Natural and sustainable products continue to gain favor with parents.
By Craig Levitt
Natural and green products may seem like a good idea, but oftentimes, especially in the current economy, consumers eschew these eco-friendly items for less expensive options. However when it comes to baby and child care products, it is no surprise that parents are opening their wallets, buying what they deem are the best and safest products for their children. While industry insiders agree that the product set in the baby aisle hasn’t changed all that much in recent years, sales of natural and green baby products are on the rise.
“There is absolutely no question in my mind that [products labeled] natural and clean are going to remain important,” says Jim Wisner, president of the Libertyville, Ill.-based Wisner Marketing Group. “Where those items used to be kind of niche categories before, they are mainstream now and retailers need to catch up to the fact that they are.”
While consumers are generally willing to spend a bit more on their children, the baby category hasn’t completely escaped the lingering effects of the recession, according to insiders.
Robert Passikoff, founder and president of New York City-based Brand Keys, says that while consumers may still be spending the same amount, if not more, on their children, he believes the recession has forced consumers to cut back on experimentation. He points to the fact that there seems to be fewer product introductions.
“I have not seen anything where I would turn around and say this was a category gangbuster,” says Passikoff. “For moms, now it’s an issue of ‘I am going to buy the right thing for my baby, but I don’t know what that particular item is.’ During better economic times she is willing to risk the money. That’s the issue now. They are risk averse but they are still looking for quality products.”
According to various industry reports, the baby care category is valued at around $7.5 billion, which is flat from last year. Industry insiders further estimate that retail channels such as mass merchants, club store and even drug stores have been steadily filtering share away from supermarkets. In fact, the Chicago-based market research company Mintel estimates that baby care sales at food stores has declined about 16% since 2003.
“As the consumer becomes more value conscious she is making changes to her shopping behavior,” says Rahul Mehrotra, vice president marketing retailer brands for Nice-Pak Products, based in Orangeburg, N.Y. “One change she is making is to shop more at stores that are perceived as higher value. Unfortunately this works against supermarkets. However some supermarkets are successfully countering this by getting squarely behind their own brands.”
Mehrotra says Nice-Pak works with its partners to ensure that their programs are designed to optimize growth based on each retailer’s individual business strategy. He adds that supermarkets have unique characteristics—such as convenience, location and assortment—that will always ensure they attract traffic, no matter the economic situation.
“The key to supermarkets success will be to ensure that their offerings are based on a deep understanding of their shopper, designed to meet her needs and well merchandised to capture her attention,” says Mehrotra.
Mixing it up
Monica Nassif, president and founder of Minneapolis-based Mrs. Meyer’s Clean Day, agrees that it is important for supermarkets, perhaps more so than other retail outlets, to get their product mix right. She says that she sees a lot of fragmented sections in supermarkets offering a lot of disjointed brands, causing nothing but confusion for shoppers while creating inefficiencies at the shelf. Nassif suggests that retailers focus on the few brands that will drive the majority of sales while using the majority of promotional dollars to help drive sales for those brands.
“The result will be increased sales for your overall category,” says Nassif. “[Retailers should also] merchandise products together as a brand.”
While attracting moms via the baby care aisle may take a little extra work on the retailers’ part, many insiders believe that this is often time well spent. They say that the category is important because many of these shoppers are young parents who are forming their shopping habits.
“If a retailer can win the trust and faith of these consumers,” says Passikoff, “more times than not these people become customers for life.”
At first blush it may be commonplace to think that grocery can be priced a bit higher than other retail outlets. That would be a grave mistake say observers. Wisner uses the diaper category as an example.
“Though diapers only reach about 7% of households, the fact is it is an item that is purchased every week,” says Wisner. “So they become fairly cognizant as shoppers what prices are, so it is really important to be aggressive in that category.”
Many believe the diaper category is one in which supermarket retailers can make significant inroads, particularly with private label brands. According to Chicago-based Information Resources, Inc., total sales of private label disposable diapers for food, drug and mass, excluding Wal-Mart, for the 52 weeks ended Oct. 4, private label disposable diaper sales were up 4.6%, accounting for more than $265 million and more than 14% of category dollar share.
“There is far less resistance on the part of this generation then there was years ago,” says Wisner. Some insiders say the difficulty for many private label brands is getting moms to move away from the brands that they are comfortable with—even though they may believe that the private label brand is just as good as the branded product. Some consumers may feel a twinge of guilt that they are not getting the best for their kids, industry observers say.
Passikoff admits that some consumers still think that way, but the times are changing. “Brand names have become less important,” he says. “Along with a real change in terms of just the market environment itself, you have a better educated consumer with more access to the information, i.e. the Internet. Not to take away from brands themselves, because they are established and do a good job, but the question is whether or not there is any brand differentiation.
“In baby care, you are talking about many of these names that have become category place holders. When there is no difference in the product you are getting, then people are not going to pay a higher price.”
One company banking on the value of a brand name is Grand Brands. The Grand Rapids, Mich.-based company recently launched a seven-product line of Lander baby lotions, shampoos, powders, oils and baby bath. According to Sue Hunt, Grand Brands president, the line, which she says is affordably priced, has received strong consumer support.
“With the recent re-launch of the baby line, we have received a vast number of customer e-mails expressing their fondness for the products and requests for local retailers to carry the line,” says Hunt.