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Appealing to the New Consumer

Posted: July 22, 2010

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Another mature category enjoying a resurge in the stay-at-home culture, laundry detergent sales have grown more than 3%. Once the growth leader, Procter & Gamble's Tide has steadily inched up its pricing and features with combination products that seem to have finally pushed this stalwart beyond consumer's desires. In response to lagging sales, the company launched a value-priced Basics line to help regain momentum and stave off competition from private-label products, which have surged nearly 30% over the past year. Product innovation has also helped to boost growth in this category: Purex's 3-in-1 product that combines detergent, fabric softener and dryer sheet promises to make laundry simpler and easier for consumers. Meanwhile, the Gain brand has built a strong following on its unique ability to tell a fragrance story that appeals to consumers' desire for relaxation and escapism.

The escape to home trend has also sent the U.S. home fragrances market into recovery mode, posting a 0.4% growth rate in 2009—a meager increase, yet considerably better than the 2% decline in 2008. As consumers’ instant-gratification mentality released its grip, sales of candles—the quintessential home fragrances mainstay—rebounded from a tough 5.5% decline in 2008 at the hands of faster-acting room sprays and diffusers. Driven partly by specialty product launches into new channels, including Yankee Candle’s arrival at Target, and innovative new boutique-style product lines by S.C. Johnson and Procter & Gamble, the candles category posted a much-welcome 0.1% gain.

The private label draw

Across the board, consumers are drawn to value, and through the aggressive marketing tactics of many major retailers—including Walmart, Target, and Costco—private-label products have emerged as brands themselves. While private-label products surge in nearly every economic downturn, they have historically tumbled in the aftermath as consumers return to their tried-and-true favorites. However, this time may be different.

The private-label growth trend has also been at play in the U.S. personal care market. Sales of private-label personal care products surged nearly 6% in 2009, compared with an overall market decline of 0.8%. As consumers traded down for lower-priced products, brand manufacturers scaled back on domestic advertising and shifted their focus to burgeoning international markets. As a result, categories once thought to be infallible have declined. On the bright side, skin care and makeup are both showing signs of growth spurred by innovative combination/anti-aging formulas that promise near-professional results at an affordable price.

Naturals and corporate responsibility

The growth in natural personal care and cleaning products has maintained a steadily upward trend throughout the recession, and most marketers have faced the fact that this is no passing fad. Growing consumer awareness for natural products, coupled with a growing supply of natural raw ingredients, helped this market segment expand by nearly 12% through even the most difficult economic crunch. Especially at the global level, consumers’ affinity for natural products devoid of harsh chemicals and synthetic ingredients has pushed sales of these products beyond $18 billion. Brazil and Asia have posted the strongest growth, driven by rapid adoption among their large populations, growing consumer interest in grooming overall, and their natural and herbal traditions.