Product Innovation Paradox
Somewhat counterintuitively, the slowdown in the home care market can be partially attributed to a recent slate of successful product innovations. Take, for example, the case of unit dose laundry detergent packs. Prior to 2012, this category did not functionally exist in the US, but by 2017 it constituted 17% of all detergent sales by value and posted the most rapid year-over-year sales growth of any home care product category, according to Euromonitor. Yet this success has come at a steep price for manufacturers. Not only have detergent packs cannibalized sales of powder and liquid detergents, but the product’s unit dose format has also allowed consumers to only use the amount of detergent required per wash. Ultimately, this has served as a check on overall laundry care sales growth.
Beyond laundry care, the rise of multipurpose cleaners that can be used in a wide variety of cleaning applications has simplified life for many consumers, but it has also reduced the number of cleaning products an average consumer purchases. The sustained sales growth recorded by all-purpose cleaning wipes has had a similar effect on the industry.
In short, while consumers have responded positively to product innovation in the home care space, the effect of this innovation has restricted revenue growth almost as much as it has encouraged it.
New Product Development Stalls
While it would be hard to overstate the impact that recent product innovations continue to exert on the US home care industry, 2017 was marked by a relative lack of groundbreaking product launches. However, there were a few notable exceptions. RB unveiled Lysol Laundry Sanitizer, which has the distinction of being the first true laundry sanitizer from a major brand in the US. Meanwhile, Clorox updated the formula of its signature liquid bleach.
Yet, in terms of product development, 2017 was defined much more by smaller, incremental improvements. Home care manufacturers that own proprietary air care brands doubled down on cross-promotion during the course of 2017, continuing to integrate the scent-improving properties of these brands into new offerings of laundry care, surface care and toilet care products. Additionally, many home care manufacturers made improvements to their product packaging with Procter & Gamble’s addition of child-resistant closures to its Tide Pods and Gain Flings liquid tablet detergents being one of the most notable examples. Furthermore, with formula and packaging adjustments, the leading players in the home care space drew attention to any improvements to their products that could be marketed as being “green” or environmentally-friendly.
The reality of the US home care market is that minor product adjustments do not deliver the same sales boost to the industry that the introduction of a truly original, new product format does. One of the reasons why recent product innovations like liquid tablet detergents continue to exert such an outsized influence over the home care industry is that—so far—manufacturers have not developed any newer products that could plausibly supplant them. In 2018, the leading players in home care would be wise to once again embrace more ground-breaking forms of product innovation.
In addition to product innovation, evolving consumer behaviors had an impact on sales growth in the US home care industry. For example, during the past few years, consumers have been eating less formal meals at home while also buying carryout meals more regularly. As a result, consumers are eating their meals directly out of the disposable containers in which they come or off other disposable dinnerware. The net result of this is that consumers tend to wash fewer dirty dishes and utensils at home, which has acted as a check on sales growth in dishwashing.
Until 2017, the dishwashing market seemed to weather reasonably well this shift in food consumption patterns. Last year, however, with both real wages and consumer confidence growing, US consumers acted as if they had a bit of extra cash to spend, and many used their surplus pocket change to avoid cooking at home as frequently. This had a substantial impact on the US dishwashing market, which posted a year-over-year value sales decline of 1%—the first sales decline recorded in the category since 2004, according to Euromonitor.
The shifts toward less formal at-home dining and more take-away food purchases are set to intensify in the US. As a result, the prospects for sales growth in the US dishwashing market during the coming years appear dim.
If consumers in the US continue to wash substantially fewer dishes and utensils on an annual basis than they did a decade ago, then it seems unlikely that even a revolutionary new product in dishwashing will restore sales to their former levels.
To download Euromonitor International’s full report, “Home Care in the US,” visit: http://www.euromonitor.com/home-care-in-the-us/report.
Bob Hoyler is a research analyst with Euromonitor International. He can be reached at Bob.Hoyler@Euromonitor.com