All Charged Up

Duracell exec Vole Kuhn offers valuable insights into the battery biz.

The battery category offers an opportunity for retailers to generate significant sales and profit year-round, and especially during special events and the holidays. But the key is to merchandise effectively and take advantage of lessons learned.

To learn more, Progressive Grocer spoke with Volker Kuhn, general manager at Duracell NA.

Q. What are some of the key steps Duracell is taking to help retailers drive sales in the battery category?

A. We are investing significantly in Duracell's equity and innovation pipeline. All batteries and power solutions are not created equal. Duracell has developed a reputation of trust, and we are investing to extend that trust through innovation. Our Duracell Ultra product is our longest-lasting all-purpose battery and the only one with a strip to show how much power is left. Our rechargeable business has cells with low self-discharge, and our 15-minute recharger is the fastest we've offered. We just announced a joint venture with Powermat to lead the wireless recharging category and introduce new personal power solutions. Building the strongest brand possible, combined with consumer-inspired innovation, will drive the category higher even faster.

We are investing in consumer and shopper research to help retailers make shopper-based interventions across fundamentals like assortment, shelving and display that accelerate growth. Retailers have been pleased with new insights we are generating, and our investments in these areas will help shape the future of the category across all segments, including hearing aid, coin button, rechargeables and now wireless. We have several success stories of retailers partnering with us and seeing their categories grow.

We are making huge investments in driving consumer and shopper demand. Duracell has the top equity rating and is the most recognized in the category — everyone knows copper and black. We are investing to drive demand all year long, during hurricanes and especially during the holidays. Duracell gets the added multiplier of being a P&G brand, which makes our leadership media spending more effective. We are helping retailers increase visibility and compliance of battery displays in-store — the key driver of the impulse battery business.

We are investing in supply innovation to help improve the efficiency of working capital for retailers. Having an innovative supply plan to handle the multiple points of display in-store and being able to flex for key events like hurricanes and the holidays helps ensure maximum inventory efficiency and avoid lost sales.

Q. What key trends are influencing battery sales, and how can supermarket retailers capitalize?

A. A key trend is that devices that take all-purpose batteries like AA, AAA, Cs, Ds and 9-volt continue to grow. (Source: “Euromonitor Battery Powered Devices Study,” 2011 (mgh)). For example:

• Wireless Video Game Controllers: 9 percent compound annual growth rate (CAGR) 2010-15; 36 million devices in five years
• Toys: 6 percent CAGR 2010-15; 65 million devices in five years
• Remote Controls for TV, DVD, Blu-ray: 1 percent CAGR 2010-15, 44M million devices in 5 yrs (AA and AAA combined, moving from AA to AAA)
• LED Flashlights: 27 percent CAGR 201015; 29 million devices in five years

Another trend is the decline of high-drain devices like digital cameras and film cameras for which the more expensive lithium batteries were designed. (Source: “Euromonitor Battery Powered Devices Study,” 2011 (mgh)).

• Digital Cameras: -20 percent CAGR 2010-15; 16 million devices in five years
• Film Cameras: -100 percent CAGR 2010-15; 18 million devices in five years
• CD Players:-23 percent CAGR 2010-15; 20 million devices in five years
• Handheld GPS (SatNav): -2 percent CAGR 2010/15; 0.4 million devices in five years

To capitalize on these trends, retailers should plan shelf and display space accordingly and apply the principles of winning battery retailers we're recommending today. All-purpose battery devices will continue to grow, so get those displays up and give more share of shelf to premium all-purpose batteries such as Duracell Ultra.

Q. What are the best-in-class ideas for merchandising and shelf space utilization?

A. Winning retailers embrace the fact that display visibility and multiple points of disruption in-store, not deep price promotion, are the keys to driving growth in this impulse category. Having a robust display for the full battery portfolio at front of store, the highest-traffic area, is most important. Next is having a great checkout solution with the right assortment — this is not the time to trade customers down, so feature premium brands. Checkout is critical for food retailers.

Food retailers also should have a battery shelf/robust display at the front of an aisle that is close to checkout and carries the full assortment so shoppers have access to all their personal power needs.

Spread the display inventory across the store in highest-traffic areas first and logical adjacencies second. For food retailers, these are pharmacy for hearing aid and medical device batteries (both round cells and coin and button), baby, seasonal (especially during Daylight Saving Time), and hardware/ general merchandise.

Have clipstrips of batteries throughout the store. We've seen successful retailers use this tactic to grow the category, especially when they use signpost battery brands like Duracell.

Q. What common mistakes do retailers make when merchandising the battery category?

A. The biggest mistake is treating batteries as a commodity and then driving deep-price promotions and their low-tier/private label brands more than branded products. That is a sure way to deflate category sales and profits. Batteries are an impulse item, and when a display triggers shoppers to buy, they will buy. Don't give away dollars unnecessarily.

The premium brands, which usually have a higher dollar ring and profit margin, should have a prominent place on the shelf, and plenty of it. Give them more space and they will grow. Retailers that have given more space to Duracell Ultra have seen a nice boost in sales and profits.

Some retailers make the mistake of burying their battery shelf within the electronics or GM departments. Since visibility is the main driver of sales, these lower-traffic departments are not ideal for the main battery section.

Another category-dilutive tactic is offering large-count packs. Since it's an impulse item, shoppers aren't necessarily in the stock-up mode. So if the pack is too big, you are leaving dollars on the table and driving the category down.

Q. With the holidays approaching, what steps can retailers take to maximize sales and profits from battery products?

A. Most importantly, put the shopper first. Duracell has a massive holiday program, “Peace of Mind,” that is inspired by not wanting to disappoint one single child during the holidays. So retailers should get displays up early, especially in the front of the store. It's worth having a big display in your toy section as well. Get the clipstrips up throughout the store. Try driving your premium and trusted brands especially during this time. Moms, dads and grandparents do not want to disappoint, so remind them to get batteries in their carts.