Baby product manufacturers are trying to spur retail sales with innovative products and marketing programs.
For the majority of retailers, there is no customer that is more valuable than a loyal customer. There are perhaps no consumers more loyal than new parents. Manufacturers of baby care products as well as retailers that meet these parents’ needs are likely to have earned faithful customers for quite a while. On the flip side, disappoint them just once and it can take a lot to win them back.
The ability to capture new parents as customers continues to be critical to success as the economy remains in flux. The uncertain economy also means that more parents than ever before are shopping the category based on price rather than convenience. Thus, there is increasing pressure on supermarkets to retain the market share it has in the category.
The biggest sub-segment within baby care is disposable baby products, primarily consisting of diapers and wipes. While parents’ need for these products will always exist, sales are waning. According Mintel, a Chicago-based research firm, supermarket sales of disposable baby care products have fallen every year between 2006 and 2011, dropping from $1.7 billion to $1.4 billion.
“Within the diaper category, the grocery channel has experienced declines as shopping habits are modified in search of the best value,” says Chris Ferdock, vice president of marketing for Duluth, Ga.-based Associated Hygienic Products (AHP), manufacturer and marketer of disposable baby diapers and training pants. “Of course the grocery channel has the unique advantage of being a routine shopping trip. As such, they need to develop and market a robust baby care aisle with the assortment and value meeting consumer demand.”
Industry observers suggest grocers provide consumers with an opening price-point item that can compete directly with mass, drug, dollar stores and online retailers. It is also important to stock larger count pack sizes to meet the consumers need to purchase in bulk.
Observers add that to retain these valuable consumers some supermarkets have created “baby clubs” that offer parents discounts and promotions on a variety of baby care products. According to a in a recent study by Cincinnati-based Procter & Gamble (P&G) and Glenview, Ill.-based Mead Johnson Nutrition, grocers should also strive to satisfy parents’ primary needs, which include: well-stocked shelves; integration of social media through the use of smartphones; at-shelf product codes; bringing mommy blogs into the shopping experience; and keeping preferred brands in stock.
In the diapers category, P&G with its Pampers and Luvs brands and Dallas-based Kimberly-Clark with its Huggies brand, still account for more than 80% of sales. However, according to Chicago-based SymphonyIRI Group, both manufacturers dollar sales are down at food, drug and mass outlets (excluding Walmart) for the 52 weeks ended April 15. In contrast, private label sales, accounting for 18.5% of sales, were up almost 1.5% during the same time period.
Making a good first impression
While private label products have fared well as consumers search for value, many new mothers remain hesitant in trying private label baby products regardless of the economy. AHP has created its “First Impressions” marketing campaign specifically aimed at attracting first-time moms.
Ferdock says the campaign revolves around promoting a robust design that delivers best-in-class performance and making a commitment to a product that provides uncompromising leakage protection and fit.
“It remains a challenge to persuade new mothers that private label diapers work as well as leading national brands,” says Ferdock. “This is the foundation to gaining the trust of new mothers entering the category and allows us to build a reliable brand message.”
Baby wipes is another segment in which private brands are flourishing. In fact, the private label baby wipes segment is the top dollar producer in the category, accounting for 36.0% of sales. Kimberly-Clark and P&G are second and third, with 35.8% and 25.0% respectively.
National brand manufacturers are not going down without a fight. Officials at U.S. Nonwovens Corp. (USN), based in Brentwood, N.Y., say the success of private label has caused the national brands to increase ad spend and heavily promote product. To stay competitive “retailers must continue to promote their own brand programs by utilizing price shield tactics while at the same time promote the quality of their baby product profiles,” says a spokesperson for USN.
A few months ago, Irish Breeze, a Drogheda, Ireland-based company and supplier of skin and baby care products in the U.K., launched its DermaH20 WaterWipes in the U.S. Preservative-free, the wipes are made from 99.9% purified water, making them less irritating to a baby’s skin than most other wipes, says CEO Edward McCloskey.
“Baby wipes is quite a stagnant segment,” he says. “There hasn’t been much innovation for a number of years. The brands are pretty much the same. They have the same packaging formats, it’s quite a uniform category and not very interesting for a consumer to shop. So what we are bringing to the party is real differentiation in a category that is currently sorely lacking it.”
With price points a little higher than traditional wipes, McCloskey adds that DermaH20 WaterWipes also offer retailers the opportunity to earn higher margins.
Babying baby’s skin
The Derma H20 WaterWipes address what for years now has been one of parents biggest concerns—using products, particularly baby wipes and lotions, that are applied throughout the day, that contain ingredients that may be harsh on a baby’s skin. As natural products in general become more mainstream, parents seem to looking for baby products that fit the bill as well.
“Consumers are flipping around bottles and boxes, reading the ingredients more thoroughly and asking a lot more questions, looking for products that are true chemical-free options,” says Tino Reiser, founder and president of Coral Gables, Fla.-based BabySpa, maker of natural skin care products for babies. “It can sometimes become a frustrating shopping experience to find skin care products that are safe, gentle and effective but also serve a skin care purpose—protect a baby’s skin.”
After three years of research, Reiser says BabySpa has developed an innovative line of products inspired by therapeutic spa cultures and ancient healing traditions. He adds BabySpa also recognizes that newborns, infants and toddlers each have different skin care needs and the collection follows a “stages” approach based on children’s developmental milestones. Stage One products are for newborns through crawlers and Stage Two products are for walkers through pre-schoolers and beyond.
“Our natural bath and body care collection provides parents the opportunity to become comfortable with one brand and stay with it throughout their babies’ growing years,” says Reiser. “The BabySpa collection prides itself on offering parents a complete ‘A to Z’ solution, with everything from the essentials: diaper cream, moisturizing body lotion, shampoo and body wash to more spa oriented components including bubble bath milk, face cream and massage oil.”
Reiser says that in order to remain competitive and appeal to these better-educated parents, grocers need to change their baby care offerings by getting out of their comfort zone and carry a bigger variety of natural items.