New Growth for Old Categories
There is new life in some large, long-established categories, according to presentations at a recent editor's briefing by Procter & Gamble (a RetailWire sponsor) in Cincinnati.
According to Jim Flannery, Managing Director, Customer Development, Procter & Gamble Global Operations, the company is focusing on two moments of truth - the first when a consumer makes a decision at the shelf, and the second when they actually use the product. According to Ed Shirley, Group President of P&G North America, they are striving to constantly innovate by learning fast and turning insights into action, which leads to commercial success. The company is currently spending $200 million per year on consumer research, and conducting a staggering 10,000 studies per year.
For the "old line" consumer products companies (P&G started selling soap in the 1830's), it really comes down to inventing completely new products and categories, while continuing to push organic brand and category growth. P&G gave trade publication editors glimpses of three categories where it's been able to do this: beauty, bath tissue (mainly Charmin), and laundry.
In beauty, P&G seems to be focusing on the "beauty enthusiast" - those 30 percent of consumers who spend 70 percent of the dollars in the category. One example of success they've had is with Olay Regenerist Derma Pods, which are basically single use pads with the treatment inside that reduce puffiness and wrinkles around the eyes.
P&G believes retailers can capitalize on the emotive quality of health and beauty categories by getting involved in the "retailtainment" trend - having beauty advisors in-store; using their websites to educate consumers; and redesigning departments to make them more appealing.
In the laundry category, P&G is focusing on growing their billion dollar brands - Tide, Downy and, soon, Gain. A recent success has been Tide to Go for treating stains on the run.
High-Density Liquids (HDL's) now make up nearly 80 percent of detergent sales. The big news there is that P&G brands are getting "compacted" as 100-oz. bottles go to 50-oz. bottles, and so on down the line, beginning in September. Benefits accrue to consumers (smaller package size), retailers (supply chain efficiencies), and the environment (less materials and energy used).
According to a May 21 article in the Wall Street Journal, all major players in the industry, including Unilever (All & Wisk), Henkel (Purex), and Church & Dwight (Arm & Hammer and Xtra), are going the compact route. The Journal mentions that retailers will be able to get more bottles on the shelf (reducing out of stocks and labor costs), while manufacturers will cut costs (packaging and shipping), but that there could be a challenge convincing consumers to pay the same price for half the product, albeit double-powered. No mention is made of private label in the story.
The environmental benefits of compact detergents would seem significant as well, especially at a time when "green" and "sustainability" are industry buzz words. Yet a May 30 WSJ letter to the editor indicates that at least some consumers misunderstand the initiative and view it as a move to increase consumption.
On bath tissue, the big news for P&G is that Charmin has its largest initiative in history launching in August. Charmin Ultra Strong (Red) is going from one ply to two, increasing strength and yielding less lint, while staying just as soft. While this might not seem to be a big deal, P&G is projecting increased sales of $240 million from the initiative. And, they are looking for 100 percent consumer awareness at launch, so suffice to say some big media bucks will be spent.
Charmin is also doing some non-traditional media such as the Charmin restrooms you may have heard of in Times Square, demos at state fairs, in-pallet demos where consumers can compare old versus new right from end-cap displays, etc.
Bottom line (so to speak): There still seems to be a ton of life in some of these long-established categories. The branded manufacturers obviously have to keep the pedal to the metal on innovation, in order to stay ahead of each other as well as private label, and to figure out what the consumer wants next.
Discussion Questions: What big retail categories do you think have the most room left for innovation? What new products have you seen lately that had the "wow" factor?