Category Project

Conducted by:

Chau Nguyen

Randy Aaron Horton

INTRODUCTION

Household Cleaner(Fall 2010)

• In total GM%, household cleaners get 26.80% in Marsh Super Market, and then 35% to 39% for strong national brands in our store auditing.

• Private label receive a large GM%; from 45% to 55% with copy cat brands, or Premium-lite store brands.

• The retailers are more in control in this category because of increasing GM / profit. Retailers & many small manufacturers continued to make more new products with minimized costs, while suppliers most enhance products’ characteristics & limit cost.

IMPORTANCE OF DEPTH

GROSS MARGIN $

WalGreen-School St.

- $ GM

WalGreen-6th St. -

$ GM

Walmart-Mall Ave. -

$ GM

WalMart-6thST-$ GM

Target-Shiloh - $ GM

Harps-Crossover-

$ GM

Harps-Garland-$

GM

IGA-College-$

GM

Dollar General- Garland-

$ GM

Dollar General-SchoolSt-

$ GM

% of Total Sum 22.9% 25.9% 15.7% 18.2% 37.7% 38.0% 24.7% 25.6% 19.6% 12.8%

N 7 7 6 8 10 15 12 10 11 5

% of Total Sum 3.2% 15.0% 7.3% 2.5% 7.0% 6.0% 10.4% 13.9% 5.5%

N 1 4 3 1 3 3 4 6 2

% of Total Sum 17.2% 19.3% 8.8% 9.8% 7.4% 6.8% 3.1% 3.0% 9.1% 13.4%

N 5 5 6 5 4 3 2 2 6 5

% of Total Sum 30.5% 18.0% 28.9% 37.5% 28.8% 20.1% 31.7% 37.4% 5.5% 14.8%

N 9 5 9 11 7 8 11 11 4 6

% of Total Sum 10.0% 11.5% 5.3% 3.9% 10.9% 9.4% 5.6% 7.8% 13.3% 12.0%

N 8 8 3 3 3 7 5 6 12 10

% of Total Sum 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

N 34 32 36 40 28 46 55 39 55 41

Private Label

Total

P&G

Reckitt Benckiser

SC Johnson

Report

Manufacturer

Clorox

GROSS MARGIN %

WalGreen-School St. -

GM%

WalGreen-6th St. -GM%

Walmart-Mall Ave. -

GM%

WalMart-6thST-GM%

Target-Shiloh- GM%

Harps-Crossover

Rd-GM%

Harps-Garland-

GM%

IGA-College-

GM%

Dollar General- Garland-

GM%

Dollar General-SchoolSt-

GM%

Mean .553 .568 .332 .345 .328 .452 .410 .434 .318 .365

N 7 7 6 8 10 15 12 10 11 5

Mean .579 .434 .390 .267 .468 .479 .490 .356 .341

N 1 4 3 1 3 3 4 6 2

Mean .610 .614 .206 .360 .211 .454 .310 .362 .283 .351

N 5 5 6 5 4 3 2 2 6 5

Mean .556 .567 .348 .385 .356 .455 .505 .492 .254 .290

N 9 5 9 11 7 8 11 11 4 6

Mean .374 .374 .402 .418 .411 .446 .468 .445 .404 .379

N 8 8 3 3 3 7 5 6 12 10

Mean .517 .515 .354 .380 .333 .445 .426 .453 .355 .363

N 34 32 36 40 28 46 55 39 55 41

Private Label

Total

P&G

Reckitt Benckiser

SC Johnson

Report

Manufacturer

Clorox

Strongest Manufacturers

• Clorox

– 3 stores per item between 34 SKUs

– 26.8% stocking rate

• SC Johnson

– 3 stores per item between 31 SKUs

– 26.1% stocking rate

Demographics

• Highly purchased in $70,000+ households

• Multiple-member households•Windex most popular among 5+ member households

• Windex primarily for under 35 year olds and Lysol for middle-age

• Increasing sales for under $20,000 households since 2003

• Private labels are heavily consumed by both low & high income families

Category Role : CASH MACHINE

• In store audit, high GM % & medium Sales volume. → more development with increasing assortments & depth in a long run of brands competition.

• Based on Ad Hoc Base and Demo:

– Sales volume: down a little for low income & increasing for middle-income.

– Household size: +2 members family.

– Essential item with 91% as household penetration & 89.3% repeated buyers

BRANDS

Brands Competition

• No one brand is in control of household category

• The market is shared by PL, some strong national brands (Windex, Lysol, Clorox, 409, Fantastik and Mr. Clean) and many brands from small manufacturers.

• Retailers are playing hard with non-stop production of new products, directly competing with national brands on quality and on price

DG’s PL compete directly with Windex of SC

Johnson and with Mr. Clean of P&G on both share

of facings (3 facings) and price (only 1/2)

DG guarantees best value for customers:

quality (if customers don’t satisfy, refund)

price-sensitivity

FACINGS

WalGreen-School St. -Facings

WalGreen-6th St. - Facings

Walmart-Mall Ave. -

Facings

WalMart-6thST-Facings

Target-Shiloh- Facings

Harps-Crossover-

Facings

Harps-Garland-Facings

IGA-College-Facings

Dollar General- Garland- Facings

Dollar General- SchoolSt-Facings

% of Total Sum 20.0% 20.6% 14.1% 16.0% 29.6% 32.6% 18.0% 25.5% 17.9% 7.1%

% of Total N 20.6% 21.9% 16.7% 20.0% 35.7% 32.6% 21.8% 25.6% 20.0% 12.2%

N 7 7 6 8 10 15 12 10 11 5

% of Total Sum 2.9% 8.1% 5.0% 2.8% 6.7% 6.6% 9.1% 10.3% 3.6%

% of Total N 3.1% 11.1% 7.5% 3.6% 6.5% 5.5% 10.3% 10.9% 4.9%

N 1 4 3 1 3 3 4 6 2

% of Total Sum 14.3% 14.7% 16.2% 12.0% 18.3% 6.7% 3.3% 4.5% 9.0% 8.6%

% of Total N 14.7% 15.6% 16.7% 12.5% 14.3% 6.5% 3.6% 5.1% 10.9% 12.2%

N 5 5 6 5 4 3 2 2 6 5

% of Total Sum 28.6% 14.7% 22.2% 35.0% 29.6% 19.1% 26.2% 30.9% 6.2% 24.3%

% of Total N 26.5% 15.6% 25.0% 27.5% 25.0% 17.4% 20.0% 28.2% 7.3% 14.6%

N 9 5 9 11 7 8 11 11 4 6

% of Total Sum 22.9% 29.4% 16.2% 9.0% 9.9% 14.6% 9.0% 16.4% 23.4% 23.6%

% of Total N 23.5% 25.0% 8.3% 7.5% 10.7% 15.2% 9.1% 15.4% 21.8% 24.4%

N 8 8 3 3 3 7 5 6 12 10

% of Total Sum 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

% of Total N 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

N 34 32 36 40 28 46 55 39 55 41

SC Johnson

Private Label

Total

P&G

Reckitt Benckiser

Report

Manufacturer

Clorox

• Most PL gained best part in share of facings and share of SKUs in small stores (niche market such as DG, IGA)

• But strong national brands such as Windex and Clorox try to fight back and also has strong influence in big stores (Wal-Mart, Harps).

SKU’s & The Battle for Shelf Space

• Total SKU #s found: 194 within 10 stores

• PL plays big part in share of SKUs but strong national brand try to gain share of facings.

→ uncompromising struggle

• Retailer is in control with rather high GM%

Brand SKUs % of Category

Windex 16 8.25%

Lysol 15 7.73%

Clorox 9 4.64%

Mr. Clean 11 5.67%

Private Label 39 20.10%

Average GM% by national brand

WalGreen-School St.

-GM%

WalGreen-6th St. -GM%

Walmart-Mall Ave. -

GM%

WalMart-6thST-GM%

Target-Shiloh-GM%

Harps-Crossover

Rd-GM%

Harps-Garland-

GM%

IGA-College-

GM%

Dollar General- Garland-

GM%

Dollar General-SchoolSt-

GM%

Mean .599 .389 .389 .432 .467 .414 .452 .395 .395

N 1 2 2 3 3 3 3 1 1

Mean .543 .543 .241 .317 .244 .464 .438 .409 .336 .336

N 3 3 3 2 3 3 2 3 2 2

Mean .575 .335 .384 .476 .476 .476 .218 .218

N 2 3 2 1 1 1 3 3

Mean .610 .614 .209 .402 .211 .454 .310 .362 .288 .351

N 5 5 5 4 4 3 2 2 5 5

Mean .579 .434 .474 .267 .468 .479 .472 .356 .341

N 1 4 1 1 3 3 3 6 2

Mean .590 .590 .354 .374 .347 .503 .509 .522 .360 .360

N 3 3 5 4 4 5 6 6 1 1

Mean .517 .515 .354 .380 .333 .445 .426 .453 .355 .363

N 34 32 36 40 28 46 55 39 55 41

Total

Windex

Lysol

Mr. Clean

Fantastik

Clorox

Report

Brand

409

Stocking Rate by Suppliers

Manufactures Stocking Rate

SC Johnson 26.1%

Reckitt Benckiser 2.7%

Clorox 26.8%

P & G 19.3%

Cost Estimation

• Our cost estimation is consistent with “Cash Machine” role for Household product.

• For strong brand like Windex, the cost is high and range from 0.07 to 0.10 ¢/ounce.

• For PL, cost is ultimately low and from 0.01 to 0.07¢/ounce.

• We lower the cost when counting items with bigger size package & increase cost for smaller size.

Role of Private Labels

• Higher gross margins

• Low-price

• Difficult to differentiate

Average GM% by PL

Private Labels Presence

• Increasing presence

– Same number of facings

– New items because of high gross margins

• Private consumption is increasing across most

demographics

Private Labels vs. National Brands

    ITEM $ (000) DOLLAR SHARE ITEM PENETRATION% REPEAT BUYERS

(% 2+ TIME BUYERS)

HOUSEHOLD CLEANERS

WEST SOUTH CENTRAL 300,056.0 0.7 91.0 89.3

CTL BR ND- LIQ - CLEANERS - NON- DISINFECTANT

WEST SOUTH CENTRAL

2,454.6 3.9 8.4 31.0

WINDEX ND- LIQ - CLEANERS - NON- DISINFECTANT

WEST SOUTH CENTRAL

1,615.9 2.6 3.5 15.1

LYSOL ND- LIQ - CLEANERS - NON- DISINFECTANT

WEST SOUTH CENTRAL

441.4 0.7 1.4 9.8

Suggested Strategy for Wal-Mart

• Increase strategy

• 36 total facings while the Harp’s on

Garland had 55 total facings.

• Small selection of private labels and high

number of facings

GM% by FACINGS No.

N Mean

1 3 .441

2 16 .367

3 12 .308

4 2 .295

5 1 .491

6 1 .354

9 1 .429

Total 36 .354

Walmart-Mall Ave. -GM%

Walmart-Mall Ave. -Facings