Time For A Change?

A weak economy and a declining birthrate are dragging down sales of disposable diapers and training pants. But retailers that invest in product innovation and unique marketing strategies still can grow store brand share.

The disposable diaper category long has been thought to be immune to economic fluctuations because of the constant but obviously disposable nature of the category. However, the segment just is not growing in this economy.

According to The Nielsen Co., New York, dollar sales in the disposable diaper category dropped 5.5 percent during the 52 weeks ending May 15 (food, drug and mass merchandisers, including Walmart), while unit sales fell 2.6 percent. The private label side of the segment posted even steeper declines, with dollar sales down 9.8 percent and unit sales, 10.6 percent.

It turns out that diapers' recent lackluster performance is in line with a multi-year trend of declining sales in the overall baby products segment. In its February 2010 "Disposable Baby Products — US" report, the global market research firm Mintel International reports that the disposable baby products category, once adjusted for inflation, actually experienced a 9 percent dollar sales decline between 2004 and 2009.

Baby-stepping to profits

The Mintel report does note, however, that the smaller wipes and towelettes segment showed steady growth between 2004 and 2007 at least — most likely because of low prices and more uses for older children.

Shoppers also are seeking value within the drug and mass merchandising channels (which Mintel says realized a 5.7 percent increase in disposable baby products dollar sales from 2007 to 2009) and online — thanks to higher product availability, better customer service, low prices and free shipping.

But despite the bright spots, there simply are fewer moms buying baby products overall, as the declining U.S. birth rate reveals. In addition, research from Duluth, Ga.-based Associated Hygienic Products LLC (AHP), a baby diaper, training pants and wipes manufacturer, found that mothers are extending the lifecycle for diaper use, resulting in fewer purchases — aided, no doubt, by improved product design.

Still, Mintel still expects the disposable baby products category to post 5 percent gains from 2010 to 2014, due to the lasting strength of national brands. Also, although private label sales are currently down, existing shoppers are not likely to trade back up to premium brands when the economy rebounds. Retailers have an opportunity to "up-sell" these shoppers on other store brand disposable baby products.

Provide quality with value

Many consumers began trying store brands solely for price reasons when the economy was at its lowest, notes Theresa Leiter, communications manager for Nice-Pak Products Inc., based in Orangeburg, N.Y.

"Retailers with high-quality programs built a strong repeat business on this foundation, and are retaining shoppers as confidence returns," she adds.

Savvy Gen Y moms might be searching for value, but they still want a high-quality product for their children.

"Nice-Pak works with our retailer partners to understand the specific needs of their shoppers and create winning programs that are building shopper loyalty and driving traffic," Leiter says.

Regardless of potential savings, however, a substantial consumer base will never try store brand diapers, notes Chris Ferdock, vice president of marketing for AHP, referring to company data.

"This is very evident with new mothers — defined as [having] their first child — who want nothing but a recognized and trusted brand name for their newborn baby," he says.

Still, retailers keep improving on their store brand diaper and training pants offerings, aiming to become that "trusted brand name."

After extensive consumer research this year, Cincinnati-based Kroger announced the relaunch of its Comforts brand, Ferdock notes, while Minneapolis-headquartered Target introduced its up & up line.

And Supervalu recently added new items to its Baby Basics line, including a diaper that offers better leak protection, an improved fit and a comfier, extra-soft interior; and training pants that feature reclosable sides. The Baby Basics product line includes more than 80 items, ranging from diapers and training pants to formula, pediatric drinks and shampoos, lotions and wipes, says Susie Bell, corporate public affairs manager for Minneapolis-based Supervalu.

"The Baby Basics products offer not only cost savings for busy moms and families, but the convenience of shopping for diapers and other baby essentials at their local grocery store," Bell notes.

She says the Baby Basics brand is a logical extension of Supervalu's business strategy to drive customer loyalty by offering a differentiated in-store experience and a portfolio of high-quality private label brands. The relaunch of the line has been supported with a fully integrated marketing communications plan, as well as direct mail and online and in-store initiatives. Bloggers and other social media outlets also are a key component of the public relations activities, Bell adds.

The recent Pampers Dry Max social media crisis proves that today's media-savvy mothers cannot be underestimated; they will use social media to research and promote performance and value. Parents used the Web and, specifically, Facebook to create a social networking movement against the new diapers, alleging they caused diaper rashes and sores, which led to a Consumer Product Safety Commission investigation.

This summer, Rite Aid also announced the launch of a line of quality diapers and trainers. Branded as Tugaboos, the line soon will be augmented with creams, lotions and wipes. The hypoallergenic diapers boast a new design technology for additional absorbency and leakage protection and come with a money-back customer satisfaction guarantee (touted on the package).

The new baby care line is part of Rite Aid's plan to revamp its entire private brand program with a new look, brands and additional offerings to meet the needs of today's value-driven consumer, says Eric Harkreader, a spokesman for Rite Aid, Camp Hill, Pa.

This summer, Rite Aid engaged in a variety of marketing efforts, including selling 99-cent diapers (with a dollar-off coupon), placing wire baskets with samples by the checkout counter, highlighting end caps of diapers in all the stores, providing online coupons and adding short informative videos to Rite Aid's Video Values online savings program site (parents can earn dollar-off coupons for watching). Furthermore, the retailer reached out to bloggers and other influencers to educate them about the new diaper line, Harkreader says.

Don't pass up opportunities to "up-sell" existing shoppers on other store brand disposable baby products.

Do support store brand diaper and training pants offerings with marketing initiatives that target moms, including direct mail, online and in-store initiatives, and even social media outlets.

Do consider unique or exclusive ideas (such as baby clubs) to build sales.

Don't forget to communicate any product improvements/enhancements to your shopper-moms — through packaging, online initiatives and more.

Uncover new opportunities

As buying rates for diapers drop, retailers need to find unique or exclusive selling ideas to convince customers to change their buying habits. Some are finding success with baby clubs, which generally offer special programs for new parents with baby-related coupons and samples, as well as offers for store brand disposable baby products and related items such as film development, dinner entrees and baked goods.

"Retailers see a lot of value in that as a way to draw cross-promotions with other items in the club and bring new customers to the store," says Steven Light, partner and vice president of Impex of Doral Inc., based in Medley, Fla.

According to Ferdock, retailers are moving away from typical licensing agreements because they haven't added much value to their store brand programs.

And for now, the economy is trumping the environmental inclinations of most shoppers, but eco-friendly features still remain a positive value-added component. Avi Tansman, president of Boca Raton, Fla.-based A World of Wipes, says his company has worked with retailers to create low-cost wipes that are sustainability-minded, biodegradable and recyclable.

"We'll see more eco-friendly products," Tansman says. "The population has to change, and plastic packaging, in many cases, is already changing."