How Bad Can It Get? Diaper Sales Fall

Tough times can sometimes force consumers to make rash decisions. So maybe it’s time to forget the Lipstick Index and turn to the Diaper Rash Index, as it appears that even indispensible disposable diapers aren’t recession-proof, according to a new study by Consumer Edge Research. The tight U.S. economy has turned even essential goods into luxuries. Now consumer-goods companies are seeing something they thought would never come to pass: Parents are buying fewer diapers. What does that mean for sales of non-staples, like cosmetics?

Spending on children has traditionally held steady in times of recession, including the most recent one, with parents sacrificing other items rather than scrimping on their children’s hygiene or happiness.

But as the economy continues to sputter, recent data show diaper sales are slowing and sales of diaper-rash ointment are rising. Industry experts say it costs about $1,500 a year to diaper a child six times a day.

The volume of diapers sold in the U.S. slipped 1% in the four weeks ended Sept. 4 from a year earlier, extending a string of similar or steeper declines stretching back to August 2010, according to Consumer Edge Research, whose retail-sales tracking doesn’t include Costco Wholesale Corp. or Wal-Mart Stores Inc. Dollar sales fell nearly 3%, indicating parents are both cutting back and trading down to cheaper private labels.

Dollar sales of diapers in the four weeks fell 4% at Huggies maker Kimberly-Clark Corp. Procter & Gamble, maker of Pampers and Luvs, saw dollar sales drop 2.5%. Even generics were down, with sales of private-label diapers slipping 0.5%.

The U.S. birth rate has declined since 2007, and it isn’t clear how much of the drop in diaper buying is due to penny pinching and how much results from fewer kids. Changing technology—more absorbent diapers, for example—also make comparisons difficult. Finally, the cohort being surveyed is always changing because parents buy diapers for a few years and then move on.

Still, Consumer Edge Research analyst Javier Escalante sees economic pressure behind the data. “This has never happened in this country before—this is a very rare circumstance,” says Mr. Escalante, adding that the fact that people are having fewer babies is itself a strong indicator that the economy is influencing parental behavior. “That’s a huge decision.”

Meantime, sales of diaper-rash ointment have increased 8% over the past year, according to market-research firm SymphonyIRI. Analysts and pediatricians say the higher sales likely reflect either less frequent changes or a shift to lower quality diapers.