Inside This Issue - News
Tough times for general merchandise
May 17th, 2010
NEW YORK – The recession has had a major impact on the general merchandise department, as many consumers have limited purchases of discretionary items and even some consumable items.
According to SymphonyIRI Group Inc., dollar sales of GM products declined 4.6% in 2009 while unit volume fell 8.3%. More recent data from Symphony IRI, however, shows a number of GM categories recovering over the 52 weeks ended March 21,2010.
Although price deflation has attracted the most headlines as a factor in weak retail sales, a recent report from SymphonyIRI, “2009 CPG Year in Review,” points out that 63 of the top 100 consumer packaged goods categories actually experienced higher-than-average price increases last year, driven by a diverse range of factors. For instance, laundry detergent experienced a 19.9% price increase while dog food was up 12.7%.
Inflation helps explain some of the dollar sales increases that have outpaced unit volume, as seen in hair accessories and dry dog food.
But growth in a number of GM categories is being driven by innovation, not only in product development but in marketing as well. For example, dollar and unit sales of both liquid and powder laundry detergent declined in the most recent 52 weeks tracked by SymphonyIRI, but that erosion reflected the 213% growth of a new segment based on detergent in packets and bars.
Most of that growth was driven by the top two brands: Henkel North America’s Purex Complete 3-in-1 and Procter & Gamble Co.’s Bounce, which together accounted for nearly 69% of dollar sales.
“As others drew back from investing in innovation, we doubled down on it,” says Eric Schwartz, vice president of laundry care at Henkel North America. “This was the largest launch for Henkel in any category.”
He adds that Henkel not only increased its marketing efforts but is also exploring new emphases and new media, particularly social media. For example, because Purex Complete 3-in-1 involved a new product form, the company emphasized free samples as a way to overcome shopper skepticism. But the sampling was driven by television advertisements that referred viewers to the Purex web site to obtain samples.
Because customer surveys are showing a high degree of purchaser satisfaction with the product, the company has altered its TV ads to incorporate customer testimonials.
“In the middle of the recession, the consumer is still willing to pay for innovative ideas, even when they cost a little more,” says Schwartz. “The key for both retailers and manufacturers is to take a hard look at whether a new product delivers a benefit the consumer is willing to pay for.”
One of the strengths of GM over the years is that it encompasses a huge and diverse array of products and categories, many of which do indeed thrive on real innovation.
For example, Shed-Rain, a leading umbrella and rainwear manufacturer, has partnered with 3M Co. to introduce a new line of WalkSafe umbrellas and rainwear featuring 3M Scotchlite Reflective Material, which provides enhanced visibility through 3M’s Retroreflection technology.
In low-light conditions, the material reflects light when a subject is illuminated by a light source, such as vehicle headlights, offering pedestrians greater safety.