Household products and toiletries may not sell as quickly as some other lines such as confectionery, but they do tend to have a higher price tag and much higher cash margin, so it’s not surprising a lot of wholesalers’ customers stock them. But it’s not an easy option for independent retailers because of the competition they face from the supermarkets.
DCS, a wholesaler that specialises in household and health and beauty products, reckons overall sales of its ‘retail-based’ homecare products are pretty flat. DCS commercial director Richard Jorden says: “Traditional ‘retail-based’ homecare sales are indexing at 98%, versus our company growth of 112%. However there are two key sectors that have shown phenomenal growth over the course of the past 12 months.
“Our ‘professional goods’ sales – such as big box powders and five litre liquids – are indexing at 133% through traditional cash and carry. In addition some of our more entrepreneurial customers are forging ahead with big value multi-packs giving them a point of difference over local competition, and offering the shopper better value.
“Whether these packs are being bought by professional users or for personal use in the home is unclear, but one thing is sure, the trend towards bigger packs will continue to grow and allow the independents to prosper. The question is, how long will it be until we see them on the shelves of Tesco et al?”
In addition to wholesaling to retailers DCS also acts as a distributor to the wholesale channel, working on behalf of branded manufacturers to deliver to more than 400 cash and carries and delivered depots, and the wholesale channel represents 67% of its total sales, so it is well placed to gauge performance in the wider market.
Jorden says: “The traditional ‘bread and butter’ lines continue to sell well – powder, wash up, bleach etc – and these are the lines where we must focus on range and availability. After all, when was the last time you rushed down to your local independent retailer to buy a Flash Power Mop?”
To help its wholesale customers, DCS set up a category management programme and one of the groups it has worked with closely on household and health and beauty is cash and carry members of Landmark Wholesale. It implemented bay branding and planograms and regular merchandiser visits to depots, resulting in an average sales increase of 36% in the first year.
In addition to getting the range right, Jorden says promotions work very well in the household category. He says: “In the main, the category is very responsive to promotional drives, and tends to be very price conscious. The introduction in laundry, for example, of near permanent price-marking across all key brands – Persil, Ariel, Surf and Daz – has proved a real winner.”
For the overall household market across all sectors, sales are showing the strongest growth for several years. IRI figures to the week ending April 21 show main wash up 3.3%, conditioner up 5.1% and household cleaning and bleach up 6.5%. John Bedford, business delivery leader – household, at Unilever, says one of the factors behind the strong performance in household cleaning is the development of separate cleaners for specific areas, so consumers are buying several where they would previously have bought one. For instance strong performances from Cif Oven Cleaner and Cif Stainless Steel Cleaner have helped increase Unilever’s MAT by 13.3% in this category.
The main wash category has also shown growth as a result of the introduction of concentrates by the main manufacturers, with consumers trading up to the new variants. Unilever invested pound;15m in launching its Small Mighty variants of Persil and Surf in February, and last month it re-launched its Comforts Concentrates range. Meanwhile P G is planning a pound;4.4m multi-media campaign next month to drive shoppers to convert from regular Lenor Fabric Softener into its concentrate range.
Bedford says that the wholesale sector is seen as increasingly important across Unilever’s business. “It is important to us that our products are where the consumer wants to buy them, so wholesalers have an important role in distribution. We are developing a clearer emphasis within our teams on the skills needed to engage with the wholesale channel.
“We see a significant opportunity for growth through the channel and we will be looking at the area closely to maximise that growth.”
One of the factors holding back the wholesale channel, says Bedford, is the slow adoption of new products by independent retailers. He explains: “Innovation often takes longer to get through to the independent channel than the major mults. Small Mighty has been a huge success in the mults since its launch earlier in the year, but it’s so right for the independent sector. It’s better environmentally, it takes less shelf space and consumers are trading up to it. It should be pulled through the wholesale channel.”
Another supplier which sees the wholesale channel as an important route to market is Chartered Brands. Sales director Bob Cheeseman says: “While the cash and carry sector growth rate is lower by comparison to the multiples, we believe that it still represents a very viable and effective means of reaching retailers, particularly if products are tailored for its needs. We are conscious that the wholesale and cash and carry channel needs a differentiated offering in order for their independent retailer customer base to compete against the growing challenge of multiples moving into the convenience store sector.”
Cheeseman says Chartered Brands carried out research among retailers and cash and carry staff to find out exactly what was needed in the category and what were the best sellers and why? The key points that came across were that retailers needed to be able to compete with the major multiple grocers and the best way of enabling them to do this was to offer secondary brands, with competitive retail price points.
He adds: “In order to ensure retailer discipline, price-marked packs were seen as being essential. Further to this, and to gain retailer trial, the overriding opinion was that the fewer the units in the pack – and hence the lower cash outlay – the more chance there was of gaining a wider retailer distribution base. The final point was that the units should be visible to the retailer, so being produced in cardboard trays with shrink wrapping was seen as essential.
“Therefore, we made the decision to launch Sqezy washing-up liquids, Sqezy/Pow trigger cleaners and Frish toilet cleaner all in six-pack, shrink-wrapped and price-marked packs. Sqezy washing-up liquid is now exclusively available to this channel and, furthermore, we redesigned the 500ml bottle.
“Shrink-wrapping gives the products visibility in the cash and carry depot, and the price-marking gives the independent retailer a very competitive positioning. The move to six-packs also means a lower cash outlay, and the product can go straight on fixture.
McBride is another manufacturer which gives positive support to the independent sector, according to Lee Duplex, buying director of Rayburn Trading. He says: “McBride has been very supportive for many years. Its Clean Fresh range of household products for the independent sector gives independent retailers a competitive edge.”
Like Unilever and P G, McBride has gone down the concentrates route with its most recent launch in its Surcare range of products for consumers with sensitive skins. Its latest product is a 750ml concentrated fabric conditioner.
A range of cleaning products that responds to the increasing environmental concerns of consumers has been produced by Ozkleen. The Power range of products comprises cleaners for kitchens, baths and carpets, as well as a pre-wash powder and clothes and wipes. The company says its Bath Power product contains no chlorine, phosphates or ammonia, but still provides a powerful cleaning action with a mild natural plant acid and surfactant.
Air fresheners is another category that has seen major product development. Ambi Pur claims a first in the electricals sector with a product that neutralises odour, freshens and then provides fragrance. The Ambi Pur 3volution 3in1 Odour Neutralizer comes in two fragrance variants, Spring Gardens or Spring Flowers.
Reckitt Benckiser is also keeping up the pace of change with the launch of a new automatic device. The Freshmatic Mini is designed to be a discreet automatic spray and Reckitt Benckiser says it will be investing pound;15m in a brand support package. Ben Crawley, Air Wick brand manager, says: “The autospray segment is already fast growing following the success of the Freshmatic launch in 2004, but we know Freshmatic Mini will further appeal to consumers who are moving away from manual concentrated sprays. The new product will deliver incremental usage for existing autospray users by tapping into areas where a small and more discreet format is desirable.”
Richard Jorden at DCS adds a note of caution, however: “While one should applaud the brand owners continual strategy of adding value to the market, resulting in increased spend and profit – six years ago we would spend 69p on an air freshener, now we spend pound;6.99 – we must be wary that the drive for development is geared towards the multiples, and the consumer spending more in their weekly shop, rather than at the local store.”
Like the household category, toiletries is another tough market for independents due to the activities of the supermarkets, but wholesalers and independents retailers can make attractive returns if they get their price points and product right. Manchester-based Rayburn Trading has a 50-year history in wholesaling toiletries, and although it has branched out into many other categories, toiletries is still one of its specialities.
Buying director Lee Duplex says manufacturers need to tailor packs to certain key price points so independents can offer their customers a value proposition. He singles out Cusssons as a company that has worked with wholesalers to tailor products such as Imperial Leather and Carex for the independent market. He says some other companies have previously walked away from working with the independent sector, but some of them are now trying to expand again in the sector so they are not so dependent on the supermarkes.
Another distributor that is strengthening its activities in the health and beauty sector is Jenks. Chris Webster, who heads up the health and beauty division, says: “Increasingly companies view the convenience sector as important, but because of the costs involved in providing a resource to service this sector, they are looking to outsource the sales and marketing. For this reason, the sector accounts for a large amount of Jenks’ business and is a growth area for many of our health and beauty brands.
“We can service the wholesale channel because we offer value at the front end and cost-savings at the end. For example, we can deliver composite pallets or even one case minimum drops. Across all of Jenks’ lines, we are seeing significant growth through the wholesale sector – there is a lot of opportunity for distribution wins and incremental sales. We work very closely with the wholesale trade to develop strategic plans for our brands to really make the most of these opportunities and this is contributing to what is already a very healthy sector for our principals.”
One manufacturer that is investing heavily in promoting its products is Unilever. Already this year it says it has allocated pound;9m marketing spend to its re-launched Sure range, invested pound;5.5m in promoting Impulse, and is supporting its Dove Pro Age range with a pound;12m spend. Its latest spend is pound;4m on a marketing campaign for Sunsilk, which sees the brand link with the girl band Girls Aloud. The campaign includes TV advertising, and an on-pack promotion to drive awareness of the existing Sunsilk range and support the introduction of a new variant.