Steady As She Grows
The household paper products market will see "steady, but unspectacular growth" in 2012.
It’s safe to say that 2011 was not a stellar year for the household paper product segment. Data from Chicago-based SymphonyIRI Group show dollar and unit sales losses in almost every one of the segment’s subcategories during the 52 weeks ending Oct. 30, 2011.
However, retailers and manufacturers have a reason to be optimistic. According to the April 2011 — Sept. 2011 Category Insight: "Paper Products" — a review from the Global New Products Database of global research firm Mintel International — they can expect "steady, but unspectacular growth" in the household paper products segment in 2012.
And according to Bruce Woodlief, director of marketing for Spokane, Wash.-based Clearwater Paper Corp., retailers have store brand opportunities across all tiers and subcategories of the paper product segment. "Retailers would do well to take advantage of multi-tiered ... offerings in own-brand tissue rather than settling with one quality level for bath and facial tissue, paper towels and napkins,' he notes.
Where opportunities lie
But which subcategories offer the greatest store brand opportunities? Paper towels and bath tissue, suggests "Household Paper Products — US," an October 2010 report from Mintel.
Because of their versatility, paper towels likely have cannibalized sales from other subcategories, the report notes.
"Mintel's data show that about 60 percent of households exchange paper towels and napkins, with the former likely being used more than the latter," it explains.
But the report says bath tissue makes up the largest household paper product subcategory, accounting for more than half of household paper products on the market.
Woodlief notes that bath tissue continues to be "the dynamic segment" in household paper products.
"Several products in the premium- and ultra-premium-quality tiers have improved with enhancements to softness, thickness and strength through a mix of added fiber, strength additives and improved production technology," he notes. The production technology to which Woodlief refers is through-air-dried (TAD) technology. Unlike conventional paper-making technology, TAD technology creates a thicker, more-absorbent and softer sheet by using hot air.
Woodlief says he expects TAD technology to grow in demand during the next 12 to 18 months, which is understandable — strength, softness and absorbency are the attributes consumers value most when selecting a bath tissue product, according to the Mintel report.
Consumers also value store brand paper products that perform like the national brands. Daniel David, executive vice president of Medford, N.Y.-based Global Tissue Group, notes that many national brand manufacturers have reformulated their products to meet specific retailer price points and consumer needs. In response, a number of store brand paper product manufacturers have reformulated their products to perform as well as the national brands.
Package to sell
But no matter how well a product performs, consumers could still pass it by if its packaging is drab. Howard Telford, U.S. research analyst with Euromonitor International, Chicago, says retailers can expect to see plenty of activity in paper product packaging throughout the year.
"The success of new pack sizes, shapes and design in bolstering [Kleenex's] market share will result in further experimentation in facial tissue over the year," he says. "We can expect leading manufacturers to introduce new package designs to replace the staid, traditional boxes on store shelves with bright and exciting new designs."
James D'Agosta, senior vice president of sales and marketing with Elmwood Park, N.J.-based Marcal Manufacturing LLC, says he sees more and more retailers updating packaging on paper products across all tiers — value, national brand equivalent and premium — using creative artwork and snazzy names to differentiate their products from the competitors'. Woodlief agrees that retailers are giving special attention to their facial tissue packaging.
"Carton graphic designs reflect more contemporary themes to reflect changing tastes of households," he notes. "Unique carton shapes with high-end graphic quality are popular in-and-out seasonal offerings with consumers."
Get 'em to try
Some special attention to merchandising also goes a long way. According to Woodlief, retailers have a number of opportunities to get customers to try their own-brand paper products in-store. For example, a supermarket could place its store brand napkins on tables in the store's dining area.
And bath tissue could be placed in bathroom stalls.
To get consumers to try facial tissue products — specifically premium items — retailers could package a trial-size version with related items in other categories. For example, retailers could package a facial tissue with a related personal care product to increase the size of a shopper's register ring.
Retailers also could position their paper products as alternatives to products in other categories. For example, Mintel's GNPD review notes that improved paper technology could make paper towels a "more viable alternative" to kitchen cloths.
"If kitchen [cloths] at the higher end of the market can prove their worth, significant scope exists for encouraging wider use of [paper towels] — and not just in the kitchen, but ... in the bathroom or anywhere that a cleaning cloth might currently be used."
D'Agosta adds that shoppers who tend to purchase store brands in other categories are likely to purchase private label household paper goods. Therefore, retailers could leverage their loyalty-card data to target these "prime customers" with their promotions.
Paper product segment performance
Consumers also could be targeted via the web and social media, D'Agosta says. "[Retailers] can use their websites, Facebook and Twitter ... to speak directly to consumers about their [own-brand paper products'] features and benefits — and can incentivize them to try the products as well."