BATTERIES 101

DAN ALAIMO

Despite an abundance of new battery choices that might better meet their needs, most shoppers keep picking up the same alkalines they've been using for years.

More choices, including private label, in the category are confusing shoppers. Besides the basic alkalines, there are advanced alkalines and rechargeables. Batteries for high-drain devices like digital cameras come in several varieties and price points, while older “heavy-duty” battery types are still offered in value or dollar presentations.

Consumers are particularly confused over which of the high-drain batteries to choose for what applications. This is a concern for retailers, because these batteries sell at higher prices with better margins. Meanwhile, the two big manufacturers use very different names and descriptions for these products — for example, Energizer's “Titanium” and “Lithium” vs. Duracell's “Ultra Digital” and “PowerPix.”

Retailers also are baffled over why rechargeable batteries aren't more widely accepted during a time when sustainability and ecological issues are on the minds of most consumers.

While point-of-purchase signage, national advertising and consumer trial are part of the solution, many retailers, wholesalers, suppliers and the GMDC are concluding that education of store-level employees, and by extension the shopper, needs to be addressed. For example, GMDC — the Global Market Development Center, Colorado Springs — is working with Energizer Holdings, St. Louis, and LearnSomething, Tallahassee, Fla., to develop an online educational program for store associates (see sidebar, Page 17).

“If the retailers are confused about batteries, then it's certainly our job to try and educate them so they can educate the customer,” said Al Jones, senior vice president, procurement and merchandising, Imperial Distributors, Auburn, Mass.

Overall battery sales in food, drug and mass merchandiser channels, excluding Wal-Mart Stores, show a category that is up slightly in dollar sales by 1.2% for the 52 weeks ending May 19, 2008, according to the Strategic Planner of the Nielsen Co., Schaumburg, Ill. Unit sales for the same period were down 3.2%, indicating that higher-priced batteries were outselling others.

The trend was similar in food stores, where dollar sales declined 0.1%, with unit sales dropping 3.6%. In drug stores, dollar sales rose 3.4% while units slipped only 0.6%, perhaps reflecting that channel's greater penetration of private-label batteries. According to Nielsen's private label report, store brands were 22.7% of battery sales for the 52 weeks ending March 29, 2008 in drug stores, vs. 9.9% in food stores and 13.5% for food, drug and mass, excluding Wal-Mart. Private-label battery sales increased slightly in all three compilations of data: 1.4% for drug, 0.8% for food and 1% for food, drug and mass.

Point of Purchase

The idea of online education is still very new, and many retailers and wholesalers interviewed by SN during the recent GMDC General Merchandise Marketing Conference said they were either using or about to use point-of-purchase communication vehicles to clarify the battery choices.

“We're in the process of updating our racks with new signing that helps shoppers understand what batteries go with which devices,” said Lanny Hoffmeyer, corporate director, hardlines, photo and lobby, center store merchandising and GM/HBC, Supervalu, Eden Prairie, Minn. The effort also involves color-coding and segmenting the products on the racks, he said.

The goal is not to trade customers up to the higher-priced batteries, he said. “The hope here is really just to help consumers find the right battery that goes with their appliance. Today a good number of those folks are buying the improper battery and then are disappointed with the results,” he added.

Even with education, it's hard to count on store-level personnel. “We probably have the best opportunity at the shelf itself,” said Terry Cerwick, senior category manager, non-edibles, Bi-Lo, Greenville, S.C. The retailer is looking at ways to make its battery set more “clear and concise” with labels, he said.

“The chance of a consumer being able to grab an employee right there at the moment of truth when they're going to make the purchase is pretty thin. They're best off having a very clean, organized set that depicts each of the segments within the set,” Cerwick said.

“You just have to set the planograms so as to make shopping easier for consumers,” said Bill Dunkle, category manager, general merchandise, Valu Merchandisers Co., Kansas City, Kan.

Some retailers singled out Energizer for providing them with the POP they need.

“We put in the Energizer endcaps that are learning centers,” said David Lowe, senior director, GM/HBC/seasonal, C&S Wholesale Grocers, Avenal, N.J. “That tells the customer that if they have a camera, what batteries to buy to get the most out of it. Without that, it's a difficult sell, but that will help a lot. The people who are using the high-drain devices are buying the higher-end batteries,” he said.

“We went with signage from Energizer that actually calls out what devices those batteries should be used in, because we felt that was a miss for the consumer,” said Dewayne Rabon, vice president, general merchandise and health and beauty care procurement and sales, Winn-Dixie Stores, Jacksonville, Fla.

Jones of Imperial expects Duracell, now owned by Procter & Gamble, to come out with more information in its presentation. While Duracell has been quiet lately, “it won't be long,” stated Jones. “P&G knows how to sell products. They'll figure it out.”

The Big Picture

Product education starts with the manufacturer, said Larry Ishii, general manager, GM/HBC sales, Unified Grocers, Los Angeles. “I think the manufacturers do a reasonably good job of presenting a lot of information, but it tends to come a little bit piecemeal.” For example, when a new battery comes out, the retailer hears all about it, “but not how the whole category lays out, and that's what we need to get from the manufacturers more frequently.”

From the wholesaler's perspective, Ishii noted that while there may be good battery POP out there that helps customers with the buying decision, it's up to the retailers to put it in, and they are sometimes hesitant. “Historically, there's been a reluctance on the part of the retailers to allow those kinds of things, because they want to keep everything clean, neat and organized.”

Not all retailers think such POP or other informational materials are needed. “I don't know that the consumer really has a whole lot of questions on batteries when they come into the store,” said Dan Spears, director of nonfoods, Ingles Markets, Asheville, N.C. “Most of them either have a battery in mind they are coming in to get, or they will make the decision at the rack.”

Television advertising is a big influence, Spears said. “It's up to the Energizers, Duracells and Rayovacs of the world to convince people that moving up to their higher-tier battery is worth the extra money.”

The most effective way to educate the consumer about batteries is with displays and header cards explaining the longer-lasting new-technology products, said Nick Barainca, director of nonfoods, Scolari's Food & Drug Co., Sparks, Nev. “But we've found that a lot of people are still looking for the lower price point. In this economy, our private-label sales are shooting through the roof.”

While consumers are still loyal to Duracell and Energizer, Scolari's private-label batteries are up about 25%-30% in sales, Barainca said.

Rechargeables are growing at a faster rate, and the high-performance batteries are seeing strong increases, “but I don't think that the cheap battery is going away,” said Charles Yahn, vice president of sales, retail development, customer service and pharmacy, Associated Wholesalers Inc., Robesonia, Pa.