Paper Products Plunge

But retailers could recapture sales within the store brand paper products space if they commit to national-brand-equivalent (or better) quality and eco-minded options.

It might be a dirty job, but someone has to do it. Luckily, store brand paper products are always at the ready to manage almost any mess.

But data from Chicago-based SymphonyIRI Group show a slowdown in growth across the category during the 52 weeks ending April 15, suggesting that consumers now may be willing to make do with less. (See the table, p. 44.) To retain customer loyalty now and increase profits in the future, retailers will have to work hard to deliver quality products in attractive packaging and at a good price.

According to "Household Paper Products — US," a February 2012 report from global market research firm Mintel, consumers have abandoned their reticence about using store brand paper products and now feel good about the offerings' combination of quality and affordability. And retailers have been expanding store brand offerings in response.

"Stores are doing a great job promoting their brands," says Cristian Vergara, director of retail sales for Stefco, Haines City, Fla. "Retailers have gained the consumer's trust, and they now need to sustain it and grow it."

Pinpoint opportunities

But retailers will have to keep their eyes peeled as shoppers occasionally look for small splurges to compensate for the big-ticket spending they still may not be able to do. Of particular threat to private label market share are low-cost national brand options.

"The biggest store brand opportunities that retailers could tap into currently are the mid-tier programs," says Daniel David, executive vice president of operations for Medford, N.Y.'s Global Tissue Group, "which would make it national brand equivalent to the Sparkle-type products or the Bounty Basic type products [in] the towel segment, which is one tier below Bounty and one tier above the standard products that are out there."

While nearly everyone has certain expectations for the paper products they bring home, most people have a longer list of performance requirements for their bathroom tissue. Strength is the most important feature, but softness, price, absorbency and roll size also matter.

"Much of the new innovation in the tissue category will come from the bath segment," predicts Bruce Woodlief, director of marketing for the consumer products division of Clearwater Paper Corp., Spokane, Wash. "Improvement in product attributes of softness, strength, clean[ing] and thickness will be featured in the coming quarters of 2012 and 2013."

Many of these product improvements will be facilitated by advanced paper-making technology, he adds. Through-air-dried technology (TAD), in particular, creates a thicker, softer and more absorbent sheet through the use of hot air.

Premium bath tissue, specifically, is an area rife with opportunity for retailers.

"This is an area that has been void for many store brand retailers who want a product comparable in quality to the leading national brand," Woodlief explains.

Do

pay attention to the latest bath tissue innovations and consider adopting them for new store brand offerings.

Don't

overdo it in terms of store brand paper product SKUs — too many options can be detrimental to sales.

Stand out with sustainability

Looking ahead, retailers will have to maintain the delicate balance between providing quality and an excellent value to their consumers. On top of that, they will have to find ways to stand out with unique product features.

"One area that retailers can distinguish themselves is in the area of sustainable products that are certified by the Forest Stewardship Council (FSC)," Woodlief says. "Products featuring the FSC logo indicate that the product was made with quality fiber sourced from well-managed forests."

Few national brands currently offer this certification, he adds.

"With packaging, people are looking for more sustainable, recycled products and using less product," David says.

And if it is important to the consumer, it should be important to the retailer, as well. Retailers should look closely at what kind of innovation private label manufacturers have to offer to help them with these sustainability and environmental goals.

But the development of eco-minded or premium store brand bath tissue, paper towels, facial tissue and napkins might not make sense for every retailer. A retailer must first understand its shopper base to determine the appropriate approach or approaches here.

"Some retailers really want to stick to wanting to be national brand equivalent," David says. "[On the other hand], some other retailers have changed their programs to be more price-driven."

Do

consider adding Forest Stewardship Council certification to show shoppers you are committed to sustainability.

Don't

overemphasize branded promotions at the expense of store brand offerings.

Mind your P's

Regardless of the approach taken, retailers must commit to the same tactics for private label paper products that make the national brands successful. Woodlief refers to the four "P's" needed for success: product, place, price and promotion.

"Retailers also have the added challenge to effectively manage multi-branded, multi-tier categories like paper tissue products," he explains. "Too much emphasis on branded promotions or over-proliferation of category SKUs can have a significant effect on the strength of the store brand."

The key is for retailers to remain disciplined and "develop a target category share for their store brand and manage to that share via pricing, promotions, advertising, share of shelf, share of selection, etc.," Woodlief adds.

Rethink packaging

Another trend impacting the store brand paper products category is innovation in packaging, particularly as more consumers show interest in eco-minded product options.

"Using more sustainable packaging products," says David, "[has been] seen over pretty much of the categories recently, but more so in paper products because not only does the packaging come from a paper product, but also the material inside of it."

As a result, he adds, many converters and national brands "are looking to save costs and increase their sustainability and innovation" by using lower-cost/more sustainable products.

But packaging "will continue to be dominated by poly-wrapped [bathroom] tissue," Woodlief says, "and recycled cartons for facial tissue."

Retailers themselves, he adds, can benefit from packaging that is labor-friendly and makes restocking shelves simple by offering tear-perfed cases and display-ready units.

Draw them in

A successful paper products program also can have a positive impact on a retailer's other store brand categories.

"Since it's a highly used and low-cost item, retailers can really use paper products to draw in customers to be able to sell throughout the store," David says.

Thinking outside the box when it comes to merchandising is crucial, Stefco's Vergara says. Offering higher-capacity rolls in denser packaging would communicate greater environmental consciousness, as well as a great value, he says.

"One excellent promotion that has been used successfully by a handful of retailers," Woodlief offers, "is a 'buy one get one' promotion where the retailer would promote a national brand tissue product with the identical store brand item next to it."

The consumer would get the comparable store brand product for free with the purchase of the national brand item.

"This type of promotion emphasizes the comparable side-by-side nature of the products," he adds, "[while] providing a great value and promoting a store brand trial experience for the consumer.

Look what’s new

New from Sam’s Club, Bentonville, Ark., are Member’s Mark Ultra Premium Bath Tissues. The large two-ply rolls retail in a flexible package bearing a “Compare to Charmin Ultra Strong” statement. They retail in a pack of 36 rolls, said to be equivalent to 90 regular rolls.

Stop & Shop Premium Paper Towels from Quincy, Mass.-based Ahold USA are said to be ultra-absorbent, extra strong (even when wet) and custom-sizable. The two-ply towels retail in a single-roll flexible package; each roll has 121 sheets, and each sheet measures 11 in. by 6 in.

Minneapolis-based Target launched four different up & up Facial Tissue carton designs for the 2012 spring and summer seasons. Featured on each carton’s sides are a cow, duck, lamb or pig. The tissue is said to be soft, strong and absorbent, yet gentle and convenient for family needs. Each carton, made from a minimum of 35 percent post-consumer fiber, contains 100 unscented white two-ply tissues.

Schnucks Select Truly Elegant Premium Napkins from Schnuck Markets, St. Louis, feature a three-ply design and are said to be thick, soft and cloth-like for everyday or special occasion use. The generously-sized napkins (15 in. by 17 in.) feature a unique embossing that adds an artistic trait. They retail in flexible packaging containing 40 napkins.

Source: Mintel’s Global New Products Database