Research: Household Products Brands Under Attack as Consumers Still Fixate on Price

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September 21, 2010

Household-products companies, especially those from small and medium-sized manufacturers, may face an inhospitable future as about 70 percent of consumers say they now shop for home cleaning products, kitchenware and paper products based on price alone.

And the future doesn’t look much brighter -- 50 percent say they will spend less on these types of products in the coming year, according to a new study by AlixPartners LLP, a global business-advisory firm.

Fifty percent of the 1,000 American consumers polled said they see no quality difference between private-label and national brands today in home cleaning products; 47 percent see no difference in paper products; and 46 percent see none in kitchenware.

“Our survey found that two out of three American consumers underestimate the premium that national household-products brands charge over private labels, and approximately half of consumers do not see a quality gap when buying private label,” said Zeeshan Mirza, a director at AlixPartners. “This creates the opportunity for private label to gain share and ‘generic-ificate’ the household-products category, which can be very difficult to reverse.”

The survey also revealed that nearly 65 percent of consumers underestimate the actual price differential between private-label and national household-products brands.

“Home is where the heart is, but may not be where the money is anymore as we’re seeing household products and brands are not immune from the big reset of consumer-spending priorities taking place throughout today’s sluggish, uncertain economy,” said David Garfield, a managing director at AlixPartners and head of the firm’s Consumer Products Practice. “The consumer survey tells us there’s going to be a lot of price and volume pressure on household-products companies of all sizes in the year ahead, but especially those companies that lack the economies of scale and balance sheets of the very largest firms.”

Seventy-two percent of respondents said price is the now their most important consideration when buying home cleaning products; for paper products, it was 70 percent; and for kitchenware, 65 percent.

When asked how they would change their spending behavior in the year ahead, 51 percent said they will spend less on home cleaning products; 50 percent said they’ll spend less on paper products; and 44 percent said less on kitchenware.

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