Innovative new products, improved private label, environmental awareness and aggressive pricing are helping to grow the paper category.
By Richard Turcsik
The big news drawing the attention of many readers of New Jersey’s Sunday Star-Ledger on Aug. 7 was not the downgrading of the nation’s credit rating or a proposed toll hike. Rather, it was the huge sale on paper towels and toilet tissue at ShopRite that caught the eye of value-seeking shoppers. The chain’s wrap-around ad on the front page highlighted the big weekly specials, including a 12-pack of Angel Soft bath tissue half-price at $2.34, and an “All Week Price Break” on a 6-pack of Sparkle Thirst Pockets paper towels at the “Wow!” price of $3.84—a savings of $3.85.According to industry officials, ShopRite’s ad is a classic example of using paper goods as a tactic to draw shoppers into stores.
“A featured paper item can have a very powerful effect of driving store selection for consumers if they see a paper sale,” says Doug Daniels, brand manager, strategy and innovation for the Scott brand, which is owned by Dallas-based Kimberly-Clark Corp. “There is no getting around that every house needs bathroom tissue. So if you are seeing a good deal on that it will actually be a very influential driver to get traffic to your store.”
“Retailers use the paper category as a traffic builder,” says James D’Agosta, senior vice president of sales and marketing for Marcal Manufacturing, based in Elmwood Park, N.J. “Oftentimes you will see retailers putting paper products on their front page either as a loss leader or at very low margins to put really hot price-points out there to get consumers in the store and get them to buy other items and up their basket ring.
“We’ve seen promotion for all the big guys—Kimberly-Clark, Georgia-Pacific, Procter & Gamble—spending at trade rates that are really unprecedented. We’ve been doing the same. Consumers are seeing very aggressive price points on larger packs. We are seeing our bundle packs sell more because we are promoting them more aggressively and getting much more feature and display activity behind them,” he says.
In today’s economy, price is definitely a key factor, Daniels says. In some very economically depressed markets that means smaller packages, such as the single-roll Scott 1,000, are gaining steam. “In this economy we definitely see consumers shopping more on price point and dollars-in-wallet vs. really looking for the best value on a package,” Daniels says. “There are breaking points, even in our category, of how much people are willing to pay at any one trip. Retailers have to make sure that they are delivering on those key pack sizes and price points.”
Retailers also have to deliver on the innovation. In 2011, Scott rolled out three key innovations: Scott Extra Soft toilet tissue, an improved more durable paper towel, and —in what industry observers say may be the biggest innovation to the category since Scott invented rolled toilet tissue 99 years ago—the Scott Naturals brand, billed as the first tube-free toilet tissue on the market. According to Kimberly-Clark officials, some 17 billion toilet tube rolls are discarded in the U.S. each year, accounting for 160 million pounds of additional refuse. According to a Scott survey, only 37% of consumers say they recycle toilet tissue rolls.
Scott Naturals was introduced last year nationally in Walmart and is now being expanded to other retailers in the Northeast. “We are still very much in a test mode of this innovation and technology and we are going to be rolling out to additional customers in additional geographies,” Daniels says. “We certainly have our eyes on expanding if we continue to see the great results for Tube Free that we are currently seeing in the market.”
Innovation is also being seen in paper towels. In June Atlanta-based Georgia-Pacific introduced its “Now Stronger” Brawny Paper Towel. “It is stronger and more durable, which is part of our ongoing efforts to grow towel occasions within the household,” says Lanier Thomas, director of Brawny brand. “That should help our retail partners continue to see growth within this category because Brawny can now be used for everything from washing windows to scrubbing pots and pans. It has the durability in each sheet to scrub away grime, which helps the paper towel category capture those occasions from durable items, like cloth towels and sponges.”
To promote the “Now Stronger” Brawny, Georgia-Pacific is using a combination of media, including TV, print, online and social media such as Facebook, to reach key influencers, Thomas says.
The best way to promote paper towels in store? A good, old-fashioned endcap display. “Getting the product on display generally generates the highest lift for the category and help drive impulse purchases,” Thomas says.
While stronger paper towels are economical because they can be used more than once, the recession has made consumers more purposeful and resourceful in general. As a result they are hunting for simpler, better options, according to Matt Crum, vice president of retail marketing for Oasis Brands, the Winchester, Va.-based manufacturer of the Paseo brand line. “As evidenced in the bath tissue category, consumers are turning toward the emerging ‘next generation’ value brands like Paseo—with high quality products and clear, simple messaging.” According to company officials, Paseo is the fastest growing brand of bathroom tissue with sales growth in the triple digits.
Widely distributed in the West and making inroads in the East, Paseo offers a standardized solution to purchasing paper products. “We offer a single, simple roll-length on each variant—not the confusing mix of up to four roll lengths like some of our competitors,” Crum says. “This makes it easier for consumers to know what they’re getting, and typically our rolls have more than competitors’ double rolls, so each roll lasts.”
Crum notes that Oasis offers retailers customized consumer marketing communications programs to drive awareness and trial. “Retailers stocking Paseo have found their categories have grown without impacting their private label brands.”
While the national paper brands continue to slug it out with half-price sales and other promotions, an increasing number of retailers are stepping up their private label paper products offerings. “Retailers are coming up to speed very quickly on how to market their private label products as ‘branded’ items,” says Brian S. Carlson, director of marketing, consumer products-USA, at Cascades Tissue Group-Sales Inc., based in Eau Claire, Wis.
“At Cascades we have a full-service creative team to help retailers brand their private label offerings,” Carlson says. “In the past, many private label products appeared somewhat generic in their labeling and package design. This is changing and consumers are seeing private label products on shelf marketed like national brands. Sampling is the best way to convince consumers the quality of the private label is NBE [National Brand Equivalent], however, we have also seen some well done cross-promotions in the category.”
To improve sales packaging should “pop off the shelf,” Carlson says. “Studies that we have conducted show items placed on display end caps and in action aisles provide sales lifts as high as 29%. In the aisle, placement next to the NBE products with a ‘compare-to’ price label is very strong as well,” he says.
It also helps if your private label paper products make a statement. And they do if they are manufactured by Spokane, Wash.-based Clearwater Paper Corp., which offers Forest Stewardship Council (FSC) certified premium and ultra-premium bath tissue and ultra-premium paper towels to retailers. The Rainforest Alliance’s SmartWood Program performed all certification audits to ensure conformance to the FSC standards.
“This is another way of marketing virgin product, because virgin is much better quality than recycled, that still communicates the fact that this is a product made from timberland sources that are very well managed,” says Bruce Woodlief, Clearwater’s director of marketing. He says that most paper products are made of blends of hardwood and softwood pulp from around the world.
The certification levels can give retailers a certain cache and unique selling proposition. “There is not a lot of certified fiber out there, so large manufacturers like Georgia-Pacific, Kimberly-Clark and Procter & Gamble are too big, but as a smaller manufacturer we are able to get enough certified fiber and make it a viable marketing ploy within our arsenal,” Woodlief says. “This is a perfect opportunity for someone to feel good that they are buying a product that is good for the environment because it is coming from sources that are very well managed.”
Blue Bin Forest
Marcal has been touting environmental responsibility for years; all of its products are made from 100% recycled paper. “We say we get our products from the Blue Bin Forest because we source the majority of our fiber from the blue recycling bins located in office buildings, hospitals and schools all across the East Coast, as well as a long list of municipalities in New Jersey and New York that we buy paper from,” says D’Agosta.
Like virgin product, Marcal’s is also made from a blend of fibers—in this case from magazines, office paper, newspaper and cardboard. “We have a unique recipe, if you will, that allows us to make different grades for our commercial, office line and retail line. We even have a flanker brand, a lower quality brand that lets us get much hotter price points for retailers where that is warranted,” D’Agosta says.
The Marcal Small Steps brand is uniquely positioned because it is a mid-tier brand that is differentiated by being green, he says. “We go to market as a value brand that also happens to be green. You can do something for the environment while also doing something good for your wallet,” D’Agosta says.