CHARGED UP

DAN ALAIMO

In the battery category, price and performance trump conscience.

While consumers have long adjusted to rechargeable batteries in many aspects of their lives — with cell phones, digital music players, personal digital assistants and laptop computers, among many other examples — their preference when shopping in supermarkets remains the single-use battery.

Some consumers are expressing a concern for what happens to the batteries once they have been used up, while others recognize the cost savings in rechargeable batteries, but most opt to put batteries they can use at once in their shopping carts. New pre-charged rechargeables may help meet this desire, retailer said.

Rechargeables are growing, but from a very small base. Meanwhile, high-performance batteries, such as lithium and titanium cells, are starting to catch on with consumers, retailers told SN, but alkaline batteries remain the bedrock of the category, while low-priced heavy-duty batteries also maintain sales in many stores.

“We are seeing strong growth out of the battery category in general,” said Lanny Hoffmeyer, corporate director, hardlines, photo and lobby, Supervalu, Eden Prairie, Minn. Hoffmeyer, along with other retail and wholesale executives, were interviewed during this month's General Merchandise Marketing Conference of the Global Market Development Center, widely known as GMDC, in Colorado Springs.

“The lion's share of the business is still in the alkaline type of batteries. But when you look at the percent increases, the high-drain batteries are performing well. As the consumers understand what they are for, the volume is picking up,” he said.

Rechargeables are not a big part of Supervalu's mix yet, Hoffmeyer said. “They are still only 3% to 5% of the volume, but we have the SKUs out there, anticipating that the volume will grow as we go along.”

“We have found substantial growth in the longer-life batteries,” said a nonfood executive with a Northeast retailer. “The category has really taken off for us. As customers understand the difference between the types of batteries — the lithium and the regular alkaline batteries — we are seeing a substantial growth in the higher-end batteries,” he said.

SALES GROWTH

The marketing from the battery companies has gotten much better, and they are succeeding at explaining to consumers why they should pay more for a longer-life battery, he said. “I think the category is going to continue to grow. I don't see the higher-end batteries slowing down anytime soon,” the executive said.

Numbers from Information Resources Inc., Chicago, show sales increases for batteries, with some declines in unit sales, for the 52 weeks ending May 20, 2007. For U.S. supermarkets, drug stores and mass merchandise outlets, excluding Wal-Mart, total battery sales rose 3.35% to about $1.6 billion, while units dropped 4.44%.

Alkaline batteries, representing about 78% of the category's sales, increased 2.47%, with a unit decline of 5.65%. A subcategory encompassing lithium and other batteries increased 2.62%, with unit sales down 5.7%.

The one brand of rechargeables tracked by IRI, an Energizer E2 line commonly seen in stores, saw a 38.76% jump in dollar sales to $17.6 million — about 1.1% of the total category — and a 33.65% rise in units. Other rechargeable lines, including one from Duracell that supermarket retailers reported they are preparing to stock, as well as a new type of rechargeable that comes ready to use, will add to these numbers, observers said.

“From everything we've seen, rechargeables are increasing in sales faster than anything else in the battery category,” said Nick Barainca, director of nonfoods, Scolari's Food & Drug Co., Sparks, Nev.

“I think the rechargeable category is really growing,” said Bill Dunkle, category manager, general merchandise, Valu Merchandisers Co., Kansas City, Mo. “We carry a rechargeable from Energizer, and we've just added a new one from Duracell to our latest planogram.”

Mike Isom, director of general merchandise, Bashas', Chandler, Ariz., sees the use of rechargeables as being related to consumer attitudes to wellness in other categories. “People are looking at their health, their eating, their exercise, and all those different pieces roll up into a larger green wellness initiative. As a result, they are looking at how those products interact with the environment. They are conscious of ‘What do we do with all of these batteries when we are done?’” he said.

However, at Unified Western Grocers, Commerce, Calif., Larry Ishii, general manager, GM/HBC, commented: “I think the awareness of the need to properly dispose of batteries is much, much greater, although I can't say that the actual activity that takes place follows suit.”

Bashas' just put rechargeables into its sets within the last year, added Cathy Kennedy, general merchandise category manager. “It's still a very small part of the business, but with the digital cameras and other items, the rechargeables are really starting to take off.”

READY TO RUN

The pre-charged rechargeables are attractive to consumers, especially those unfamiliar with the battery type. “I think those are going to do quite a bit better than some of the other rechargeables that have been out in the last couple of years,” Kennedy said.

“Rechargeable batteries continue to increase,” said Sammy Snell, director, GM/HBC, W. Lee Flowers & Co., Lake City, S.C. “We just added two more SKUs, and I think the consumers are a lot smarter in that they're buying products that are going to last longer. They are definitely buying more high-end batteries.”

The pre-charged batteries could bring new customers to the rechargeable segment, said Gregory Hott, director of general merchandise, Weis Markets, Sunbury, Pa. “If you have a digital camera or an iPod device, you want immediate satisfaction” such as these batteries deliver.

“Batteries sell. They are highly consumable,” said Anthea Jones, vice president, nonfoods and pharmacy, Bi-Lo, Greenville, S.C. Taking advantage of the category is not just a matter of price or technology, but “having them out in the right places, the right points of interruption throughout your store. The more you can put out, the more you have the opportunity to sell. We'll look at value packs and long-life packs, and look at the sizes that are selling in some of the electronic items right now. So if you want to capitalize on your sales, what you need to do is look at additional price points,” he said.

HIGH-POWERED SALES

While the typical customer — and the typical marketing campaign — doesn't dwell on the energy-savings capabilities of high-performance batteries, these do last longer before they need to be replaced. If used in appropriate devices, they also will deliver cost savings in terms of battery life despite their higher price points, retailers and manufacturers reported. That may be why high-performance batteries are adding incremental sales to the category and not cannibalizing alkalines.

High-performance batteries like lithiums are growing for Valu and its wholesale customers, Dunkle noted. “We are concentrating on those, trying to merchandise them on the rack next to the film and the photo supplies so the consumer can understand that those batteries last longer in their cameras.”

At the Penn Traffic Co., Syracuse, N.Y., Lisa Matthews, GM category manager, said she's not sure if consumers really understand rechargeables yet, “but I do see a bigger growth in the lithiums.”

Some see the high-performance batteries subcategory as growing, but very slowly.

“Several times, both of the major battery manufacturers have tried to move people up to the next generation of batteries, but it hasn't been particularly successful yet in getting people off of alkaline, which is still the mainstream battery by far,” said Al Jones, senior vice president, procurement and merchandising, Imperial Distributors, Auburn, Mass.

“The consumers want longer-lasting batteries, but I'm not sure they are ready to pay for them,” said Charles Yahn, vice president, merchandising, Associate Wholesalers Inc., Robesonia, Pa. “Batteries are definitely a category that is picking up. Rechargeables are growing slowly, but not as fast as you'd think they would,” he said.

Price continues to drive battery sales in the marketing areas of Brookshire Brothers, Lufkin, Texas, said Doug Barnett, director, GM/HBC. “We still carry the Energizer heavy-duty batteries,” he commented. Alkalines will be around for “a long time,” he noted, adding that lithiums have started to grow, while rechargeables haven't.