, said the displaying of liquids by manufacturers has helped stimulate sales.

"I do see a lot of liquids being promoted, and they are almost always on display in our stores," he said.

Indeed, indications from national scanning data are that liquids look like the bright spot in a currently murky category.

Scanning data evaluated by Nielsen North America, Northbrook, Ill., showed that for the 52 weeks ended June 11, 1994, powdered detergents had total supermarket sales of $1.7 billion, a decline of 11.3%, and unit volume of 413.6 million boxes, a decline of 12.5% from the previous year.

Heavy-duty liquid detergents were a different story, however. They showed dollar volume in supermarkets of $1.2 billion for the period, an increase of 0.4%, while unit sales increased by a healthy 6% to 343.3 million bottles.

A report on detergent sales across all classes of trade prepared by Information Resources Inc., Chicago, also shows liquid detergents holding firm in an otherwise declining category.

For the 52 weeks ended Aug. 28, 1994, total laundry detergent sales in U.S. supermarkets, drug stores and mass merchandisers totaled $3.8 billion, a decline of 5.4% from the previous year. Powdered detergents, while still the market leader with sales of $2.2 billion, had a sales decrease of 8.7%. On the other hand, liquid detergents tallied up $1.6 billion in sales, a decrease of only 0.2% from the year before.

"I don't know how people are washing their clothes today," lamented Mark Polsky, senior vice president at Magruder Inc., Rockville, Md. "There has been a real shift away from all kinds of detergents."

Retailers said that for all detergents -- both powdered and liquid -- there are basically two tiers of customers: those who are brand-loyal and buy Tide, Wisk and Cheer, and the budget-minded shopper who will buy whatever brand is on sale or a private label.

"Sales of our private-label detergent brands are picking up as the national brands continue to get more expensive," said Todd Steen, grocery buyer for the 17-unit CWC Cos., based in Findlay, Ohio.

Here's what retailers had to say about sales of liquid and powdered detergents and the status of the category in general:

Ned Meara corporate grocery merchandising manager Grand Union Co. Wayne, N.J.

In the Northeast, we're extremely strong in liquids and not at all strong in powders. But in the Midwest, where our sister company Big Bear operates, it is a strong powder market and a weak liquid market. It has been that way for a long, long time, and it is continuing with the ultras. Ultra Liquid Tide is doing a superior job, as is Ultra Tide powder, but we're still a liquid market. I don't think one is cutting into the other at all. In the Northeast, we just definitely have the type of customer that for some reason prefers liquids.

Currently our best-selling detergent is Liquid Tide, followed by our private label and then Wisk.

Our private-label detergent segment has grown dramatically. We have an ultra item that competes with the Tide and we still have our standard liquid formulation, which continues to grow even with the ultras out there. Both segments are doing very, very well.

Procter & Gamble is doing a remarkable job with their advertising and marketing programs and the money they have put behind making this ultra business happen and a success.

There is no question that there is brand loyalty when it comes to detergents. There is probably more brand loyalty to Tide in that particular category than any other of the SKUs, including the other Procter & Gamble items.

Wisk used to be the leader in liquid detergents, but with Liquid Ultra Tide, P&G has more or less cleaned their clock. When Lever came out with their entry into the ultra program, which was Wisk Double Power, it was a disaster. They are going back into the standard formula and are really going to work that.

There is definite brand loyalty and it is probably to Tide, and there is still a very loyal Wisk customer out there, and that is being proven because they are buying the standard formula product.

Manufacturers have been trying to build sales by expanding into other formulations, like "with bleach," but I don't know if those are new trends or old. Oxydol always had bleach. I think it is just playing up different features of the product or seeing what they can do to spike up sales.

Detergent margins are neither strong nor weak. They are traditional for the category and have not changed that much. It is a tough, tough area and it is an item that is highly promoted and used as a draw for customers. After all, everybody washes clothes.

Laundry detergent is a very strong segment and a category builder, because you pick up a lot of incremental sales off of your features of laundry detergent. If they buy laundry detergent, maybe they will buy fabric softener to go along with it, and maybe some sheets, bar soap, and some other things while they are shopping that department.

Tom Fassbender category manager Kroger Co. Columbus, Ohio, division Westerville, Ohio

In our stores the powders continue to be the strongest, with about 62% of the market, although liquids are showing the greatest percentage of increase.

From a brand-loyalty standpoint, the laundry detergent category is unique because of Tide. There are the Tide users and then there is everybody else. There is still a lot of brand loyalty to Tide, but brand loyalty is not so strong with the lower-tier product.

We find our unit sales on detergent actually increased when the industry shifted to the ultras, but when Procter & Gamble took their great price decreases in the last year and dropped their lists, we're not showing the retail dollar gain that we would have, had pricing remained the same.

In the detergent category there have been a number of line extensions. Everybody has come out with a "With Bleach" and a "Free" that doesn't have perfume or colors.

We find that private label has not made the inroads in the laundry detergent category as much as it has in other categories, such as cereal, coffee, vegetables, etc. It lags behind, as do, I think, most of the household items in private label.

Emily G. Holdstein senior VP Wonder Market Cos. Worcester, Mass.

In our operating area, the liquids outsell the powders. We are about 70% liquid and 30% powder. The division of market share has been holding steady and we haven't noticed any shift.

Our best-selling brand is Tide, followed by Wisk, Purex and Dynamo.

We find we have two types of consumers buying laundry detergent. Most of them are brand-loyal and the rest of them are budget-conscious. We find that for the most part the Tide and Wisk customers are brand-loyal. The rest buy whatever we have at a low price point.

Couponing is effective in increasing sales, and we double coupons in our stores.

The margins on the detergent category are average, while the ultras are slightly higher than average.

When the manufacturers switched to the ultras, they didn't really give up space, they just added more SKUs. There are more products, but it is not using more space. The manufacturers have been able to maintain the same amount of shelf space by adding different sizes and different formulations.

We have a private-label detergent, but it seems to sell only when it is advertised and is the lowest price point detergent.

Peggy Ingersoll grocery buyer Nash Finch Co. Lincoln, Neb.

There has been a slight gain by the liquids, but as of yet it has not been significant, and we're still the land of the powders in these parts.

I think people that use powders will always use powders, and the people that use liquids will always use liquids.

We do have private-label detergents, and we're in the process of switching them from double power to ultras. We went from standard density to double power, and now we're going to go to ultra-type sizing like Procter & Gamble.

Some of the Lever Bros. detergents are retreating back to the standard density. They are doing very well. Thank heavens for Lever.

Todd Steen grocery buyer CWC Cos. Findlay, Ohio

In our market the powder is outselling the liquid by a wide margin, but the liquids are gradually gaining on the powders.

In the laundry detergents, people tend to stick with tradition. They've always used powders and it is hard for them to change.

We find that margins are down because of heavy competition from other retailing channels, especially Wal-Mart. Wal-Mart has had an impact on sales. Our detergent sales have dropped since the Wal-Marts of the world have moved in. They lowball the Procter & Gamble items. We are trying to combat that by promoting other detergent brands.

For example, sales of our private label are picking up as the national brands continue to get more expensive.

We find that there are still a few detergents out there that are not ultra concentrated, and they are still outselling the ultra concentrates.

Mark Polsky senior VP Magruder Inc. Rockville, Md.

We are still basically a powder market, and that has been holding steady, but there has been a little bit of a shift towards the liquid.

And there has been a real shift away from all kinds of detergents. I don't know how people are washing their clothes today. Since all of the ultras came on the scene, detergent sales are down a little bit in general.

We find that detergent brand loyalty has declined, and we're selling a lot more of what is on sale. There are still the brand-loyal Tide and All users, but that's about it. With the other folks it is just whatever is on sale.

We carry Home Best from Supervalu as our private label. It is doing fair. We just keep it around to have a low-end item. I don't think people trust a private-label detergent. When you open up a can of beans and it is a private label, you can look at it and see if it is like Green Giant. When you open up a box of detergent, what do you really know? It's a powder in there.

Michael W. Shultz senior VP Hughes Family Markets Irwindale, Calif.

In our market we find the ultra concentrated powders to be the best sellers, and we have really noticed little to no shift in sales between the two segments of the category within the last year or so.

Our best-selling brands are, in order, Tide, Surf and Cheer.

Advertising of laundry detergents is done through our newspaper ads, as well as radio and TV advertising. In the store we merchandise the detergents off the shelf and through end aisle displays.

As of late we have noticed that consumers seem to be more loyal to price than brand when it comes to detergent. We also find that price is the key element to moving items in the category.

We find that the margins are traditionally low in the laundry detergent category, and category margins have been flat to up slightly in the last year or so.