CHANGE FOR THE BETTER

BARBARA MURRAY

Diapers play a large role in the grocery channel's baby aisle destinations, with many retailers now offering their own store brand and special deals through baby clubs.

Jeff Lowrance, a spokesman for Food Lion, said "Food Lion diapers do well for us. The quality of our diaper is comparable to the national brands, making it a value to our customer. Our retails run from 23% to 30% below the national brands."

Retailers must promote the category often to remain competitive in the market, Lowrance continued, since "mass merchants have had a foothold in the category for some time."

Sales by outlet in the disposable diaper/training pants category show that, indeed, the mass channel has experienced higher dollar sales recently -- $2 billion, as opposed to the food channel's $1.7 billion -- and the mass results, for the year ended Aug. 12, 2001, grew by 3.5%, according to Information Resources, Inc., Chicago.

In the grocery channel, dollar sales fell by 4.3%. Unit sales were down even more for grocery, 13%, while dropping in mass, also, by 5.8% from the previous year.

The drug channel has the remainder: sales of $362.7 million for the period, a gain of 5.4%, although units in this channel dropped minimally, 0.4%.

Private-label disposable diapers and training pants ranked third out of the Top 10 vendors, behind Kimberly Clark and Procter & Gamble, showing a gain in dollar sales of 23%, for a total of $842 million. Unit sales went up 7.3%.

The remaining vendors, ranked in order, include Drypers Corp., ASSC Hygienic Products, Gerber Products, Jettar, Univ Converter, Absorbmex S.A. De C.V. and Paragon Trade Brands.

Among brands, private-label diapers ranked second in IRI's list of the Top 10. That completed list includes Huggies Ultratrim, private label, Pampers Baby Dry, Huggies Pull Ups, Luvs Ultra Leakguards, Pampers Premium, Huggies Supreme, Huggies Pull Ups Goodnites, Luvs Ultra Leakguards Stretch and Drypers.

Jim Gordon, diaper and paper goods buyer for Minyard Food Stores, Coppell, Texas, said the private-label Hy-Top brand "does pretty well, and it's manufactured by the Drypers Co. It's a good quality diaper at a substantially cheaper price. People that are interested more in price than in brand loyalty -- that's the customer we have for those, I think." A 28-count Hy-Top package of diapers retails for $5.39, compared with a national brand at a few dollars more.

Gordon feels the mass merchants are not hurting Minyard as much on diapers as on paper goods, although he said the mass channel does run ads on megapacks of diapers, which is considered to be a package of 58 or more.

However, a spokeswoman for A&P, Montvale, N.J., said that chain considers mass merchants, such as club stores, to be very viable competition, even having expanded A&P's retail price checks to include club stores.

"Our diaper pricing remains competitive with those retailers," said Susan Hamilton, director of customer marketing for A&P's Atlantic Region, Paterson, N.J.

"A&P's private-label brand, America's Choice Diapers, is a small portion of the diaper business in our stores; however, our private-label diaper sales have increased 48% since the launch of our Baby Club program," Hamilton added.

A&P and its divisions promote the diaper selection as having "Everyday Low Prices," Hamilton said. "We've gained market share in all of our operating areas since the launch of our Baby Club program," she added.

At Waldbaum's, A&P and Food Emporium, Baby Club was launched in March 2000; at Super Fresh and Super Foodmart, it was launched in October 2000.

The A&P Baby Club program gives Bonus Savings Club and Valued Shopper Club cardholders $20 back in cash each and every time they accumulate $200 in Baby Club products. Procter & Gamble has worked with the chain extensively on consumer research in the diaper category, Hamilton said.

Publix Baby Club, which is well established, sends coupons for free products, including its store brand diapers, to members. Women can join when they are pregnant, and their children remain members up until they turn 2.

Sales in diapers are fairly flat for the category as a whole (up a mere 0.2%, IRI says), and down by almost 9% in units.

"To me, it hasn't varied that much," Gordon told SN, disagreeing with the IRI statistics, at least for the 94-store Minyard's region.

Most of the sales can be linked to advertising in the store circular. And it's a consistent category, Gordon said. In other words, "if you sold 100 cases last time on ad, you'll sell 80 to 150, unlike paper goods," which can fluctuate more widely, he said.

Minyard's, and its other divisions, the warehouse style Sack 'N' Save and the Hispanic format Carnival stores, have no baby club, so the only extra incentive to purchase diapers is with a coupon or on ad. Gordon said Minyard's sells what he calls "blockbuster ads" to the major companies, 8- or 12-inch ads several times a year to push their sales. Manufacturers such as Kimberly Clark buy quarter- or half-page ads on paper products and diapers, he said.

One of the few new developments in the diaper aisle is the pack change, or downsizing of the package from a 24- to 20-count for the same price, which occurred late last year. In general, the diaper business is steady, not volatile, Gordon said.

All the big manufacturers try to sell the megapack. Some megapacks do well, retailers say, depending upon the demographics of the store. The medium-to-high end buy the bigger packs, and Hispanic customers like them as well, according to Gordon.

The other constant in the diaper section is the profusion of stockkeeping units. Huggies' megapack, for example, contains 58 diapers in size 5 (sizes are larger as numbers are higher); Ultratrim megas have 64 diapers. Packs of this size cost about $16.99, contributing greatly to the expense of raising a family.

There are scented diapers, unscented diapers, diapers for boys, diapers for girls and unisex diapers.

Pampers, by Procter & Gamble, had Rash Guard treated with ointment to prevent diaper rash, but "P&G has done away with it," said Gordon. Drypers has a 72-count unisex diaper, and a 64-count unisex. Kimberly Clark alone has 37 SKUs, and P&G has at least that many.

Minyard and its divisions carry a diaper from Mexico that is made by the Ultra Co., called Chicolor diapers, made in Tijuana, Gordon said. Minyard stores have been carrying them about six months now, he said, with good results, particularly among Hispanic shoppers who recognize the brand from back home.

"We carry five stockkeeping units and sell 42 to 47 cases a week," Gordon said. "They've been really promoting them." He said Minyard's looked at several different companies before deciding to add this one.

Most major diaper manufacturers use bilingual packaging. One thing that emerged from a Spanish-language demo program that Minyard conducted was the Hispanic customer's desire for a "Medium Jumbo" diaper, which the chain then started carrying, Gordon said.