With their compact size, and because they are usually invisible when in use, batteries can often be overlooked but they play a role in most consumers’ lives and their influence is growing.
Powering everything from household smoke alarms to TV remote controls, electric toothbrushes and kids toys, they are in use in most homes and the emergence of a new generation of electrical devices such as MP3 players and digital cameras guarantees the market will continue to expand for the foreseeable future.
According to Mintel, sales of the batteries in 2004 exceeded £0.75bn, having grown 18% since 1999. In its most recent report Mintel said supermarkets accounted for the largest share of battery sales and had achieved the strongest growth in the last two years, but the convenience sector also plays an important role. Battery sales in supermarkets benefit from being planned purchases as part of the regular grocery shop, but distress purchases – when a battery runs out and needs to be replaced – are focused on conveniently located local stores, and Mintel comments: “This sector continues to be a valuable retail distribution channel for the industry.”
Except for a handful of the largest wholesalers most battery manufacturers’ products are supplied to wholesalers via distributors, the largest of which is Supreme Imports.
Supreme is a distributor for all the big brands and sells 230 million batteries a year which equates to about 14% of the market, but when it comes to the independent sector its managing director Sandy Chadha reckons it supplies around 50% of the market. He also confirms the importance of the wholesale channel, which he says accounts for about half of his business.
With their relatively high price compared with the amount of space they take up batteries can also be a star performer for wholesalers, says Chadha. “Often it is the highest profit earning product per sq ft for wholesalers and retailers, and it’s recession proof,” he says. “The high street may be depressed at the moment but people are still buying batteries.” There is also scope for good margins, he argues, because it is not a price-sensitive product. “If someone wants a battery and the shop sells them they are not going to shop around. Very few consumers know how much they expect to pay.”
But catering for a distress market requires careful planning by retailers in order not to disappoint customers. According to Mintel, five cell types – AA, AAA, C, D, and 9V – account for almost 90% of sales, with AA by far the biggest seller, and Chadha emphasises: “It is important to have the right mix of the big five batteries.”
He adds: “The growth in the use of high drainage devices, such as digital cameras, has lead to a boost in sales of rechargeable and long life batteries. Rechargeable battery sales have grown about 10% in the last year.”
Because of their relatively high price compared with conventional batteries – until recently the batteries and a charger would start at about £15 – few wholesalers and independent retailers have been willing to stock them, but the leading rechargeable manufacturer Uniross is looking to change all that.
Marketing controller Simon West agrees the market has been limited until recently. “Ten years ago rechargeables were only about 2%-3% of the market, but it is up to 10% now and they are the fastest growing sector of the batteries market,” he says. He agrees demand is being driven by the boom in sales of devices such as digital cameras, and says rechargeables work out far cheaper than conventional batteries over the longer term.
However, the company is also appealing to environmentally aware consumers concerned about so many conventional batteries being thrown away once they are drained, and going to landfill. In addition, he says, recent developments make rechargeable batteries a more attractive proposition because they perform much better than they did five years ago. “We have doubled the performance and halved the price,” he says.
West says that the higher cost than conventional batteries has tended to deter many wholesalers from trying the product but those who have, such as Makro and Costco, have seen good results. “Costco started stocking one line about nine months ago and it has been a huge success. We did a special display box for them which contains six packs and can be positioned on the counter and it has sold fantastically well,” he says.
Now Uniross is looking to attract more consumers into the rechargeables market with a much lower cost entry point product which West believes is ideal for wholesalers and their independent retailer customers. It is introducing the X-Press series of products with four 800mAh Ni-Cd AA batteries at an RRP of £4.99 and the X-Press 150 charger with four 800mAh Ni-Cd AA batteries with an RRP of £5.99. Other charger products in the range are the X-Press Mini charger with two 2,100mAh AAs with an RRP of £6.99 and the X-Press 150 charger with four 1,300mAh AAs with an RRP of £7.99. In the battery only packs there will also be four 1,300mAh AAs with an RRP of £5.99 and four 2,100mAh AAs with an RRP of £8.99. “This brings the cost down much closer to the conventional batteries and, especially for smaller stores, will be a very good introduction to the rechargeables sector,” says West.
One of several big players in the conventional battery sector is Energiser with its Energiser and Ever Ready brands. Energiser marketing director Paul Ardron says the market has been growing steadily, although a concern is that volume has been growing faster than value. He says a trend towards larger packs, particularly in the supermarkets, and own label has helped to drive some value out of the market.
However, ACNielsen MAT figures to July 9 show the impulse sector up a healthy 6.9% and Energiser up 7.6%.
Ardron says the increase in the number of household gadgets powered by batteries is helping to provide growth, and demographic changes, with more households, and therefore even more gadgets, is also a factor. Like Chadha and West he also cites the growth of ownership of digital cameras as one of the factors fuelling growth in battery sales. He says: “The fact that Dixons pulled out of selling 35mm film cameras in August, because it says digital cameras have become the standard, is very significant. It suggests sales are set to grow well into the future because the potential market for digital cameras is huge.”
Energiser has a full range of products from its lower cost Ever Ready branded carbon zinc batteries, through its Energiser Ultra Plus alkaline batteries and up to its Energiser Ultimate Lithium cell which has been independently confirmed as the world’s longest lasting battery.
Wholesale is critically important for Energiser, says Ardron, with about half of its business in the UK passing through the channel, and he says it is a major focus for the business. One of the important factors for wholesalers selling batteries to retailers is visibility, he says. “Consumers tend to buy batteries when they run out or when they see them, and it is much the same for retailers in wholesalers,” he says.
“Wholesalers need to use point of sale materials to bring batteries to their customers’ attention, and they should consider positioning them close to the tills.” Ardron says Energiser works closely with its wholesaler customers providing POS materials and can provide tailormade displays for individual companies.
Education about the products and potential sales is also needed, he says. “We need to do more to educate wholesalers about how important batteries are to c-stores, pointing out factors such as the switch away from film cameras to digital cameras.”
Wholesalers should also be aware of the increase in battery sales that occurs in the run-up to Christmas, says Energiser’s UK marketing manager Katharine Goodchild.
She says 42% of the company’s sales take place between October and January and they refer to it internally as the “golden quarter”. Other sales peaks occur at Easter and also as the summer holiday season begins. She says: “Nowadays batteries are on the holiday list alongside sun cream as people are packing to go away,”
Energiser is keeping its brand at the front of minds with a £1.7m national TV advertising campaign featuring Mr Energiser, and Ardron says there will be further advertising in the run-up to Christmas.
Panasonic is another major company, and has been investing heavily in NPD aimed at producing batteries for use in high drain devices.
In May it launched a new range of batteries, Digital Xtreme Power, utilising a new type of technology. Panasonic claims they deliver up to three times more energy than alkaline batteries when used in digital equipment.
The new range has been backed by a £1m marketing spend on advertising and sampling, and during September and October the range will feature in advertising in the national press. To ensure maximum standout for its products on shelf, Panasonic has also introduced a new eye-catching packaging design across its entire range.
Tim Clark, marketing and communications manager at Panasonic, says the wholesale channel is a priority for the company. “It is hugely important. It is where we have built our foundation.” He advises wholesalers and retailers to stock up in readiness for the surge in sales between October and January. “During that period Panasonic makes 40%-45% of its sales,” he says.
Duracell dominates the UK market, accounting for more than two fifths of value sales, according to Mintel. Duracell Plus is the most popular battery for everyday devices and Duracell has recently updated the product with a new formula designed to increase its lifespan. Similar changes have been made to the Duracell Ultra M3, Duracell’s premium brand designed for devices such as digital cameras and CD/MP3 players.
Reacting to the strong growth in rechargeables, the company has also relaunched its rechargeable range with new eye-catching packaging and enhanced performance.
Duracell recommends that retailers stock the five key cell sizes, AA, AAA, C, D and 9V, and in addition it advises they should also offer its Ultra M3 batteries, particularly the AA and AAA cells which it says are the highest selling lines for use in audio devices and digital cameras.
Senior business manager Flavio Palumbo says: “We know that visibility drives sales of our brand. It is crucial for retailers to display batteries clearly and effectively in high traffic locations around the store, encouraging impulse purchases and potentially increasing profit in store. Surplus stock should also be ordered for the two key selling periods, summer and Christmas, to meet the high increase in consumer demand at these times.”