Store Brands delivers unprecedented strategic and tactical information needed by retail executives to develop and support compelling, differentiated store brand programs to build customer loyalty.
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5 2 Store Brands / December 2015 / www.storebrands.info E conomizing remains important to American consumers, who continue to search for ways to trim expenses. While this frugality keeps the household paper product category in a stagnant state, it also creates an opportunity to show consumers that better-quality products can equal better value for them, global market research firm Mintel concludes. Sales of household paper products have been weak, rising only 6 percent between 2009 and 2014, and were nearly flat in 2014, clocking in with $17.3 billion in sales, according to Mintel's February report, "Household Paper Products — US." The economic uncertainty of recent years has helped store brands (as well as value-tier national brands) gain share in the category, Mintel notes. Virtually every household purchases toilet paper and paper towels, which dominate the segment with more than 80 percent of total category sales. Sales of facial tissue and paper napkins, however, declined between 2009 and 2014, mostly because these products are considered discretionary, or replaceable by other paper products or non- disposable alternatives, according to Mintel. Flushable wipes and moist towelettes designed for use on faces and hands are performing well, but comprise only 3 percent of the category. Mintel advises marketers to sell consumers on the idea that trading up to higher-priced, higher- quality paper products will give them better value for their money. Trends with traction Consumers are becoming more sophisticated, and desire "ultra-premium" tier products, says William McKernan, vice president of private label sales for Global Tissue Group Inc., Medford, N.Y. "The ultra-tier of products will continue to grow and get bigger next year. Ultra towels have already been established and are the driver in that tier. Differentiation in ultra bath items, such as 'strong and soft,' are the most significant new offering in the category," he explains. Retailers have committed to the development of store brands as a method to gain their consumer's loyalty, McKernan says. "The result is the development of ultra, mid-tier or value-level items with higher quality that offer the consumer value versus the national brands," he states. Trends on the horizon Items developed with bamboo/bagasse have the greatest potential to hit big in retail, McKernan says. Used in the manufacture of pulp and paper products, both bamboo and bagasse (the fibrous plant residue of sugarcane and similar plants) are compostable, renewable resources. Because it is naturally pest-resistant, bamboo can be grown with little or no pesticides. It also has antibacterial, anti-fungal and odor-resistant properties and is highly absorbent. Bagasse, the fibrous matter that remains after sugarcane stalks are crushed to extract the juice, is used as a biofuel and in the manufacturing of pulp and paper products, as well as building materials. Consumer demand for sustainable products continues to grow, McKernan observes. "Within the millennial demographic, this demand is becoming a requirement," he says. "Consumers are more informed and willing to pay for higher- quality items that offer additional attributes, especially ones that are environmentally friendly." And as demand for bamboo/bagasse items increases and the products gain market share, those items will become more price-viable, McKernan remarks. — D. Cvetan A makeover for paper? Premium, environmentally sustainable paper products could push the category out of its stagnant state. PAPeR PROdUCTs