Call for Innovation

Product development opportunities in the baby diaper and adult incontinence sector are on the upswing. An expanding infant population and aging base of baby boomers are triggering added demand for products — and creating greater incentives for suppliers to develop, and retailers to leverage, innovative items that enable them to stand out in a busy marketplace.

Indeed, a recent report from the Centers for Disease Control and Prevention notes that the number of babies born in 2013 in the United States rose by almost 5,000, the first annual increase, though very slight, since 2007. The U.S. Census Bureau, meanwhile, reports that the 65 and older sector grew 15.1 percent between 2000 and 2010, compared to 9.7 percent for the total U.S. population.

While category participants could potentially benefit from increasing demand, they still must break out of the technological stagnation that gripped the sector in recent years, says Rick Jezzi, principal of A.D. Jezzi & Associates, LLC, a Bala Cynwyd, Pa.-based technology and management consulting company that specializes in baby diapers and personal care absorbent products, including adult incontinence selections.

“We are not seeing the same level of innovation as there was in the 1980s and 1990s,” he notes. “It is more of the same. The market is mature, and by not doing much in a mature market, companies will lose ground.”

Go beyond the expected in diapers

In a 2014 report on the baby diaper sector, Pricie Hanna, managing partner of Price Hanna Consultants, a West Chester, Pa.-based management consulting firm, notes that the major diaper suppliers continue to emphasize softness, absorbency and leakage protection, and body-hugging fit performance.

“Consumers now expect good-quality diapers to provide leakage protection for close to 12 hours,” she states. “Optimized absorbent cores with improved performance in fluid acquisition/distribution materials are clear priorities for leading diaper manufacturers.”

Jezzi, meanwhile, says store brands account for about 21 percent of baby diaper revenues. Private label diaper prices typically are 20 percent to 30 percent lower than the national brands.

“Private label items today are very similar to the national brands, which is why private label share is strong,” Jezzi states. “Innovation is the only way for suppliers to stand out.”

He adds that the two largest vendors of private label baby diapers, Great Neck, N.Y.-based First Quality Enterprises Inc. and Raleigh, N.C.-based Domtar Personal Care, “have the quality and scale and buy the same materials as the national brands at the same price, if not better.”

But innovation is being hampered in part by the greater attention some suppliers are giving to foreign markets, Jezzi says. Many consumers in those sectors — particularly in developing countries — are focusing more on price than performance.

Steven Sirota, director of sales for Impex of Doral Inc., a Miami-based baby diaper vendor that produces private label and branded products, agrees.

“Customers in those areas are not asking for product improvements,” he states. “Diapers there are need-based. Indeed, one of the growing trends in the U.S. — greater market interest in biodegradable diapers — is not a major concern in Third World countries.”

But with more than 2,600 supermarkets and multi-department stores in 34 states and Washington, D.C., The Kroger Co., Cincinnati, is moving to capitalize on the eco-friendly movement with the recent launch of its Comforts Touch of Nature private label baby diapers. Kroger promotes the products as being “chlorine-free so they create less air and water pollution than many of the leading brands,” and states that the diapers contain renewable materials that are gentle on the environment.

Kroger adds that natural plant-based resources — rather than petroleum-based materials — are used for the diaper linings and outer covers. Such resources protect the baby’s skin with natural absorbency and coverage and reduce the amount of energy needed to produce the products.

Jezzi, meanwhile, notes that there is ample room for additional innovations. Opportunities include creating the “ideal” diaper with maximum breathability, comfort and leakage protection.

Also impacting the overall diaper sector is growing online activity, according to Packaged Facts, a division of Rockville, Md.-based MarketResearch.com.

“More retailers use diapers as a loss leader to drive sales of other products,” the company states. “Bricks and mortar, as well as online retailers, employ the tactic — heavily promoting diapers with low prices and special deals. Diapers are a big traffic driver, so items purchased online mean a lost opportunity to sell other merchandise in a physical store.”

Capture incontinence sales via differentiation

Web-based activity, meanwhile, also is becoming more prevalent in the adult incontinence sector. Adult incontinence, defined by the National Association of Continence as the involuntary loss of bladder or bowel control, is set to be a steadily expanding market as the U.S. population ages.

The association notes that 25 million adult Americans experience transient or chronic urinary incontinence.

“Web portals act as e-commerce channels too, and allow consumers to overcome any feelings of discomfort, anxiety or insecurity due to the power of anonymous purchasing,” states London-based Euromonitor International Inc., a market research firm.

Store brands that are priced lower than national brand offerings, meanwhile, are positioned to garner greater market share because of the growing segment of older budget-conscious Americans who are on fixed incomes. It is important, however, that the products are as functional — or more functional — as the national brand offerings, analysts say.

“Private label merchandisers will be taking more aggressive ownership of their brands,” Jezzi predicts. “Because they want to be competitive with the national brands, they will be demanding that their products are different.”

Indeed, Jezzi forecasts that store brands will have a 40 percent to 50 percent share of the market over the next 10 to 15 years if there is not significant innovation by the national brands.

Newer designs, however, are emerging. McAirlaids, Inc., a Rocky Mount, Va.-based developer of absorbent products, next year will begin marketing in the United States a pouch for males that slides over the penis and is fixed with a Velcro fastening system.

The pouch is 2 inches wide, 6 inches long and is intended to hold 50, 100 or 150 milliliters of fluid. It absorbs urine without swelling up and can be replaced without requiring users to disrobe, says Matthew Diersen, McAirlaid’s sales director for fast-moving consumer goods.

“There has been very little innovation in male incontinence,” he states. “Underwear and briefs that were developed in the late 1990s were the last significant innovations. Up until then, users were basically wearing large diapers.”

Diersen says there is large growth potential for supermarkets’ private label selections, noting that many groceries devote a fraction of the space to adult incontinence products compared to drugstore chains and big box retailers.

“Incontinence is a medical condition that has a stigma attached to it,” he says. “It is getting better, but grocery retail is not embracing the opportunity. Millions of baby boomers are turning 65; 48 percent of them are male; and that is a huge target. Grocery retailers need to be on the leading edge.”

He adds that it is crucial for merchandisers to innovate, and for retailers to be more aggressive in their marketing, if the sector is to reach its revenue potential.

“I haven’t seen a display or a floor stand telling what the product does or how it works,” Diersen says. “We need to push the envelope by sticking the product in front of peoples’ faces, and that will bring in new users.”

The base of consumers seeking adult incontinence products and baby diapers is expanding. How aggressive manufacturers and retailers are in developing and merchandising innovative products will determine how the sectors will evolve.

Do differentiate store brand diapers and incontinence products from the national brand offerings.

Don’t ignore the growing online channel for sales here.

Do educate consumers at the point of sale when it comes to incontinence products.

Don’t skimp when it comes to product functionality, which is key to a repeat purchase.