Edit Properly merchandising household paper products can help retailers clean up on sales and profitability throughout the entire store.
When it opened last April, the Orchard Fresh gourmet market was a foodies’ paradise stocking every need a chef could ever want with one notable exception—paper towels and napkins.
“Our philosophy in the beginning was that we didn’t want to sell conventional grocery or duplicate what was being sold in other stores, so we don’t stock Heinz, Pepsi or Campbell’s, and we didn’t have a paper towel, toilet tissue or any of that stuff,” says Frank Curci, president and CEO of Tops Markets, the Buffalo, N.Y.-based parent of Orchard Park, N.Y.-based Orchard Fresh. “That was a miss on our part and we have brought it in.”
Starting with paper towels and gradually adding other SKUs as it readjusted floor space, Orchard Fresh began stocking the Seventh Generation line. “We’ve done what our customers have wanted and customers have asked for that,” says Kevin Donovan, store director of Orchard Fresh.
By stocking at least one brand of household paper products Orchard Fresh was able to keep its customers from having to defect to sister store Tops, Kmart or Wegmans to round out their shopping needs.
“Regardless of price, toilet paper is something that everybody buys and everybody uses,” says Fernando Gonzalez, vice president, general manager, tissue category, at Georgia-Pacific, the Atlanta-based manufacturer of Quilted Northern and Angel Soft. “It is a traffic driver. So as a feature or in an ad or cross-promotion, it is definitely a way to get consumers into the store.”
So are new and improved products. “We are always keeping an eye on and refreshing our point of views on the industry, specifically starting with the consumer,” Gonzalez says. “We have developed an understanding of what is happening in the landscape, how trends are changing demographically, socio-economically and through psychographics and how those changes have the potential to impact our business. That helps us get the best understanding of our customers so we can then design the best products for them.”
According to IRI, a Chicago-based market research firm, the paper category is a supermarket powerhouse; sales in toilet tissue alone topped $3 billion for the 52-week period ended Sept. 8. Unit sales, however, are down nearly 3% to 579.5 million packs as other retail channels wipe up sales. Kirkland Signature private label toilet tissue is the top selling item at Costco, for example.
Industry observers say private label sales represent about 25% of tissue sales and can help build customer loyalty. “Good private label execution is an important part of a successful growth program,” says Bruce Woodlief, director of marketing—consumer products for Clearwater Paper, based in Spokane, Wash. “Other factors include a comprehensive product quality assortment that is well merchandised, clear and relevant package communication and a consistent dedicated product promotion schedule that offers compelling value.”
Astute supermarket operators are following this blueprint and are using paper goods to build sales and win back market share. “The key for grocery retailers is to really understand the brands they have in their box in terms of sales and profit,” says Michael Hurt, senior brand manager, Scott, based in the Neenah, Wis. office of Dallas-based Kimberly Clark. “Scott 1,000 has been around 100 years and is actually the most loyal brand in the category. A Scott 1,000 buyer will often switch stores based on where they can get the best price for their Scott 1,000. Retailers realize that it helps drive traffic for their store.”
Scott 1,000 customers have a basket size larger than the category average, Hurt says, citing one leading Northeast chain that regularly features paper products at hot prices on the front page of its weekly circular. “When they promote Scott 1,000 they are the biggest sales weeks in the entire store,” he says.
Cottonelle, Scott’s sister brand, has been creating category interest by building awareness in flushable wipes. “While you might expect 100% of households to buy toilet paper, fewer than 25% buy the moist wipes,” says Mike Hirsh, account director, Cottonelle, at TRIS3CT, the Chicago-based creative agency for Kimberly Clark’s paper brands. “That is the thrust for the strategies you have seen in Cottonelle over the past year and will see for the foreseeable future.”
Cottonelle’s strategy centers on cheeky commercials featuring British spokesperson Cherry Healey walking up to Americans on the street and asking them about their “bum.”
“The thing that is unique for Cottonelle and a game changer for us is that everyone else uses animated characters, like bears and quilting grannies, that talk in roundabout metaphors,” says Mel Routhier, vice president, group creative director, at TRIS3CT. “Cottonelle made a conscious decision to go out and have real conversations with people and get them to have a light bulb moment,” she says.
The “light bulb” moment for Charmin brand is improved effectiveness, say officials at Cincinnati-based Procter & Gamble. “Charmin is now manufactured to include additional features and optimizations for easier breakdown of flushed toilet paper, ensuring pipes stay clear and clog-free,” says Laura Dressman, communications manager.
Georgia-Pacific has been focusing on Quilted Northern Ultra Soft & Strong. “It uses technology we call Clean Stretch,” says Gonzalez. “It delivers the texture consumers are looking for, but more importantly, its stretch provides the confidence that they can clean themselves without the product falling apart.”
Innovation also continues to evolve on the private label side of the business.
“Retailers need to venture away from the ‘me too’ national brand equivalent concept for their full line of private label paper products and move towards new sheet counts, paper qualities and innovations to differentiate themselves and meet specific price points based on consumer needs,” says Daniel David, executive vice president of operations, at Global Tissue Group (GTG), a Medford, N.Y.-based manufacturer of private label and branded paper products.
On the branded side, GTG has signed a multi-year licensing agreement with the U.S. Army to develop Army Strong paper products, including paper towels, napkins and facial tissues. “Army Strong will encourage consumers to honor troops and veterans,” David says. “Proceeds will benefit the Morale, Welfare and Recreation (M.W.R.) program for all soldiers, veterans and their families.”
Innovation continues to sweep the paper towel side of the aisle. P&G, for instance, recently introduced Bounty DuraTowel.
“A single sheet of Bounty DuraTowel is durable enough to tackle tough jobs like cleaning countertops, sinks and even small appliances,” Dressman says. “Thanks to its fiber-rich design, Bounty DuraTowel offers consumers a cloth-like experience without compromising on clean, leaving surfaces three times cleaner than a used dishcloth, which can redeposit millions of germs after a single day’s use.”
By pushing their value image, Scott Towels continue to build sales and market share.
“The great thing about Scott Towels is that they have been on a really great growth trajectory over the last few years,” says Hurt. “We grew double-digits in 2011 and 2012 and we are on track to do the same in 2013.”
Some manufacturers have found their niche by promoting the environmental friendliness of their products. Napkins, paper towels and bath tissue from Earth’s Natural Alternatives, for example, are made from annually renewable sugar cane and bamboo instead of wood pulp, and drive home the message with “SAVE TREES” written in big letters on the front of every pack.
“We use a proprietary blend so our products are soft and white,” says B.J. Liu, head of business development at Northbrook, Ill.-based Earth’s Natural Alternatives. “Our wet strength is the same as the premiere brands and it dissolves so it doesn’t clog the pipes or septic systems. It has all the important qualities that today’s consumers are looking for,” she says.
Seventh Generation recently launched a 100% recycled unbleached line of paper towels and bath tissue that contains a minimum of 50% post-consumer recycled paper with no added dyes, inks or fragrances.
“In addition to saving trees, we use 80% less water than the industry average and less energy to manufacture our paper products,” says Brandi Thomas, public relations manager, for Seventh Generation, based in Burlington, Vt. “While not necessarily exactly comparable to the properties of the premium 100% virgin fiber based products, we believe we can offer products that meet our consumers’ requirements while avoiding the significant incremental environmental footprint associated with the harvesting of trees that provide the virgin fibers.”
Thomas suggests retailers merchandise Seventh Generation and other recycled paper products in-line with the mainstream brands instead of in a separate natural aisle. “This increases penetration with the green consumer, profitability and basket ring,” she says. “Seventh Generation paper products are proven to drive basket ring, delivering 101% and 71% increases on bath tissue and paper towels, respectively.”
Glow in the dark
Several new products are driving innovation for the facial tissue sector of the category. GTG has introduced Dream Soft—a line of facial tissues in an innovative glow-in-the-dark box. “The boxes glow luminously in the dark for hours,” says David. “This new line of packaging can easily provide a touch of ambience to a darkened room and is ideal for children’s rooms to provide extra comfort at bedtime.”
P&G’s Puffs brand is livening up the category with Puffs Fresh Faces—a line of patented moistened tissues with saline, aloe and vitamin E available in Light Lavender, Fresh Scent, Fragrance Free and With the Scent of Vicks varieties. “When saline is delivered with aloe and vitamin E in a moist tissue like Puffs Fresh Faces, it’s easy to benefit from the power of saline,” says Dressman.
Category leader Kleenex brand from Kimberly Clark has developed what company officials say is a better, safer tissue. “We’ve come out with a significantly thicker, more absorbent tissue to help create that barrier between germs and your hands,” says Anna Elledge, brand manager. “A lot of the spread of sickness comes from the hands, so Kleenex brand tissue is now able to keep that wet stuff away from your hands and prevent the spread of sickness.”
Kleenex brand has also introduced the Achoo by Kleenex Cold and Flu Predictor. Consumers visit www.myachoo.com and type in their ZIP Code, city and state, and they are able to see the cold and flu outlook for the next three weeks for their community, giving them ample time to run to the store and stock up on Kleenex, Elledge says.
“It uses CDC (Center for Disease Control) data and we work with a third party company that has a proprietary formula that allows them to leverage the trends and forecast out for the next three weeks with a 90% accuracy rate,” Elledge says.
Making an impression
Officials at Evergreen Packaging think they have a great story to tell. The Memphis, Tenn.-based company is trying to get consumers—and retailers—to see the many benefits of paperboard packaging, especially from a sustainability aspect.
Officials say their packaging, plus the company’s unique barrier technology, is designed to keep products fresh by offering oxygen and moisture-barrier protection and to reduce any environmental impact. “The cartons we use are perceived as more sustainable,” says Erin Reynolds, marketing director. “The cartons are recyclable; are made with renewable materials since 70% of the carton is made from paper and are made with renewable energy. It’s a win-win for everyone involved.”
Now Evergreen wants retailers—through their private label programs—to consider using its cartons for their store brand products. Besides some cost benefits, Reynolds says that switching over will be a great public relations move for merchants. “This type of packaging makes many consumers say things like how impressed they are that the retailer respects sustainability with their store brand products,” she says.
The paperboard packaging also allows retailers to make a big impression with their products. Reynolds says that from a design perspective, the packaging provides a cost-effective platform for branding and allows retailers to put a message on the product that can help educate consumers about the benefits of the packaging and the retailer’s commitment to sustainability.
Building a partnership with consumers
Officials at U.S. Alliance Paper think they have all their bases covered when it comes to the paper category.
The Edgewood, N.Y.-based company offers a wide spectrum of national branded, private and control label products, various price points and impeccable service that makes it that much easier for retailers to sell the products. The result, according to officials at the 20-year old company, has been an increase in sales across the board.
Right now, the company offers the Daisy line of paper products, including bath tissue, table napkins, facial tissue and kitchen towels, at a value price. The Earth First line features products that are made of 100% recycled paper with up to 80% post-consumer content whitened without chlorine bleaching. The Delicate Touch line features products that are designed to satisfy the price and value relationship for consumers who want quality at a consistent price, company officials say.
“We offer more than 250 SKUs,” says John Sarraf, president and CEO of the company. “And with the investments we are making we have the capability to produce a lot more product. Even with our private and control brands, we try to be above national brand equivalent. It is all about offering the best value and quality to the consumer and the best margins for our retail partners.”