For paper product manufacturers seeking to convince c-stores to back their brands, space really is the final frontier. With c-stores already heaving with high-turnover items, paper products need to offer a proper profit for managers to allocate the category reasonable space in-store. After all, making room for bulky items like kitchen and toilet roll steals valuable space from more proven products.
"Space remains key to every convenience store owner," explains IGD senior analyst Jamie Trust. "With investment of late focusing heavily on fresh, chilled and food-to-go ranges, it becomes more difficult to justify a broad range of paper products. Sales of household items, including paper products, remain a small part of a c-store's turnover in fact, just 1% according to our figures."
So are c-store retailers missing out on the opportunity to turn popular products such as toilet tissue into the kind of paper they can happily tuck into their tills? They could be, according to the market analysts. Mintel's last look into the sector shows paper products are worth £1.5bn in the UK and Kantar Worldpanel reports that the overall category is down 2.5%, but if retailers get the offer right for their customers it could be a sector with the capacity to grow during the economic recovery.
Space-starved c-stores looking to dip a toe in the sector could consider starting with smaller items, such as facial tissues, which can be placed at the till to free up all-important floor space. Some commentators may have considered facial tissues to be vulnerable during the recession, but Kleenex brand manager Martina Jezdikova says that it's showing signs of growth.
"We've just experienced the deepest recession in living memory and there has been a lot of dark thoughts around the future of the facial tissue category," admits Jezdikova. "For instance, people were saying that consumers were more likely to use kitchen roll, or other paper products, to blow their nose or remove make-up instead of facial tissues. However, sales have continued to rise and we've seen the category grow by 1.5%, while Kleenex as a brand has grown by 5%."
Like the rest of the paper products category, big brands such as Kleenex experience fierce competition from private label brands. "Private label ranges have proven to be a significant stepping stone towards c-stores offering a strong value-for-money proposition, particularly those who are affiliated to a symbol group," says Trust.
"Several recent own-label launches have focused on household items as well as core grocery categories."
Jezdikova believes that while own-label ranges are growing, only big brands have the necessary capital to develop and market new products and make sure that the paper products sector grows in the future. She says: "Because the facial tissue category is made up of Kleenex and private brands it's up to us to create innovations and grow the market. Private label brands haven't got the budget for marketing it's up to us to move the category forward."
For 2010 Kleenex is looking to revitalise the tissue market with the launch of new Kleenex Ultra Soft a tissue designed to possess both softness and strength. As part of the marketing push Kleenex is rolling out the biggest sampling effort in the brand's history by attempting to convince more than 6.5 million people to try it for themselves.
"The softness it offers is a huge improvement and is unique to Kleenex, allowing us to drive category penetration and create the perfect product for our target market women who are looking for a practical product that still offers them an everyday indulgence," says Jezdikova.
While space issues may mean that toilet tissue is bottom of the list for some c-store retailers, its must-have status ensures that there's the opportunity for retailers to clean up if they get the offer right. According to Mintel, the toilet tissue category is worth more than £1bn, and in many ways it's the ultimate distress item, since consumers who are caught short will go local rather than schlep their way to a supermarket to save a few pence.
This year it's all change for the big brands as SCA rebrands Charmin toilet tissue as Cushelle, a new name which is meant to promote the toilet tissue's 'softer' image. The new look is backed by a £10m marketing campaign which covers print, cinema and TV advertising.
Whatever consumers think of the fresh packaging, which features a cuddly 'Cushelle' Koala mascot, retailers will be hard-pressed to find fault with SCA's previous form when it comes to rebranding. When SCA migrated Bounty to Plenty in early 2009, the brand's market penetration grew by 26.5%, according to TNS.
"The brand re-invigoration for Cushelle represents a major investment for SCA and will mark the start of a really exciting period for the brand," says Emma Herlad, brand marketing manager at SCA.
"We are investing heavily to make sure we reassure consumers that our product has not changed, to drive loyalty to the brand and ultimately grow market share."
When it comes to developing an offer with real appeal to c-store customers, Andrex brand manager Chris Carter believes that choice is the key. "Shoppers want and expect choice," he says.
"They want big brands at value-for-money prices, plus an economy option for those who want the absolute cheapest product."
Unsurprisingly, Carter says that the main driver for consumers during the previous year was price. "2009 saw high levels of promotion among toilet tissue brands, as with many other fmcg categories, and Andrex offered consumers some strong value offerings including price and non-price promotions.
"Pricemarked packs continue to be critical within the convenience store channel as they offer consumers the reassurance that they are purchasing their favourite loved brands, but at reasonable prices."
Carter adds: "If used correctly, pricemarked packs at a competitive price point might help to increase sales. Pricemarks certainly bring shoppers reassurance that they are paying a fair price for the Andrex they know and love."
Of course, like the cash-strapped customer who religiously buys their favourite brand of beans during tough times rather than trade down, some consumers want much more than just value for money. This is especially relevant to the toilet tissue category; a survey carried out by Mintel revealed that more than a quarter of consumers have a higher concern for toilet paper quality than other household products.
Last year Andrex looked to grow the market with the launch of Andrex Shea Butter, which came complete with luxury look, shea butter-enriched sheets and a scented core. The company's market research suggests that despite the dire economic climate, shoppers continue to trade up and treat themselves to a little pampering by investing in everyday luxuries that make them feel good.
Carter adds that stocking premium products can be worthwhile if the store demographic is right, since they offer an incremental profit opportunity.
Mintel expects that as the recession eases consumers' concern for the environmental credentials of paper products will return to the fore, with the big brands all looking to develop their eco offer. But for now the tension between premium and economy is what's really driving the market. It all comes down to whether your consumers prefer premium or economy and whether retailers have the space to give the category justice.
"At our store if we can get in pricemarked stock then we do and that includes paper products. It can double sales of a line and if products aren't pricemarked, then we have trouble shifting them.
"In our area it's mainly older people who come in and buy toilet tissue and kitchen roll from us. They'll buy the smaller sizes to take back to their flats. To be honest, younger people aren't that interested it's like most of them have never even heard of a tissue!
"On our shelves pricemarked Andrex tends to sell quite well, especially the more upmarket choices such as quilted or scented toilet roll. Scented stuff always goes down well.
"You've got to make space for paper products, and although our store is only about 55sq m we always find space. We put stock above the chillers, and if there's space available on the shop floor near the beers, then we'll put out more toilet roll. The most important thing is to get the price right.
"If you charge less than other independents then people will come that little bit farther to buy your products."
Martin Daffin, Sands Road Mini Market, Paignton, Devon
- Stock smart and save space. Shelf space may be limited for your paper product offer, so make the most of what you do stock by choosing the top-selling brands in each category.
- Signpost your stock. Leading brands that customers associate with paper products can be useful for signposting your offer. For example, when customers see Kleenex they automatically know that they're entering the facial tissue section.
- Maximise your display. Make the most of customers' desire for top-up and impulse purchases by using the till point. Shoppers may come to the till for chewing gum, but seeing facial tissue should remind them to top up.
- Know your customers. Understand what it is your customers want and then use that information to give them a good choice within the paper products category. Source: Kleenex
Bottom line: Cushelle the new name for Charmin comes complete with a £10m marketing campaign. Packs also carry a cute Koala design in a bid to get customers coming over all soft for the toilet tissue. tel: 0161 874 3000
Tissue trade-up: Would your customers prefer a premium toilet paper? Then Andrex Shea Butter, which is both scented and super-soft, may be the perfect way to encourage trade-up. rrp: £2.39 for four-roll pack tel: 0800 626008
Roll with it: Remember the days when Plenty kitchen roll was known as Bounty? According to SCA customers have responded positively to the name change and sent sales soaring 5.1% year on year. tel: 0161 874 3000
Velvet revolution: The toddler who runs Velvet (according to the ads anyway) is currently cooking up a new look for the brand. He's keeping schtum at the moment, but expect big news next month. tel: 0161 8743 000
Soft option: Designed with both softness and strength in mind, Kleenex is getting behind its new Ultra Soft tissues with a £2.5m marketing campaign to convert c-store customers. rrp: £1.99 for 80 tel: 0800 626008
Source: Kantar Worldpanel