ORAL EXAM

MICHAEL SLEZAK

Oral care is a highly competitive and price-driven category, according to a SN study on consumer shopping habits.

Conducted by America's Research Group, Charleston, S.C., the SN survey found price determines where consumers shop for health and beauty care products. Therefore, it is not surprising that the majority of those polled, 36.2%, said they are most likely to purchase oral care products at a discount store, where the public perceives prices to be the lowest. Supermarkets, however, came in a close second; 31.8% of consumers said they go to grocery retailers for oral care products. For 29.4% of those polled, drug stores were the preferred destination.

Yet, in actual dollar sales of oral care products, supermarkets hold a clear lead, an indication of how oral care has become an important core category for supermarkets.

According to Nielsen North America, Northbrook, Ill., supermarkets hold 47.1% of oral hygiene sales, $1.38 billion. But supermarket sales in the category were absolutely flat for the 52 weeks ending March 12, said Nielsen. Drug stores ranked second in dollar share of oral hygiene, with $784 million in category sales, or 26.7% of the category, down 4.3% from a year ago. Close behind drug were mass merchandisers. As is often the case, their sales growth was tremendous, up 13.7% to $769 million, or 26.2% of the category.

For supermarkets, oral care suffers from the same shrinking margins as other health and beauty care categories, the result of competition with discount stores like Wal-Mart and Kmart. But retailers know it is vital to merchandise the oral care department in order to maintain the food store's critical customer base for HBC products.

A little brushing up on new oral care products that shape the category and some flossing out of old paradigms might be the remedy for keeping oral care sales on the rise, supermarket buyers said.

But above all, supermarket executives said they must price competitively to keep drawing customers back to food stores for their toothpastes, toothbrushes, mouthwashes and dental floss.

"It doesn't surprise me [that discount stores are the leader in public perception]," said Doug Rauch, vice president of merchandising for Trader Joe's, a 66-store chain in South Pasadena, Calif. "People are value-oriented, particularly on items that might not be considered a regular part of their food-shopping experience. Supermarkets have to get back to the fundamentals of offering the best value.

"There has to be a reason for the customer to purchase oral care products at food stores, outside of simple convenience. And if they're not going to offer a unique product or the same product at a competitive price, then the customer is smart to buy it elsewhere," Rauch added. "Convenience is worth something, but it's not worth everything. And in hard economic times, people are willing to trade convenience for value."

A source at Kroger's Indianapolis unit said the best way for supermarkets to become the number one stop for oral care would be to "sacrifice all profitability."

Rauch agreed, adding supermarkets must eliminate old thinking if they want to dominate the category. "Supermarkets shouldn't look at oral care as a profit center if they want to have the lion's share of the business," he said. "There's still profit to be made, but Walgreens and Wal-Mart have done a good job of establishing an image of lower prices. The knock against supers is somewhat legitimate. They still try to make [categories like oral care] a profit center."

Rauch said supermarkets should strive for pricing consistency in oral care products. "The consumer has a lot on their mind. To expect them to remember the price on 250 items at seven locations is an unfair expectation. What is necessary is that supermarkets have a consistent policy of pricing, one the customer can count on. And if not, it is up to the supermarket to effectively do comparison pricing or something that calls to mind what the pricing [in the market] is," he added.

In some areas supermarket buyers said they can't match Wal-Mart prices on the top oral care stockkeeping units. A buyer from a Southern chain with sales close to $200 million said his stores are "not going to beat the discount stores on a top-selling competitive brand and that's because of price. No matter how low I go, they go lower. If I give it away, they'd give it away cheaper. There's no bottom when it comes to such a product, for some of these discounters and mass merchandisers, as it is with any of the top 200 HBC items."

But the buyer has not abandoned hope, because a barrage of specialty products, from baking soda to tooth-whitening pastes, have been steadily growing in the category, and are a niche supermarkets can grab from other classes of trade.

"With these specialty products, supermarkets can get on them, stock them faster, and that's where the profits are anyway," the buyer said. "They're a niche we can fill a little faster than mass outlets can. We can set

the tone on pricing of these products instead of them."

Just how likely are consumers to buy a certain type of toothpaste? The majority of consumers polled, 38.6%, said they are still most likely to buy a tartar-control formula. Regular cavity-fighting formulas followed; 31.2% of the consumers are most likely to purchase this type.

But specialized toothpaste formulas have a strong base of support, too, including: baking soda, 12.5%; baking soda and peroxide, 8%; tooth whitening, 5%; denture cleaner, 1.3%, and denture cream, 1.1%.

The source at Kroger reported tartar control also was the most popular toothpaste formula at Kroger's Indianapolis stores, with 29.5% of sales, followed by a cavity-fighting formula with 28.9%, and baking soda cavity-fighting, with 19.73%. Following those formulas were: baking soda tartar control, 9.2%; sensitive-teeth toothpastes, 5; and kids' toothpastes, 3.9%.

The source at Kroger noted baking-soda formulas, upscale/ whitening formulas and peroxide formulas of toothpaste and mouthwash were all gaining in sales. However, the phenomenon in clear products that made its way into the toothpaste category several years ago is dying, the source said.

The source from the Southern chain agreed. "The market is expanding so much in specialty and whitening products -- your Mentadent, Rembrandt and similar products -- supermarkets can react faster to those type lines and get them on the shelves.

In toothpaste packaging, 61.4% of consumers said they preferred a regular tube, 22% said they most often bought a stand-up tube and 14.8% preferred a pump. More than half, 59%, usually buy a "regular size tube," 38.2% prefer a family/economy size package and 1.6% are most likely to buy a trial size. "Unfortunately, the stand-up tube has not been as strong as I anticipated," said the buyer from the Southern chain, who agreed regular tubes still rule his shelves.

While many consumers are likely to head to supermarkets first for toothpaste and oral care needs in general, only 46.4% said they had purchased a toothbrush at a supermarket in the past year. More than half, 53.6%, said they had not, a figure which the Kroger source said sounded low.

While price is important to consumers buying toothbrushes, it was not their number one concern. Nearly one in four polled, 24.9%, said their prime consideration in purchasing a toothbrush was a dentist's recommendation or dental association approval. More than one in five, 22.6%, cited brand name, followed closely by: price, 21.4%; technological-design advances, 17.8%; color/style, 8.2%, or a coupon, 4.3%.

The Kroger source said, "Margins [on toothbrushes] are good, but declining. They're mostly impulse sales," and purchases are influenced by price and display, too.