Paper products are suffering a sales slump as consumers tighten their belts. Matt Chittock finds out how c-store retailers can turn things around

new products
Going green
Velvet's new Three Trees Initiative will see brand owner SCA plant three extra trees for each one it uses in the paper manufacture. In addition, Velvet's poly packaging will now feature a minimum of 10% recycled material.

Plenty to talk about
SCA has also relaunched Bounty kitchen roll as Plenty. "We hope Plenty's strong product credentials will drive significant new user trials," says marketing director Chris Bartlett.
With kitchen spills, runny noses and visits to the lavatory all being regular household occurrences, you might think c-stores can rely on paper products to provide a stable income. But a closer look at kitchen roll, tissue and toilet paper sales within the convenience sector reveals that the market has suffered a significant blow in recent months.

In a 2008 report on paper products, Mintel estimated that the market in the UK was worth around £1.5bn. Further growth was forecast, with the sector's value expected to grow by 8% in real terms between 2008 and 2013. This forecast was based on the expectation of increasing consumer affluence, plus the widespread popularity of added-value products.

Unfortunately, the credit crunch has made those figures look somewhat over-optimistic. Statistics prepared by TNS reveal that consumer spend is now down across the whole paper products sector. From 2008-2009 the spend in independent stores on toilet tissue fell by 4.7% year on year and spending on facial tissues dropped by 4.5%. Sales of kitchen roll took the worst battering, with spending dropping by 18.3%.

Paul Pedelty, business unit controller at SCA, says that the tightening of household purse strings has put consumers off making impulse buys. "The decline in all three categories has accelerated over the past six months in the impulse market as shoppers cut back and trade down on purchases," he says. "In the current climate consumers are more likely to plan their shopping trips in more detail to save money."

So if regular customers are now putting price considerations before convenience, what can c-stores do to boost sales? Brand managers suggest that honing in on category management is a great place to start.

"We have seen an uplift in sales in some major retailers of up to 500% simply by placing facial tissue pocket packs on till points," says Kimberly-Clark category manager Tom Bailey. "This is obviously a successful selling mechanism that could be transported to other convenience outlets and independent stores."

Paul Pedalty suggests that independents also need to put the emphasis on best-selling products, while still offering cheaper own-label brands.

"More focus is needed on driving everyday value," he says. "Convenience stores need to focus on high-margin premium products that can be sold at competitive rrps, as well as balancing brands with tertiary and private label offerings."

One of the sector's core strengths is that each sub-category is dominated by well-known household brands with deep pockets when it comes to maintaining a high marketing profile. These leading brands believe that although some people may be switching to cheaper own-brand options, most will still find room in their basket for household names they know and trust.

"Within the toilet tissue category we have seen a section of the population downtrade to economy products," says Bailey. "However, the vast majority of people (more than 80%) are still buying the mainstream and premium products they have always bought."

Toilet paper may not be the most glamorous part of the paper products' portfolio, but no one can deny that it's still an essential purchase. Toilet tissue is an unlikely trendsetter, too, in that it has showcased product innovation, such as moistened products, which eventually spread across the rest of the sector.

According to Mintel, Andrex leads the way in the toilet tissue category by a wide margin - currently accounting for 52% of sales in the independent sector. This success has been built on Andrex's premium toilet tissue lines, which have helped satisfy consumers' demand for ever softer, stronger and more absorbent products. Popular lines such as Andrex Quilts (which experienced 39% sales growth last year) and Andrex Aloe Vera toilet tissues have helped add interest to the sector while boosting sales.

"In the toilet tissue category, moist toilet paper products offer retailers an opportunity to drive incremental sales and profit as they are used alongside the dry product," says Bailey.

Makers of premium brands hope that while thrifty consumers may settle for own-label paper products in the kitchen or living room, they'll stay more loyal in the loo. Luckily, recent research appears to justify their point of view. According to a survey from Mintel, a quarter of consumers polled expressed a higher concern for the quality of their toilet tissue than any other household paper product.

Environmental concerns
When in 2007 American singer and would-be eco-warrior Sheryl Crow suggested that the public limit their use of toilet paper to 'one square per sitting', she was widely ridiculed. But the fact she linked toilet tissue to the environment in the first place reflects a growing demand for brands to prove their commitment to sustainable sourcing.

SCA is hoping to chime with these consumer concerns by focusing on environmental issues for this year's relaunch of Velvet toilet tissue. As well as working with the Forest Stewardship Council — which ensures that forests are well managed according to strict environmental, social and economic standards — the brand is launching its own Three Trees environmental initiative.

"SCA has invested £5m in a marketing campaign for Velvet toilet tissue which will include a new TV and digital campaign," says Pedelty. "This environmental message is highlighted on eye-catching new packaging."

Another contender aiming for eco-friendly homes is Nouvelle, Georgia Pacific's 100% recycled range of toilet tissue and kitchen roll. Last year saw the launch of Nouvelle Soft, which aims to tap into the public's demand for both environmental accountability and premium toilet tissue products. The launch was bolstered by a £2m advertising campaign which included a promotion providing free rolls to revellers attending that year's Glastonbury Festival.

Facing facts
On the face of it, tissues may look the least likely paper product to thrive in a downturn. After all, cash-strapped consumers could simply use toilet paper to remove make-up or blow their noses instead. However, being aware of seasonal demand can offer an opportunity for retailers to make their tissue offerings work harder than ever.

"Facial tissue sales experience huge uplifts during the winter when consumers are suffering with cold and flu and also during spring and summer when hay fever and allergies are more prevalent," says Kimberly-Clark's Bailey. "Capitalising on these key times of year is crucial to maximising sales, particularly for the convenience market, as vast numbers of people find themselves in need of tissues when they are on the move."

To meet this demand - and bring something new to a sector in which new product development is fairly minimal - market leader Kimberly-Clark last year launched Kleenex Anti-viral, which it claimed would kill 99.9% of cold and flu viruses present in the tissue. Also offering added value to cold sufferers is Kleenex Balsam, with added calendula to help soothe sore noses. "The medicinal tissue segment is definitely a source of growth," asserts Bailey.

Rolling on
Kitchen roll may be one of the most versatile paper variants (the average person uses kitchen roll for 3.4 different household jobs) but it's still the product most affected by the downturn.

Attempting to re-energise the market this year is SCA, which in 2008 bought market leader Bounty as part of a deal with Procter & Gamble. Now SCA is embarking on a new campaign to relaunch Bounty under the Plenty brand name. SCA marketing director Chris Bartlett says: "The arrival of Plenty and the major spend behind the name change is big news."

The campaign, which reprises the roles of suspiciously masculine housewives Brenda and Audrey from the brand's previous ads, will concentrate on Plenty's strength, absorbency and versatility.

Value matters
With financial experts unwilling to predict an end to the current economic slump, it's perhaps not surprising that commentators believe brands' marketing messages will become even more value-focused. But will cheaper deals for consumers decrease market value and eventually erode profit for c-store owners?

In a 2006 report, Mintel commented that 'extra-free' promotions on paper products were driving down the price paid per unit. Though this caused concern at the time, the practice has become a common way to market paper products. Today, pricemarked packs are seen by brands as a positive way to help drive sales through tough times.

Bailey believes pricemarking can be useful if it's used correctly. "Where pricemarked packs on brand-leading products are at a level which offers a competitive price point they will stimulate purchase behaviour and potentially increase incremental sales too," he points out.