Nonfoods Talk: Feeling the power

Rather than go the way of photo/film, the batteries category is re-inventing itself as consumer needs change.

by Seth Mendelson

The retail industry can learn a lot from what is happening in the quickly changing batteries category.

What started as a trickle of products that no longer needed replacement batteries has now turned into a flood of items, leading some observers to say that sales in this billion-dollar category are starting to stagnate as demand decreases.

Fortunately for grocery retailers who have reaped huge profits from this category for decades, the batteries segment seems to be in the midst of a massive switchover, rather than following down the destructive path of such general merchandise segments as film/photo and automotive. Kudos have to go out to officials at the major batteries suppliers, who recognized the shift in demand early on and have swiftly developed new products to meet consumers’ changing port­able power needs.

Your mom’s batteries section is now rapidly turning into a “power-source” department that promises to have a dramatic impact on retail merchandising in the future.

The batteries category has a long and storied history in supermarkets. Thanks to strong consumer de­mand, the ability to generate incremental sales and great cross-merchandising possibilities, the category has been a mainstay of most grocery stores’ general merchandise strategies for years.

Things, in fact, got better in the late 1990s and early 2000s as more and more hand-held devices exploded onto the marketplace, most of which chewed up AA and AAA batteries at a record pace. The feeling in the industry was that as long as new consumer electronics products continued to flood the market, the batteries category was going to continue to be a bonanza for those retailers and suppliers that got behind it.

Increased demand led to new, higher-priced products, which, in turn, led to higher profit margins for virtually everyone involved. There appeared to be no stopping this category.

Something went wrong along the way, however. Beginning seven or eight years ago—and perhaps fueled by the introduction of the Apple iPod and now the iPad—more products have been introduced to the market that feature enclosed recharegeable batteries.

So while the batteries category is here to stay—thanks to the still-large need for traditional batteries to power such products as flashlights, toys, smoke detectors and clocks—the bloom is off the rose.

That’s the bad news. The good news is that the leading manufacturers—Procter & Gamble’s Duracell brand and Energizer—have quickly and efficiently updated their product mixes to include items that will meet the needs of a new consumer base and should ensure that the batteries category is not going to disappear and, in fact, should continue to thrive at supermarkets. Both companies are vigorously introducing and promoting items that these shoppers still need. That includes inductive chargers and back-up chargers so that consumers can either conveniently recharge their mobile devices or get extra power when necessary.

They are also introducing more and more specialized items, including solar-powered batteries and a new wave of rechargeable batteries.

Now retailers have to do their part. First, they cannot give up on traditional batteries and they must continue to cross-promote these products in such areas as toys, hardware, housewares and consumer electronics, not to mention the front-end. Second, they must understand that to truly benefit from the new “power-source” segment, they must develop a separate department that stands out with consumers. While this section does not need a lot of space, it needs the signage and visibility to grab shoppers’ attention and show them that they do not have to visit a consumer electronics store to get these power-source ac­cessories.

The result for retailers will be greater sales and profits. More importantly, it will help bring the merchant further into the 21st century, one that promises to change the way consumers shop and use products on a regular basis.

Seth Mendelson can be reached at  646-274-3507, or smendelson@groceryheadquarters.com.

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