Switching Channels
By Sean Ryan

Individual rolls of paper towels from Kroger, Weis, Giant Eagle, Hannaford, and Fleming square off against the multi-counts from Topco and Wegmans.

Warehouse clubs and dollar stores have surged in sales of paper goods. Large counts of low-priced merchandise have made these stores ideal place for shoppers to stock up. Traditional retail avenues are fighting back with their own larger sizes.

Dollar stores and warehouse clubs are like those nephews you see once a year at weddings. Every time you see them, they're dramatically bigger. You knew they were growing, but you just weren't prepared when they're suddenly getting just as tall as you.

Their growth was always somewhat stealthy, since neither reports scanner data. It took the rapid expansion of these channels' major chains to really catch the industry's attention.

Warehouse clubs and dollar stores are further behind other channels in store brand development. Both specialize in limited assortment sales, largely of low risk items. No retailer in the bunch has private labels for every major item the way supermarkets do. In fact, many popular products don't have any competition, from a store brand or otherwise. Private labeling is done on a case by case, product by product basis.

Both channels excel at paper goods, however. This is a lucrative category for both channels. Paper goods are shelf-stable, in constant demand and can be sold in bulk. High quality merchandise can be offered at a low price, and paper is enough of a commodity item for shoppers to be more inclined to sample the store brand. They're destination products for some and impulse buys for others.

The three major warehouse clubs, BJ's, Natick, MA, Costco, Issaquah, WA, and Sam's Club, Bentonville, AR, all stock store brand paper goods. According to an IRI report on club and dollar stores, the second best selling item in club stores is toilet tissue (only cigarettes beat it out). Paper towels are 16th most popular, and facial tissues 21st most popular.

Dollar chains stock private label as well, although some also use packer labels. Toilet tissue is the flat out best selling item for dollar stores, although much of that comes from national brands. Paper towels are the third best selling item.

The three dollar chains that utilize private label to a large extent are Family Dollar, Charlotte, NC, Dollar General, Goodlettsville, TN, and Fred's, Memphis, TN. Family Dollar stocks private label paper products under its own name, and Dollar General carries its toilet tissue under its Quilted Soft brand. Dollar General's 12-pack of premium toilet tissue is $5.00, while Family Dollar pre-prints $1 prices on its 200-counts of napkins.

Many dollar stores are independently owned, and get much of their products through overstock. But chain dollar stores have the size to implement store brands, especially among the products of which sell the most. Instituting a store brand might rub the national brand manufacturers the wrong way, but if it would allow for a greater profit, then dollar stores should take the leap. Most dollar store shoppers aren't national brand snobs.

Toilet Paper

BJ's Wholesale Club has upgraded its 24-count of Ultra Soft toilet tissue rolls to be a softer two-ply. The quality and value of club stores' paper products, toilet tissue specifically, capture both the bargain and the premium shoppers with a single SKU. An increasing number of patrons are shopping club stores, and putting these massive packs in their shopping carts (or at least balancing them on top of the carts).

Toilet paper's the biggest seller in store brand paper goods, bringing in $461.9 million from those who report scanner data. The true sales number is substantially higher, since warehouse clubs, dollar stores and close-mouthed Wal-Mart, Bentonville, AR, aren't included.

Speaking of odd things Wal-Mart does, the discounter still apparently has just the one SKU of its White Cloud toilet paper, a nine-count of 42-sheet rolls. The White Cloud brand name was snatched up from Procter and Gamble a few years ago, and since then Wal-Mart's used it for baby diapers and moist wipes, but still just the one SKU of toilet tissue. Perhaps the name had more value in the baby department.

Giant Eagle, Pittsburgh, PA, has its Soft Dreams brand of premium tissue in single and double rolls. The double rolls are 340 two-ply sheets, and a rebus-like equation on the front cover shows that one double roll has the same sheets as two single rolls. A 24-count of single rolls costs the same as a 12-count of double rolls, so consumers can choose if they like extra cardboard tubes or the ease of changing the roll half as much.

The Two Towels

Paper towels have an interesting two-tiered system going on. On one hand, standard paper towels are being sold in large packs, as is the style.

Topco, Skokie, IL, wholesales a three-count of its Valu Time towels, and Fleming, Oklahoma City, OK, wholesales a three-count of its 85-sheet Best Yet paper towels. Wegmans, Rochester, NY, has a jumbo 15-count of its paper towels.

On the other hand, individual rolls of paper towels are being marketed as tough guys, invincible cleaning cloths that are worth the extra money for only buying one at a time.

Fleming's alternative to its three-count is a single roll of its Wipe Outs brand towel. It has bigger sheets (11 x 13.8 inches, as opposed to the 11 x 8.8 inches of the three-count) but only has 60 sheets per roll. The three-count has 85 per roll, which works out to a longer roll overall. At a Kmart, Troy, MI, right before the Kmart/Fleming partnership fell apart, both the three-count and the single roll were 99 cents.
Hannaford, Scarborough, ME, offers its paper towels with or without designs on the paper. It's a small measure, but nonetheless something a few consumers might appreciate. With or without designs, they're $1.19 each.

Threes of Tissue

Giant, Carlisle, PA, has three-counts of its square facial tissues shrink-wrapped under its Pure Softness brand. Rite Aid, Camp Hill, PA, offers a similar shrink-wrapped three-count, although Rite Aid's boxes have 95 tissues each compared to Giant's 85 each. Both are sold for $2.99. Additionally, Rite Aid also offers three-counts of long boxes for that same $2.99, with each box holding 175 sheets.

Aldi, Batavia, IL, has long had Clarissa as its name for paper products, and has artfully illustrated boxes for its facial tissues. No sense in making boring packaging when an eye-catching one costs just the same to print.

Sav-on, Boise, ID, has eight-counts of eight-sheet pocket tissue packs for $1.89. Kleenex's eight-count is $2.39. Longs, Walnut Creek, CA, beats both those prices with a sale offering its eight-counts on sale for just $1.00 (and it's not even a dollar store).

Napkins

Safeway, Pleasanton, CA, puts its 360-count of napkins in an equal assortment of white, blue, tan and green, much the same as the Zee brand. On the West Coast, where Zee is a dominant napkin player, the four-color pack is a common assortment for store brands.

Giant has brought its Pure Power brand - normally used for cleaning products - over to napkins and paper towels. This, like Wal-Mart's White Cloud usage, is an interesting breed of brand awareness.
Weis, Sunbury, PA, has elegant napkins for $1.19, and 500-counts of its Ultra napkins for $2.49.
Smart & Final, Los Angeles, CA, targets a third customer base: small businesses. It focuses heavily on offices and restaurants. Smart & Final fixture-fold dispenser napkins in 500-counts for $1.99. That price drops to $1.69 when 20 packages are bought.