With an increasing number of consumers hitting the bottle in
favor of drinking from the tap, bottled water brands are bubbling to the
surface by, well, by the truckload. For retailers, the challenge lies in finding
the shelf space for it all.
Part of the problem is that not all of the $11 billion in bottled water
sold in the U.S. last year is made – or marketed – equally. But that confusion
also provides retailers with the opportunity to stock value, mid-range
and premium brands. Especially when it comes to value-priced purified
water, consumers – especially those who are in the habit of buying cases of
the stuff, and who have driven the massive growth of the category – aren’t
so much brand-loyal as price-loyal. When you get into the higher-end
spring and artesian waters, as well as imports, the stocking equation becomes
even more complicated – but it can also be an advantage.
Eric Skae, managing director of Iceland Spring in Orangeburg, New
York, observes that an increasingly health-conscious America is interested
in what, exactly, goes into its water. “More and more people are interested
in premium water; water from a source that they know is pristine, pure,
untouched,” he said, adding that his company receives regular calls inquiring
about mineral content and pH levels.
Skae believes that it’s up to the water brands to convey this information
to the consumer. “We have put together brochures about our water
that can be laid out next to the water so that people can read about
pH, mineral content, and so on,” he explained. “I think it’s the brand
owner’s responsibility to do that. If the brand owner does a good job
of that, it will help the retailer.”
Jackie Fox, director of sales at the Clearly Canadian Beverage Corporation
in Vancouver, British Columbia, emphasizes that retailers must
really know their customers in order to determine how much of each subcategory
to stock. “The biggest challenge by far would be interpreting
what role each different offering plays,” she said, noting that while some
consumers may purchase based on price, others buy for flavor, mineral
content, or how the water is distilled. The key, she says, is identifying the
current consumer need that is not currently being met.
Charlie Moro, president and founder of CFS Consulting, LLC in
White Plains, New York, observes that the biggest issue facing retailers is
building a sound variety around the private label brand that many stores
offer, rather than looking to one of the big brands like Dasani, Aquafina
or the Nestle Waters of North America labels. Some opt to complement their private labels with waters from around the world, for example,
while others stock premium products. “Most of them have tried to make
a brand statement in terms of their private label, but there is this whole
other plethora of brands, waters from different countries and flavored waters
that they need to incorporate,” he said. “The struggle has been how to
pick those particular players.”
The problem, Moro says, is when retailers stock too much of the same
thing. “It’s one thing to have flavored waters for the sake of argument, but
what you wind up seeing sometimes is four or five lines of the same thing,”
he said. “Everyone has a lemon-flavored water; but you could use the space
for a sparkling water, a European brand, or a premium brand.”
Like Moro, Fox cautions against stocking too many similar SKU’s, since
in doing this, retailers run the risk of like-entries cannibalizing current
sales. “New ‘options’ will hopefully convert
other beverage consumers as well as increase
the bottles purchased by current water users,”
she said. However, this variety can trip
up retailers: there are a number of unproven
brands out there that have yet to build trust
with the consumer base. “Retailers must be
confident that there will be a strong launch
plan to support these new brands.”
Too many SKU’s can also result in items
becoming quickly out of stock. “Some retailers
have a problem keeping things in stock
because they have too many SKU’s,” said Tom
Hipwell, at Nestle Waters North America
in Greenwich, Connecticut. “They haven’t
managed their assortment down so that
they have proper shelf space on the products
they are carrying, or the products that are selling
with high velocity.”
Nor should the retailer attempt to be everything
to everyone; because space is limited,
stores must first determine how much real estate the category deserves,
and then revert to its banner strategy to decide what brands to feature.
“You need to evaluate the turn-rate of each product, growth potential
of each sub-category and potential adjacencies that may not be experiencing
strong growth,” Fox advised.
So, is there a magic number of brands that retailers should stock?
Not really, since it all depends on your strategy, and what type of clientele
you are targeting.