Squeezing oral care

The oral care category is losing space at retail, which means that some products are no longer making the merchandise mix. Is this good for the category?

By Seth Mendelson

If your name is Crest or Colgate, or even Listerine, you appear to be safe when it comes to the oral care merchandise program at most supermarket chains. If your name is not one of those brands, or a few other well-known products, the oral care category is starting to get a little tight right about now.

Many grocery chain nonfoods buyers are being asked to cut back on space and oral care—which usually gets its fair share of room in most supermarkets—is no exception. On average, retailers questioned by Grocery Headquarters say they are being asked to give up as much as 10% of their space in many HBC categories. Less room means fewer products.

“Well they are not going to take space away from Crest, are they?” asks a vice president of sales and marketing for a smaller oral care supplier. “They are going to go after the smaller brands first because it is easier to do so. Of course, I think this is the wrong strategy and it is going to hurt retailers in the long run.”

Some industry officials agree that this strategy could end up hurting retailers in the wallet, particularly since some of these items carry higher price points or higher margins.

Dick Hyken, executive vice president for Pomona, Calif.-based World Trend, notices the same thing. He says that many grocery retailers are reducing SKUs in oral care to get back to an 80/20 program, where 80% of the business is done by 20% of the products. World Trend manufactures licensed toothbrushes, primarily for children.

“I think they figure they will not lose much with what many industry officials are calling SKU-rationalization,” he says. “But I do not think it works because so much of what we sell, like licensed property toothbrushes, are incremental and impulse purchases. These products are never on a shopping list. They sell because consumers see them while shopping and realize that they should buy the product.”

Daniel Enriquez, vice president of sales for Buena Park, Calif.-based Dr. Fresh, which sells Binaca breath freshening products and the Firefly flashing toothbrush, points to the fact that supermarkets are much more demanding than other retail outlets. “Grocery stores make it difficult for us with their slotting fees,” he says. “We have built a very nice business in the drug and mass trades, but we are just getting going with grocery stores. There is a nice opportunity there for grocery stores, especially with the children’s end of the business.”

“Retailers need to do what they do best,” says Sue Hunt, president of Grand Brands, a Grand Rapids, Mich.-based company. “They need to rationalize the number of sizes offered, reduce the facings of regular brands and premium brands while still carrying them to give the consumer variety and increase the private label and opening price point branded products.”

The cry for more space is not being helped by the fact that oral care sales growth has been relatively flat for the last several years. With few innovations in the category, consumers are not buying more oral care products nor trading up to higher price and higher margin products. According to Information Resources, Inc., toothpaste dollar sales in food/drug/mass excluding Wal-Mart rose by just 0.5% in the 52-weeks ended Dec. 27, while mouthwash dollar volume dropped by 2.1%.

Still some see the silver lining in the flat growth. “The oral care segment volume has stayed consistent through the economic downturn,” says Hunt, whose company makes a number of different products in the category under the Lander brand name. “There has been a shift to the lower cost products from the higher cost products. From a Lander point of view we are seeing strongly increased volumes through the dollar store channels.”

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