October sees the start of the peak season for batteries, with 40% of the year's sales expected between now and Christmas. As one of the classic impulse buys - research suggests that 75% of battery buyers did not expect to make the purchase when they entered the store - the sector remains an excellent earner for convenience retailers.
"A good battery display doesn't take up much space but it gives a good profit margin," says Panasonic Batteries marketing manager Tim Clark. "Batteries give an excellent return per square foot of fixture, and as they are so often a distress purchase they are perfect for the convenience mix."
The £350m market [AC Nielsen] is currently powered by ever-changing technology and the increasing number of portable devices that we just cannot do without. MP3 players, digital cameras and handheld games are everywhere, but they are power hungry and demand more from their batteries, which in turn is driving greater focus on npd from the major battery manufacturers.
"It's great news for convenience stores," says Duracell brand manager Martin Gormley. "They are better placed than the multiples to benefit from impulse purchases which account for 64% of battery sales."
The increased demand for power has led to changes in battery formulations, with alkaline cells dominating the category, accounting for £290m-worth of sales to date [IRI/GFK 52 weeks ending June 16, 2007], while zinc cells, once the leading technology, account for just £27m. Panasonic, the UK's zinc brand leader, recognises that the technology is unsuitable for many of today's high-drain products, and is repositioning its zinc batteries to appeal to a market that requires a competitively priced cell for low- power products like remote controls, torches and clocks. "Consumers are moving away from zinc for high- drain appliances, so we recommend that convenience retailers stock an entry-level alkaline range to encourage customers to make the step," says Panasonic's Clark. The company's Alkaline Special Power, pricemarked at £2.49 for four, is said to last four times longer than the zinc equivalent, with a five-year shelf life rather than three.
At the premium end of the market, Energizer is leading the introduction of lithium-based batteries, as the only manufacturer of lithium batteries in AA and AAA cells in the UK. Energizer's Ultimate Lithium is said to last up to seven times longer than standard alkaline batteries in digital cameras, but other manufacturers argue that the price is too high for most consumers.
Improving results and the growth of environmental awareness among consumers have contributed to the growth in rechargeable batteries, with rechargeable cells making inroads into the market, having more than doubled in value in three years to £8m. They are an opportunity for the retailer to sell not only the battery, but the charger too. "Despite costing about twice as much as disposable batteries, nickel metal-hydride (Ni-MH) rechargeable batteries are great value because they can be charged hundreds of times and last for many years," says Energizer marketing manager Sarah Richardson. "In the past consumers were put off by slow recharging times and poor memory effects, both of which made them perceive these batteries as poor value for money. But technology has really moved on and the latest generation of Ni-MH chargers and batteries offer faster charging, no memory effect and are kinder to the environment.
"This is now one of the fastest growing segments in the UK battery market - up 7.8% year on year. Shoppers see rechargeable batteries as more environmentally friendly and better value for money."
Manufacturers are now beginning to introduce pre-charged rechargeables, which can be used direct from the pack, then taken home for charging.
Among the major manufacturers, Duracell claims a 47.9% share of the battery market, with sales worth £153m [IRI/GFK 52 weeks ending June 16, 2007]. Energizer's calculations have Duracell's share at 41.8% MAT value, and says its own 28.2% shows it to be the only major battery brand in growth.
Consumer research carried out by Energizer has established several categories of battery consumer. Those who buy solely on price comprise 13% of purchasers; 18% tend to buy brands based on price or promotion; 13% will buy the first thing available when they run out; and the largest percentage (23%) have enough category awareness to mix between high- and low-tech batteries to suit the device.
A further 15% tend to buy the leading brand, and the remainder - 16% - always buy the premium brand available.
The research also concluded that shoppers spend, on average, one minute at the fixture - longer than in other grocery categories, which suggests some thought goes into the buying process. Shoppers tend to shop the fixture from left to right and top to bottom, the study revealed, so retailers need to pay attention to how they stock their shelves.
"Retailers need to stock a full range of batteries to meet all power needs - starting on the left with lower-priced products and increasing in performance to the right," says Richardson. "Batteries should be blocked by brand vertically and by size horizontally - making life easier for shoppers to find the battery they need."
The clear best seller is AA, which alone accounts for over 70% of all sales, and deserves a similar proportion of shelf space. AAA is the next biggest seller with around a 15-16% sales share, and the manufacturers recommend that even the smallest fixture should have room for C, D and 9V as well.
Secondary sitings, such as at checkouts, toy, photographic and electronic areas, encourage impulse purchasing. "Retailers in the UK and abroad who've already adopted these principles have shown an average 30% sales uplift," adds Richardson.
Duracell's Gormley adds that, in his opinion, you can't have too many additional sites. "It's all about visibility with batteries," he says. "If customers can see them, they will buy them. I'd recommend a counter display, and any other opportunity in the store - near confectionery or magazines, for example."
A study of more than 1,000 consumers by Panasonic revealed further purchasing trends. Choosing a trusted brand was found to be the most important factor when buying batteries from a c-store, and 83% of customers said they would like to see pricemarked battery packs at their local store - 77% said they would be more inclined to buy products that were pricemarked. "As batteries are often a distress purchase, consumers tend to worry that they will be paying a premium for them, especially in convenience stores," says Clark. "Pricemarking gives them confidence."
Duracell's research confirms that shopper satisfaction improves when consumers can see what they are buying and how much they are paying. Clark adds: "We see a huge opportunity for independents to capitalise on the growing trend towards higher power batteries. By moving up to alkaline technology with trusted brand names, we believe they can maximise their battery sales and take full advantage of impulse purchases."
The AA team
Christmas is a key period for the battery category as so many seasonal toys and gifts require portable power - and the peak buying season starts this month. Market leader Duracell is meeting the surge in demand with a 4+4 Christmas promotion, starting in October. The offer gives consumers four free cells when purchasing special packs of AA and AAA Duracell Plus and Duracell Ultra M3. The company says that offering the most recognisable brand in this value proposition will be a great boost - similar activity last year boosted sales by 69%.
Energizer is building a clear distinction into its range between standard batteries - for clocks, smoke alarms and remote controls - and a premium offer for high-drain, high-tech devices. The standard-use battery, Ultra+, has a new pack design, as has the premium-level alkaline battery, Energizer Ultimate. Intended for high-tech devices such as wireless mice, bluetooth headsets and toys, it is clearly packaged to indicate its suitability for high-drain devices.
Panasonic is focusing on independent retailers with the launch earlier this year of Panasonic Alkaline Special Power, an exclusive battery for the convenience sector. Under its 'Move on Up' promotion, the company is advising retailers to upgrade to Alkaline Special Power to ensure they offer their customers a competitively priced, long- lasting battery from a known brand. The support campaign includes one million leaflets inserted into zinc battery inner cartons to explain the benefits to the retailer of stocking alkaline cells, a mailshot to 54,000 retailers, and in-store displays such as shelf-talkers and wobblers.
Online wholesaler dash4yourshop.co.uk is standing by to help out retailers during the pre-Christmas battery rush. Managing director Stephen Dash says: "Empty space in the store is a wasted opportunity at any time - but to run low on batteries before Christmas would be criminal."
The website currently supplies 1,000 independent retailers, allows customers to pay by credit card, and delivers brand-name stock in two days. "There are other advantages to replenishing your stock online," says Dash. "It's supremely convenient, almost unbeatable on price, and effectively offers up to 56 days' credit, for those who play their credit cards right." Orders can be as small as a single box, but there is a delivery charge for orders less than £100.
Independent distributor Baruch has been supplying batteries to convenience stores for 30 years, and claims to achieve competitive prices by buying in bulk from manufacturers. It sells more than 500 different batteries from most of the leading manufacturers, and is the UK's exclusive distributor of Samsung and Fujitsu.
Electrify your sales with these manufacturer's tips:
Display - Seeing the product will lead to purchase, and the battery category is one which really benefits from multi-siting. Make the most of merchandising units - put them in key impulse areas, ideally near to the till point. Consider placing the units alongside electrical devices, travel magazines or confectionery.
Range - Type AA accounts for more than 70% of all sales, so give it most of your display. AAA is the next biggest seller with about a 15-16% sales share. Shoppers can get confused with too much choice; a basic type 5 offering should maximise sales potential, covering AA/AAA/C/D and 9V.
Clarity - Research suggests that up to 40% of consumers getting to the battery display fail to make a purchase due to confusion over types and sizes. Keep facings fully stocked so they can always find the correct sized battery.
Signposts - Shoppers look for signpost brands within any category, so make sure the big brands have the most prominent position.
Shelf-Edge Labels - Get all of the price and product labels on the fixture under the relevant products. Ensure special offer cards are up to date.
Peak seasons - Battery sales pick up with the longer nights, peak at Christmas, and remain strong into January.
Sell up - Check that customers buying battery- operated items have the batteries to power them, and suggest they buy spares as well.