"The impulse nature of batteries is an opportunity for every retailer," says Martin Gormley, brand manager for Duracell UK, still the market-leading battery brand. "It doesn't matter whether you're a newsagent or national grocer, given that 60% of batteries are bought on impulse, every retailer has an opportunity to maximise sales."
But, he warns, it's only those retailers who work closely with suppliers and get the fundamental sales drivers correct who will be the long-term winners. Despite key differences in pack presentation, leading suppliers such as Duracell, Energizer and Panasonic agree that getting the merchandising and availability of products right in-store is the key to boosting sales of batteries - and improving value returns for retailers.
"We need to help retailers understand that there are a huge range of devices out there now. It's about making sure that retailers have the right products on shelf to meet these needs," says Sarah Richardson, marketing manager for Energizer. The company's recent research found six categories of batteries buyers, ranging from economy shoppers to brand loyalists. "It proves retailers need to stock a range of products to cater for their shoppers," adds Richardson.
Energizer discovered that shoppers spend, on average, one minute at the fixture and that they tend to shop from left to right, top to bottom. "This helps us when we talk to retailers about planograms for fixtures: all we are doing is making life easier for shoppers to find the batteries they want." Energizer recently launched its Shopper Based Solutions programme, developing simple merchandising principles based on the shopper's decision-making process. The battery fixture has been redesigned using device images and good, better, best battery segmentation from left to right to help guide the shopper. And, according to Energizer, it appears to be working: international retailers who implemented the principles have shown an average 30% uplift in sales.
Meanwhile, research by Duracell found that two thirds of respondents claim to have made the decision to buy batteries prior to entering the store; however, once inside, they often needed reminding. "Visibility in-store is always extremely important for batteries," says Martin Gormley. "The key time of the year is Christmas: in terms of the biggest and best stores, you'd expect to see 60 secondary displays for batteries in the Christmas period.
"It shows the amount of impact and opportunity there is to grow visibility in-store. Till sites are also extremely important - anyone who goes into a shop potentially has a need for replacing batteries and till sites are the best way of capturing as many as possible."
Duracell, for example, continues to work with retailers to merchandise brands with a clear price hierarchy for ease of shop, merchandising 'cell type' horizontally, and implementing clear category signage to allow easy identification of the battery fixture. "Colour coding is a really good system," says Gormley. "One of the issues we have on batteries is that, if consumers don't use a huge amount of batteries, when they go to replace them at the fixture they often don't know what size or technology they require. Colour coding is a great way for them to check easily in-store. In the majority of retailers, the colour coding system is in-store on fixture. Potentially, there is some confusion with manufacturers doing different things, but with Duracell commanding nearly a 50% share, it's still proving popular with retailers."
The UK battery market is worth a shade under £350m [ACNielsen, Dec 06], and, despite increased volumes, was down 2.2% in value terms last year. Replacement rates are falling as consumers switch to longer-life alkaline and lithium batteries, which, combined with the growth of the rechargeables market for high-drain products, is slowing volume growth. Meanwhile, heavy price promotions, combined with a move to larger packs, have reduced value growth to a virtual standstill. Alkaline technology dominates the market, accounting for 75% of value sales [ACNielsen, Sept 06], while carbon zinc batteries continue to lose value share to new technologies such as lithium, Oxyride and improved rechargeable products, up from 12.1% in December 2004 to 17.1% in December 2006 [data from ACNielsen].
According to Mintel figures, Duracell dominates the market with over a third of volume sales, followed by Energizer, which is second in the market with just under a quarter of sales. Panasonic is the next-largest branded player, but accounts for less than 10% of market volumes. Meanwhile, own-label accounts for 10% of volume sales, appealing to those consumers who put cost above trust in a brand.
Advertising is heavily seasonal in the batteries market - reflecting key selling times - with more than 60% of all expenditure in the sector in 2005 coming in the last quarter of the calendar year [2005]. Since then, manufacturers have moved away from above-the-line strategies and instead are focusing on raising awareness of new battery technologies through targeted events. Duracell will be supporting music festivals up and down the country with its Powerhouse tour, where festivalgoers will be able to listen to live DJs and exchange old batteries for new Duracell products.
The market for rechargeables, meanwhile, is also growing. Both Energizer and Duracell have improved and increased their rechargeables ranges. Rechargeable batteries are set to grow in prominence as the European Directive on Batteries that will come into force in 2008 will introduce a recycling target to the market. Currently manufacturers claim that the extra cost of implementing recycling schemes will not push prices up.n
what the brands are saying
The battery category is about encouraging excitement among consumers and increasing consumer engagement with the product. Strong advertising is important - over the last year we have spent significant amounts on above-the-line advertising, particularly television. This keeps batteries on top of consumers' minds, especially important because it isn't a category which automatically features on a weekly shopping list, given the impulse nature of the market. Seeing batteries around the store helps stimulate this. We have also introduced new promotions this year, such as an on-pack free iTunes promotion, giving huge visibility.
Martin Gormley
brand manager, duracell
CATEGORY INSIGHT:?rechargeable batteries
The rechargeables market still has a small share, but it's growing strongly, driven by diverse consumers
Rechargeable batteries is one of the fastest-growing segments in the market, up 7.8% year on year. Although its share of the total market is still small, consumers are starting to warm to the technology, cost-effectiveness and green benefits of rechargeables.
When Uniross unveiled what it claimed was the world's first hybrid battery last summer, it was the latest in an explosion of new battery technologies, all principally aimed at powering the growing number of hi-tech gadgets and devices.
The company said its Hybrio product combines the benefits of disposables with rechargeables - they don't need to be charged up for use when purchased, as they already carry a charge, and can be recharged when this initial power is exhausted.
Such a product removes at least one of the major drawbacks of rechargeables for many consumers, and it was only a matter of time before other manufacturers followed suit and launched similar products. 2007 sees Panasonic unveil its Infinium range. Its new formula means that the batteries stay charged for much longer when not in use, just like an alkaline battery. This, says the company, offers two key benefits: first, the batteries come fully charged so that they can be used immediately on purchase; second, Infinium retain their power so they can be charged, stored and ready to be used at a moment's notice.
In the meantime, big branded players like Duracell and Energizer are promoting their rechargeable ranges, which could fuel further growth in a market that has traditionally struggled for consumer acceptance.
Research already shows that 22% of Europeans plan to buy a charger within the next six months [TNS research for Energizer, Feb 07]. That's no surprise to Sarah Richardson, marketing manager at Energizer. "With a change in the rechargeable technology, people are seeing a vast improvement in performance of the batteries and more readily accepting of rechargeable technology," she says. "People are also more environmentally conscious and want value for money, and rechargeables can offer this to them."
what the brands Are saying
The battery market in the UK has remained relatively stable over the past 10 years. However over the past few years consumers have been moving to more environmentally friendly rechargeable batteries. The implementation of recycling following the EU Battery Directive will further this growth.With this in mind we launched ReCyko+, which can be used straight from the shelf. They outlast alkaline batteries in digital cameras and can be used up to 1000 times, not only helping protect the environment, but save the consumers thousands of pounds in their lifetime. Education at point of sale has shown dramatic increases in sales of rechargeables.
Chris Howard
sales director, GP batteries
CATEGORY INSIGHT:?high-drain devices
Manufacturers are coming up with specialised ways of offering batteries with the power that's needed
With the growth in digital technology demanding higher-performing batteries, the UK's major suppliers have been quick to develop products for the hand-held generation. Power-hungry devices like cameras and MP3 players demand greater battery power and longevity, and suppliers are reinvigorating the category with a greater focus on NPD.
Panasonic, for example, is focusing its attention on the photographic market, with the launch of an improved Digital Xtreme Power Oxyride battery, as well as the next generation of rechargeable batteries, dubbed Infinium. To prove the power of the new Oxyride, on 16 July Panasonic Batteries achieved a world first by flying a manned airplane powered by 160 of the new Panasonic AA Digital Xtreme Power batteries.
Duracell's PowerPix battery, meanwhile, is also geared to meeting consumer needs in digital photography. Said to last up to three times longer in digital cameras than ordinary alkaline batteries, Duracell PowerPix has been designed for use in these high-drain devices and has recently been awarded Product of the Year, Battery Category 2007, by an independent consumer survey. Duracell is backing the range with a giveaway enabling consumers to receive 30 photographic prints with every purchase of special packs of Duracell PowerPix, Ultra and Rechargeable Supreme. "The promotional packs will stand out on shelves and are a great example of Duracell anticipating consumer demand and helping retailers to boost profits," says Paul Lettice, trade communications manager for P&G UK.
Meanwhile, Energizer claims to be the only manufacturer able to offer AA and AAA batteries featuring the Lithium technology. The company says its Ultimate Lithium batteries last up to seven times longer than standard alkaline batteries; are 33% lighter; and can even perform in extreme temperatures.
"Premium batteries (rechargeables and lithium) are driving the market and commanding better returns for retailers," says Energizer's marketing manager, Sarah Richardson. "You can get 630 photos from an Energiser Lithium battery compared with only 90 for a standard alkaline battery."
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