Smithers Apex sat down with Kathleen Kemmet, Client Insights Principal at the leading market research company, IRI and asked her to share her insights on how dynamics and trends of US household cleaning categories are changing the consumers motivators when purchasing private or national brands.
Smithers: In your opinion, how close does innovation follow the consumer feedback and influence? How much does it divert following instead innovation coming from the brand and/or formulation advances, packaging design trends and sustainability?
Kemmet: Throughout history, private label marketers have often “mimicked” name brand products. However, in recent years, retailers have increasingly invested in innovation that differentiates—differentiates the store brand from the name-brand competition and differentiates their retail banner from their competitors.
National brands have the advantage of being able to focus on a limited number of categories and brands, while retailers have to stock an entire store—many aisles, categories, brands. They need to invest to understand where their private label focus will be most effective. It’s a highly competitive market and retailers will win by catering closely to their unique shopper base, not just at the banner level, but also at the store level. As such, innovation will continue to become more targeted, to the degree that retailers can swing the balancing act across aisles and categories.
Smithers: How can private labels keep up the pace with brands in terms of innovation and product development while at the same time keeping their costs down to fulfill the needs of this consumer segment?
Kemmet: As noted above, this is a monumental challenge and the short answer is that private labels simply cannot keep pace if they are looking across all categories/aisles. It’s absolutely critical for retailers to take a targeted approach to innovation. They need to understand the needs and wants of their core and target shoppers, at the store level and provide a strong value proposition in key categories. This means examining assortments and ensuring a targeted blend of national and private brands, essential sizes/forms/price points, etc.
Smithers: Cleaning and Personal Care Products are a category that is growing quickly in terms of e-commerce, not only from retailers but also from the brands selling directly to consumer this way. Do you see this as a growing trend based on convenience for the consumer?
Kemmet: E-commerce certainly is a growing channel for these CPG sectors. Today, e-commerce holds a very small share of sales, but mobile is nonetheless playing a rapidly increasing role in influencing the purchase process. IRI’s Path to Purchase Study reveals that 22% of consumers interact digitally in some way prior to shopping. Deal seeking, learning about products and their benefits, sharing experiences—these are all very important activities along the path to purchase.
The tradeoff between “touch and feel” and convenience versus price is a critical factor in determining whether to purchase online or in-store. Online CPG shopping saves the time of traveling to the store, but this savings has a cost in delivery fees, which can be one of the largest barriers to e-commerce CPG shopping trials. Due to these expenses, home delivery is more palatable in more urban areas with higher population densities offering a more-affluent-than-average shopper base.
CPG marketers looking to play in the e-commerce space must strike a delicate balance—a balance that will change on a market-by-market basis. Playing the game well will certainly pay off, for it will protect and grow the marketer’s share of the more than $1 billion in annual growth generated by e-commerce CPG
Smithers: What are you looking forward to hear at Cleaning Products US 2015?
Kemmet: I’m interested to hear what is new in terms of biotechnology and how companies are leveraging these new technologies to create solutions that are relevant to today’s consumers and shoppers.
Innovation in cleaning and personal care must really focus on what consumers are asking for. In both of these sectors, consumers want time. IRI’s 2015 New Product Survey revealed that consumers are looking for home care products that allow them to get housework done in less time. They want beauty and personal care products that provide longer-lasting results. It’s about time, but it’s also about performance: they want products that work harder, make lives easier and provide even better results.