Why private brands could clean up in laundry

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Why private brands could clean up in laundry

By Richard Mitchell - 11/27/2019
In April, Target introduced the store brand Everspring, which includes laundry items and more than 70 household products derived from plants or use other renewable materials.

When it comes to merchandising laundry products, private brands have hardly anywhere to go but up.

Indeed, store brands account for fewer than 4% of sales in most sector categories. But by offering lower-priced selections with attributes that match or exceed those of the national brands while still responding to evolving shopper demands, retailers will be in position to boost activity, analysts note.

Those demands include products with unique scents and better clothing protection, states market researcher Mintel in its September “Home Laundry Products US” report.

While Mintel notes that the market is active, with 99% of laundry doers purchasing products and the majority of users maintaining a repertoire of three to four laundry selections, it states that altering consumer purchasing patterns is not easy. It says two-thirds of laundry buyers usually choose the same brand, and one-quarter seek products with the lowest prices.

“While the market enjoys strong penetration, consumers take a fairly routine approach to shopping the category, relying on familiar brands they trust with little motivation to change,” Mintel reports.

Because consumers prioritize stain removal and scent when shopping for laundry detergent, Mintel states that offering products with those claims is “a cost of entry in the category,” and that it is essential for brands to also tout other attributes in order to stand out in a crowded market, such as being eco-friendly.

“Ethical and moral brand qualities are fast becoming expectations rather than a value-added feature for younger adults, an important demographic for the laundry market,” Mintel reports. “This is driven by ingredient concerns as well as their familiarity and trust in the performance of natural options being on par with the mainstream.”

There also is greater interest in convenience-oriented selections with single-dose detergent packs growing in popularity, says Brian Sansoni, senior vice president of the Washington, D.C.-based American Cleaning Institute (ACI).

“They are extraordinarily convenient for busy households,” he states, noting that the packs eliminate the need for consumers to pre-measure detergent before washing.

Because the packs are ultra-concentrated, users require less water and there is less packaging necessary to transport products to retail outlets, Sansoni says.

“The product forms have an identifiable sustainability profile,” he states, which is important because the “green factor is a stronger consideration for many shoppers” and is resulting in a larger array of plant-based laundry and fabric care products.

In addition, more detergents are supporting cold water cleaning, enabling consumers to save energy when washing, Sansoni says.

The 2019 ACI National Cleaning Survey found that 52% of consumers use cold water half the time or more for their main wash cycle; 32% use warm water and 14% use hot water. The nationally representative online survey of 1,000 adults included an oversample of 500 millennials.

“As disposable income grows, more consumers will purchase high-cost, environmentally friendly cleaning products.”
Kush Patel, IBISWorld, in the "July Soap & Cleaning Compound Manufacturing in the US" report

Merchandisers, meanwhile, are seeking to generate higher profit margins for their eco-friendly lines by using recycled materials and organic compounds, states Kush Patel, research analyst for market researcher IBISWorld, in its “July Soap & Cleaning Compound Manufacturing in the US” report.

“Although standardized products typify the industry, consumers perceive eco-friendly products as differentiated, thereby lowering competition within the segment,” he notes. “As disposable income grows, more consumers will purchase high-cost, environmentally friendly cleaning products.”

Marketers will increasingly emphasize such factors as biodegradability and aquatic toxicity, Patel states. He adds that retailers of store brands are set to generate progressively greater income as industry consolidation will enable the operators to garner lower prices from their suppliers and offer lower-cost items to consumers.

Many retailers are competing on price and only providing store brand products that mimic the national brands, instead of launching selections with novel attributes, says Drew Harrison, CEO of Value Smart Products, a Suwanee, Ga.-based laundry products supplier. It’s also difficult for products to stand out in the congested laundry detergent sector, Harrison adds, as “there is so much advertising, so many brands and so many price points.”

Many retailers also are making merchandising mistakes that limit private label activity, he states. Instead of situating a lower priced store brand next to the comparable high priced national brand, for instance, operators often place a smaller-sized national brand selection next to the private brand. Shoppers might unwittingly compare a $4.99 store brand with a smaller $3.99 national brand instead of a similar $6.99 national brand, Harrison says.

Mitchell is a contributing writer to Store Brands.

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