It’s survival of the fittest in the price-led household market. As own label gains ground, brands are having to evolve to survive

When Charles Darwin published his theory of evolution, he probably wasn’t thinking about loo roll. Yet many of his principles could easily apply to today’s household market. Because in this increasingly competitive environment, a survival of the fittest scenario is emerging.

No longer can brands simply trade on being a big name. In this price-driven environment, they are needing to evolve to justify their price premium over own label. Those that don’t are suffering hefty declines.

The figures say it all. At a first glance, brands may appear to be doing marginally better than last year, when value edged up just 0.1%. But this year’s 0.6% growth belies a 2.5% decline in volume [Kantar 52 w/e 6 October 2019]. Even the biggest names aren’t safe. The market-leading brands are in decline in every area of household apart from toilet paper.

Own label, by contrast, is flying. Retailer ranges delivered more than 80% of the £125.8m extra household sales this year, leaving brands with less than 20% of that figure. It’s the third consecutive year that own-label growth has outpaced that of brands, which are suffering from “a decreasing share of spend”, says Kantar analyst Julia Fine.

Still, brands are determined not to take that lying down. They are increasingly trading on added-value credentials - environmentally friendly claims, premium cues and even Mrs Hinch recommendations - to beat the relentless rise of cheaper alternatives.

“Shoppers know they can get quality, high-performance products from own-label ranges”

So can brands evolve to win back shoppers? Or will they ultimately prove not fit enough to survive?

There’s no doubt own label is in the strongest position at the moment. Its crucial advantage is price. Although own-label prices have increased 2.6% in the past year, they are still significantly cheaper than brands, which themselves saw a 2.9% price increase.

This price differential is particularly noticeable in certain areas of the market. In toilet roll, for example, a branded pack is on average £1 - or 40% - more expensive than its own-label equivalent. Shoppers can pick up an own-label fabric conditioner for roughly half the price of a branded version, and own-label kitchen towels are nearly 30% cheaper than their branded counterparts.

Despite their relative affordability, own-label products are no longer considered the poor relation of brands. “Shoppers are now accustomed to the idea that they can get quality, high-performance products from own-label ranges, and they are prepared to pay a high price - though not as much as they would need to pay for a branded equivalent,” says Kantar’s Fine.

 

Own label boost: household & paper products value sales

Top 8 household and paper sectors   
  Value (£m) % growth Market share
Toilet Tissues   1356.8 6.0 21.0
 Machine Wash Products   930.9 -1.3 14.4
 Other Household   855.4 -0.4 13.2
 Washing Up Products   492.6 -0.6 7.6
 Air Freshener and Candles   489.5 3.8 7.6
 Household Cleaners   452.8 2.2 7.0
 Fabric Conditioners   451.5 -2.0 7.0
 Kitchen Towels   395.5 2.8 6.1
       
Brands vs own label   
  Value (£m) % growth  
Brands 4,266.6 0.6  
Own Label 2,208.2 4.8  
       
Source: Kantar 52 w/e 6 October 2019      
  • Household and paper products have been subject to roughly the same trends seen in wider grocery over the past year. Most notably, own label is still outperforming brands.
  • Key to own label’s success in household has been paper products, with kitchen roll and toilet paper sales up more than 10% in value thanks to volume sales growth and higher average prices.
  • There are markets in which certain brands are winning, however. Branded limescale removers and toilet care both outperformed their own label equivalents with 22.1% and 4% value growth respectively, driven in part by the recruitment of younger shoppers.
  • Branded cleaners and bleaches are also seeing strong growth, bolstered by eco-friendly brands like Ecover and Method. Such brands are well-placed to continue benefiting in the year ahead as plastics and the future of the planet become more influential on shoppers’ purchasing decisions, says Kantar analyst Julia Fine.
  • Several retailers have maintained their category dominance, particularly Savers, Wilko and the bargain stores.
 

A tipping point

So it’s no surprise that certain areas of the market have reached a tipping point. In toilet paper, own label has taken a larger market share than brands for the first time in Kantar’s records, holding 51% of total value. That was thanks to a 10.9% increase in own label sales, while brands edged up just £1.4%.

Retailer offerings have won over shoppers through “high-quality products at the right price” says Carl Mitchell, sales director at WEPA, the UK & Ireland’s biggest own-label paper supplier. “Over the past two years the quality in own-label toilet roll has improved to the point where it is now absolutely comparable to branded products.

“In most cases you can now buy premium own-label toilet paper for less money than you would spend on standard branded toilet paper,” he adds. “Shoppers are naturally attracted to that idea of trading up while spending less.”

That value-driven mindset means cheaper retailers are performing well. Aldi and Lidl are doing a roaring trade in household, with respective value increases of 11.8% and 15.6%. Their focus on own label has been a further dent to brands.

“The quality of own-label toilet roll is now absolutely comparable to branded products”

Bargain stores and Savers were also among the fastest-growing retailers in household this year, with respective value gains of 7.5% and 15.6%. But here, there is a glimmer of hope for brands: they make up the majority of SKUs on bargain store shelves.

Cleaning brand Astonish has seen the benefits first-hand. “Our highest rate of sales come from B&M and Home Bargains because at the moment they have the highest footfall of household shoppers,” says commercial director Mark Winter.

Battle of the bog rolls: own-label sales beat brands for first time

Plus, Astonish has a further point in its favour: it’s one of the brands backed by ‘cleanfluencer’ Mrs Hinch. With 2.4 million Instagram followers, Sophie Hinchliffe holds plenty of sway in household purchasing decisions. Of the consumers who are aware of her, 60% would buy a product solely based on her recommendation, according to exclusive research for The Grocer by Harris Interactive in May.

Minky M Cloths, Zoflora and The Pink Stuff have all experienced sell-out periods as a result. The Pink Stuff reports 3,000% value growth over the past year, driven “primarily by the effect of social media”.

Mrs Hinch is attracting younger shoppers to the aisles, too. “The growth of influencers talking about cleaning has resulted in a much younger demographic starting to take an interest in home cleaning and innovative cleaning products,” says Laura Marsden, product manager at Marigold, whose gloves are backed by the social media star.

The bargain stores were particularly quick to capitalise on that selling power. Savers, for example, put together a special display of Mrs Hinch recommended products early last year.

“Influencers have resulted in a younger demographic taking an interest in cleaning”

Now the major mults are following suit with Hinch-backed listings and displays. The Pink Stuff gained space in Sainsbury’s in March. Its sister brand Stardrops, also owned by Star Brands and backed by Mrs Hinch, went into Asda in August. Asda has since rolled out a special ‘Mrs Hinch recommends’ section in its household aisles (complete with eye-catching point-of-sale material featuring the influencer in an Asda uniform).

Even P&G has got in on the act with special PoS material for products that have earned the Mrs Hinch seal of approval, such as Febreze fabric spray and Lenor Unstoppables.

Considering the amount of loyalty commanded by ‘cleanfluencers’ it’s a pretty foolproof strategy. Still, not every brand is lucky enough to have the backing of social media stars. In which case, they have to prove their worth in other ways - and that means bringing out the big guns on the innovation front. As Reckitt Benckiser global design strategy director Jos Harrison puts it, “simply designing a communicative pack for the shelf is not enough any more, and neither is functional excellence”. Brands have to offer something different to justify a premium over own label.

 

Rise of the challengers: top surface care and detergent brands by value

Top five surface care brands  
  Value (£m) % growth
Dettol 67.6 -1.3%
Flash 58.2 -3.0%
Cif 34.0 -11.8%
Method 19.2 32.9%
Mr Muscle 18.2 -15.0%
     
Top five hand dishwash brands  
  Value (£m) % growth
Fairy 106.0 -8.4%
Ecover 8.4 16.6%
Method 1.2 2.1%
Surface Sensitive 1.1 -11.2%
Euro Shopper 0.9 -27.6%
     
 Source: Nielsen 52 w/e 7 September 2019    
  • Well-established names in household have struggled as retailers reduce their shelf space in favour of challengers with a point of difference.
  • In surface care, Cif suffered the biggest loss of the year, with sales down £4.5m on volumes down 11.1%. That’s despite the launch of its plastic-reducing Eco-Refill product in July – though the brand plans to build on the range in the year ahead.
  • Meanwhile, Method delivered the largest gain in the surface care category, up £4.8m to become the fourth-largest brand.
  • The big names are also suffering over in laundry. Persil, Ariel and Bold shed a combined £20m in the mults, largely driven by shoppers moving away from the supermarkets.
  • However, brands with the right credentials are growing in the mults. Fairy delivered a £2.2m gain as it traded on natural credentials.
  • Ecover delivered similar gains. Value sales grew 15.3%, equating to an extra £2.1m and making it the eighth-biggest brand.
  • A key driver of those extra sales has been Ecover’s Zero range, which has no fragrances, allergens or colourants. It accounted for 60% of Ecover’s growth in detergent this year, according to the brand.
  • The rise of Ecover and Method shows the power of brands that follow the sustainability trend. They drove engagement with shoppers and were rewarded by more space on shelf, says Nielsen analyst Livio Capurso.
 

Posher propositions are one way to stand out from the crowd. See toilet paper. Market leader Andrex managed to outperform fellow brands with a 3.4% increase to £361.5m [Nielsen 52 w/e 7 September 2019] thanks entirely to higher prices - a sign of its relentless focus on premiumisation.

This focus has largely centred on its Supreme Clean premise, which encourages customers to use its premium tissues in conjunction with its washlets. The latest iteration of this strategy is the October launch of Skin Kind, a “first of its kind” range of toilet roll and washlets imbibed with a prebiotic lotion (see p62) that claims to maintain the skin’s natural balance. The range is being supported by Andrex’s first nationwide marketing campaign in a decade, spanning TV, PR, in-store, digital and social media. “There’s increasing consumer demand for premium paper products that offer more than a basic experience, which is why we developed Skin Kind,” says a spokeswoman for the brand.

Other big players are taking the same view. Essity, for example, is scaling back its Velvet brand to concentrate on its Cushelle proposition, which is taking an increasingly premium direction. Last January, Essity replaced its two-ply Cushelle Quilted range with new three-ply Ultra Quilted. According to the brand, the upgraded range amassed £26.4m in its first year, up 29% on the year before.

This kind of innovation is crucial to surviving the competitive market, says Nicola Coronado, Essity marketing director for the UK & Ireland. “To be successful in the current environment, brands need to offer something distinctive, differentiated and superior to what’s already on shelf.”

“To be successful in the current environment, brands need to be distinctive & superior”

That’s not just true of the toilet tissue market. Other areas of household have also been active on this front. In aircare, December saw the launch of Febreze Bathroom Air Fresheners, a three-strong range touting “unique technology” that eliminates odour and prevents it lingering on towels and bath mats. The range has already gained listings in Asda, Wilko, Home Bargains and B&M.

Over in toilet care, Bloo rolled out Fragrance Switch, a premium toilet rim block that changes scent when it comes into contact with water, in February. Bloo claims the NPD was a key contributor to its £2.2m sales growth over the past year [Nielsen 52 w/e 7 September 2019]. Domestos launched a similarly premium toilet rim block Platinum 5, which promises “intense cleaning and freshening with added active blue water”, in December.

Domestos owner Unilever isn’t the only one to see a future in higher-priced fare. Last January, P&G gave its Fairy brand the same treatment with the launch of ultra-premium Fairy Platinum Plus dishwasher tablets. And its dishwasher range looks in healthy shape, with sales up 13.1% to £70.3m [Nielsen].

The premiumisation tactic can boost sectors that have a high penetration, says Ian Morley, group sales director at P&G for Northern Europe. “The only way we can ever really grow these categories is by delivering a superior consumer experience with premium products that command a higher cost per use,” he explains.

And premium doesn’t just mean posh. Brands with environmental cues are also able to command a higher price - plus a strong point of difference against own label.

Ecover and Method, the largest eco-brands on the market, are proof of just how successful these propositions can be. As the top surface care brands faced hefty declines, Method delivered a £4.8m gain in its range [Nielsen]. It’s also making headway in detergents, fabric conditioners and liquid soaps. Ecover is similarly climbing up the rankings. It is now the third brand in the hand dishwash and auto dishwash categories, and the eighth brand in the highly competitive laundry detergent sector. Sales of its detergent have shot up £2.1m to £16.2m.

“We’ve seen significant distribution gains across the major mults, as well as increased shelf space and better positioning with parent categories rather than in eco-specific bays,” says Ecover brand manager Charlotte Snelgrove.

 

Posh versus economy: top five toilet tissue and kitchen roll brands by value

Top five toilet tissue brands  
  £m % growth
Andrex 361.5 3.4
Cushelle 92.9 22.1
Velvet 26.1 -52.0
Petal Soft 18.3 3.6
Nicky 10.3 -7.9
     
Top five surface cleaner brands  
  £m % growth
Plenty 87.3 -1.8
Regina 84.6 1
Nicky 4.1 -16
Mega 3.7 18.5
Euro Shopper 2.4 15.4
     
 Source: Nielsen 52 w/e 7 September 2019    
  • Premiumisation and sustainability are the two key drivers for growth across the toilet tissue category this year.
  • The most common factors behind the branded sales decline are a lack of innovation, lower distribution support from retailers and the increased presence of own label.
  • Consolidation in the market has continued across all sectors, with some smaller brands losing distribution to new brands that better align with current trends and consumer needs.
  • The biggest loss and greatest gain in toilet tissue this year come from Essity’s Velvet and Cushelle respectively, as the former brand is gradually replaced on shelf by the latter.
  • There’s a reason that Velvet is being scaled back by its owner. “Cushelle is made using a unique technology that creates cushioned fibres that our customers really see the benefit of, whereas Velvet is a conventional product,” says Nicola Coronado, marketing director for Essity UK & Ireland. “Velvet is similar to other brands in the market, so we’ve made a strategic re-shift in our portfolio.”
  • In kitchen roll, it is value brands that are enjoying the greatest gains. The only players to achieve both volume and value growth, Mega and Euro Shopper, have the lowest average prices.
  • Premium kitchen roll brand Regina saw volume sales slump 4.7%, meaning its £824k value growth was entirely driven by price hikes.
 

The headway made by the likes of Ecover is paving the way for smaller eco-brands. Take the Ecoegg, which acts as an environmentally friendly alternative to detergent and fabric conditioner - and promises to cost just 14p per wash. The brand gained its first major listing with Waitrose in July and claims to have doubled sales in the past year.

Then there’s The Cheeky Panda, whose bamboo-based paper products have already secured space in WH Smith, Boots, Holland & Barrett and Superdrug. Co-founder Chris Forbes says new listings in the mults are “expected later this year”. “We’re in the process of rolling out new plastic-free packaging across the range, and we’re also vegan, cruelty-free and a B-corp,” he adds.

Consumers seem willing to pay more for these credentials. Nielsen data puts The Cheeky Panda as one of the most expensive toilet roll brands in the top 25, yet sales have more than quadrupled to £463k. Its facial tissues have increased nearly 10-fold to £161k, and its kitchen towel sales have gone from virtually non-existent to £43k.

This fast-paced growth has inspired the mainstream brands to bring out their own eco-friendly launches. Bloo rolled out Pronature, its first 100% recycled and recyclable rim block, in October. Dettol and Cif both introduced refill products to cut down on plastic waste in April and July respectively. The latter’s two-strong range of concentrated Kitchen and Bathroom solutions “aims to remove 1.5 million plastic bottles from the waste stream”, says Charlie Beevor, VP of home care at Unilever UK & Ireland, who reveals the brand will be looking to build on the success of the range in the year ahead.

“The challenge is to create something eco-friendly, but better than what’s out there”

As the Cif range illustrates, it’s sometimes as simple as putting existing household products in new packaging. The past year has seen P&G remove the plastic handles from its large detergent boxes and Unilever unveil new 100% recycled plastic packaging across its Comfort Intense and Perfume Deluxe, and Persil Capsule Tub ranges. Andrex owner Kimberly-Clark has also signed up to Wrap’s UK Plastics Pact, which pledges to create “a circular economy for plastics” through more recycling and collaboration.

Such efforts should be praised, says The Cheeky Panda’s Forbes. But he has a word of warning on the innovation front. “People want sustainable products, but they don’t want to compromise on quality,” he says. “The challenge for brands is to create something that’s eco-friendly, but also as good as or better than what’s already out there and competitively priced.”

That’s one reason own label may struggle to replicate eco-friendly cleaning products. Adopting environmental credentials would force retailers to “put their price tags at a similar level to brands”, says Forbes.

That retailers have largely shied away from sustainable credentials suggests he has a point. Yet Tesco suggests an own-label option could work. At the end of 2017, the supermarket launched its own Eco Active range of cleaning products that promised to be “at least 50%” cheaper than branded equivalents. More than two years on, the products have become a permanent fixture, and Tesco says sales of eco-cleaning products have risen 80% at a total level.

 

Shoppers open to posh loo roll

How do consumers shop paper products?    
  Grocery average Facial tissues Toilet paper Kitchen roll
         
Planned to buy the category before I came to store  76% 76% 89% 87%
Decided to buy when in store 25% 21% 9% 10%
Planned to buy a particular brand  29% 33% 45% 34%
I don’t mind paying more for something better 42% 15% 37% 19%
         
Source: Shopper Intelligence survey of more than 77,500 shoppers.     
Shopper Intelligence is an annual multi Category, multi Retailer survey of UK shoppers.   Enquiries to www.shopperintelligence.co.uk.      
  • Nobody wants to run out of toilet tissue. So it’s hardly surprising the sector is home to the highest amount of planned purchases across paper products – with 89% of shoppers planning to buy.
  • Toilet tissue shoppers are more likely to trade up than those who buy facial tissue and kitchen roll. This creates “an opportunity to up-sell premium products like moist toilet tissue in store” says Jeremy Garlick, partner at Insight Traction.
  • Facial tissue is the most impulse-driven sector in paper products. That makes high visibility crucial for the sector, Garlick says.
  • Putting facial tissue next to toilet tissue could encourage those impulse purchases, Garlick adds.
 

Own label evolution

Environmental cues are just one fledgling area for own label. For retailers are increasingly venturing into the growth areas identified by brands. The discounters are increasingly trading on premium cues, for example. “Lidl and Aldi are offering products that sit somewhere between standard and premium tiers, but at a very competitive price,” says WEPA’s Mitchell. “We call it ‘discounter premium’, and it’s something other retailers are watching very closely.”

A glimpse at the big four confirms they are watching the discounters - and, indeed, branded attempts to premiumise - very closely indeed. Sainsbury’s is selling Pink Blossom and Fresh Breeze ‘laundry fragrance pearls’, which seem to take heavy inspiration from the Mrs Hinch-recommended Lenor Unstoppables. Tesco has Luxury Soft moist toilet tissue wipes in coconut and sensitive skin variants that could give the Andrex Supreme Clean premise a run for its money (especially at a lower price).

So as competition grows in the household market, it seems there is no safe area for brands. All they can do is continue ensuring they are one step ahead of the game. Otherwise they may just fall foul of the survival of the fittest rule.

 

Innovations in household 2020

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