An idea more than a decade ahead of its time is making a comeback and by October the laundry detergent aisle at retailers across the South will change forever.
Wal-Mart Stores Inc. is continuing its sustainability push and consumers may have already noticed the appearance of “2X” concentrated laundry detergent products which offer the same number of loads in a bottle half the size.
Unilever, the maker of All, Whisk and Snuggle brands, is actually taking a step back in an effort to make strides forward in a category where they account for around 15 percent of the $6 billion in annual sales and a single point added or subtracted from market share can mean millions.
Unilever has offered All Small & Mighty, a triple concentrated formula, for nearly two years and in 2006 its sales rose to more than $100 million. However, Unilever’s “high density liquid” or “1X” lines still account for around 80 percent of its sales and its best bet to hold market share is to convert those lines to 2X rather than 3X.
Such a dramatic change requiring millions of dollars in investments by manufacturers would not have happened without Wal-Mart’s directive to detergent makers like Unilever and Procter & Gamble to slash packaging.
“You couldn’t have done this without Wal-Mart’s support,” said John Brunner, Unilever’s Wal-Mart/Sam’s Club client business manager. “I don’t think you could have gotten the consumer to engage on it.
“It put everyone on a level playing field. Now it’s your job to go educate consumers. That makes it much more palatable for a manufacturer to undertake the level of budget it’s going to take to make this change.”
Wal-Mart buyer Scott McDoulett said the company is extremely excited about the initiative that began as a way to improve on best business practices and turned into a major prong of the Bentonville retailer’s sustainability attack.
“Rarely is an entire industry changed across all manufacturers and retailers by a single product innovation such as it will be by compact laundry detergent,” McDoulett said. “Compaction has a major impact on the environment and will change the way our customer shops.
“We believe it has the potential to be a model for other industries.”
Beginning the first week of August, publicly traded grocers like Kroger and Albertson’s began switching out their HDL detergents. On Sept. 10, Sam’s Clubs from Georgia to Hawaii will switch their entire detergent aisles overnight.
Harps Food Stores Inc. senior vice president Kim Eskew said its stores will gradually change over to 2X lines as they become available from its warehouse in Missouri and he expects the changeover to be complete by October.
“On the surface it seems like a very good thing,” Eskew said. “It’s kind of a no-brainer.”
During the first week of October, 1,556 Wal-Mart stores in the South region will make an overnight switch to all concentrated lines.
The Northwest/Midwest wave will roll out in January 2008 from Ohio to Alaska and the Northeast wave from South Carolina to Maine will happen in April.
“Laundry detergent as you know it will no longer exist,” Brunner said.
Try, Try Again
This isn’t Unilever’s first effort at concentrated laundry detergent. The company offered Whisk Double Power in 1994 and it “failed miserably,” said Unilever shopper marketing manager Vince Sottosanti.
The consumer psychology of scale led them to the bigger bottle almost every time even though what they were getting for the heavier bottle was mostly water.
“It’s in perceived value,” Sottosanti said. “A big bottle for $5 is now a small bottle for $5 and they started looking at other products.”
But Unilever still had the formula and it also had a smaller bottle from its European products as the continent has long had stricter rules on reduced packaging.
So when Wal-Mart began floating package reduction plans to suppliers, Unilever was ready with the Small & Mighty concept in November 2004.
The problem introducing the product to American consumers wasn’t the formula, though. It was the bottle, which at 32 ounces isn’t much larger than an average bottle of dish detergent.
Americans needed a spout to dispense the detergent and they also needed a cap that would make sure they used the proper amount to achieve the promised number of loads per bottle.
“In order to put a spout in, you had to recut and reshape the bottle,” Brunner said, “so it became quite an engineering feat. It took us nearly a year.
“Our initial investment was very expensive. Not only do you have to change the bottle, you have to change manufacturing lines. We had to create new lines in our Baltimore plant in order to manufacture Small & Mighty.
“Now we’re making another significant investment to go to 2X. Over time we hope to recoup some of that investment. It’s a tremendous undertaking from a supply chain and a logistical standpoint. It’s an enormous investment, but it’s the right thing to do. I think everybody realizes that.”
Particularly encouraging to the Unilever team is the repeat rate on Small & Mighty. The company’s research shows a 53 percent repeat buy rate, which is off the charts in the detergent category with an average repeat rate of 18 percent to 20 percent.
“People that try it, get it,” Sottosanti said. “They get the benefits to themselves and to the environment. Our repeat rate blows away any other laundry product that has been introduced in the last decade.”
Message in a Bottle
Unilever’s team figures the best way to get the word out about its 3X product will be stocking it next to the 2X lines. Without the mammoth bottles drawing away the consumer eye, Unilever is hoping to achieve greater awareness of the Small & Mighty product.
“We focus our advertising on All Small & Mighty,” Sottosanti said. “We still feel that is a better proposition for the consumer and the environment. As consumers start taking note of what has happened in laundry in terms of the concentrate, they will start noticing our 3X product, which we don’t feel they’ve noticed to this point.”
The cost-benefits to companies like Unilever and P&G won’t necessarily be from increased sales as detergent is a commodity-like product with household penetration of 98.5 percent and similar price points, although having more product on the same shelf space could drive some extra sales with fewer out of stock issues.
The true cost savings will come from reduced amount of materials.
In just two years of Small & Mightly sales, Unilever estimates the product has saved 5 million pounds of plastic, 26.3 million square feet of cardboard and 25,000 gallons of diesel fuel.
That’s enough plastic to produce 40 million water bottles and enough cardboard to cover about 1,064 football fields.
Savings from reduced water use are difficult to quantify. The amount of water reduced in the detergent will be made up for by the washing machine filling to the same level as before.
The savings for a relatively minor player in the market like Small & Mighty shows the enormous potential for material savings across the entire product category.
P&G’s Tide line alone accounts for 40 percent of the laundry detergent market and the company estimates 22 percent to 44 percent reductions in packaging in addition to lessened fuel costs and warehouse space.
“The benefits to the consumer are obvious and the benefits to the environment are going to be profound when you multiply it out,” Brunner said.
“Based on the initiative we started with Wal-Mart, everyone else is following suit and we’re talking about within the next year millions of gallons of water saved, plastic saved, cardboard saved.
“I think it’s exciting for us to be in that position of leadership and say we are making a difference.”