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Channel Overview in Tissue and Hygiene

March 2018

The global tissue and hygiene retail landscape continues to experience shifts in consumer shopping habits. Developed economies are seeing the expansion of grocery discounters and in turn the growth of private label, resulting in declining unit prices. Meanwhile, online retail is expanding across the globe, in both developed and developing markets. E-commerce allows consumers easily to shop for the best price and evaluate competing products, and allows manufacturers to expand their distribution.

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Discounters continue to grow in developed markets, driving down the unit price of retail tissue and hygiene products

Discounters only account for 5% of global retail tissue and hygiene sales. The channel is much stronger in developed regions, such as North America and Western Europe. Markets in these regions have seen average unit price of tissue and hygiene products decline as discounters continue to expand. As discounters increasingly improve the quality of their products and attract consumers with low prices, profit margins in the industry will continue to be challenged.

Private label continues to grow, particularly in retail tissue

Private label sales continue to grow in both retail tissue and hygiene, though retail hygiene has seen private label growth slow down in recent years. Private label tissue has benefited from struggling economies where consumers have seen their disposable incomes fall, such as Russia. In other markets, private label manufacturers have expanded their offerings to include more premium brands, catering to the need for good quality products at low prices.

Shift towards online retail is particularly evident in retail hygiene

Retail hygiene products lend themselves well to sales via e-commerce. The additional discretion in e-commerce also helps drive growth in sales of products such as adult incontinence, which many consumers may not be comfortable purchasing in a store. Consumers looking for cost savings and convenience are likely to resort to purchasing online. The growth of subscription services, which have mostly focused on retail hygiene, also helps drive further growth.

Retail tissue and hygiene continuing on positive growth trajectory

Both consumer tissue and disposable hygiene are expected to see positive growth in retail value sales between 2017 and 2022, driven in large part by the unmet potential in many developing markets. It is important to take into account the differences in channel distribution in these markets, such as the importance of independent small grocers in certain markets, to inform go-to-market strategies.

Introduction

Scope
Key findings

Industry Snapshot

Retail hygiene growth slowing, but remains positive
Retail tissue sees modest growth in 2017
Adult incontinence outpaces global industry growth
Unmet potential and growth in the developing markets

Channel Shifts

Non-store retail continues to gain strength
Hygiene products sold through non-store channels exceeds tissue

Store-based Channels

Supermarkets lead the store landscape…
…though their share varies by region
Sales through modern grocery channels is growing
Discounters continue to grow, driving down prices
Global discounters: Aldi and Lidl continue to expand
Private label records positive growth in tissue
Private label growth in hygiene products is positive but slowing

Non-store Channels

Internet retailing accounts for majority of non-store sales
Baby see nappies/diapers see the strongest migration to online retail
Internet growth varies by region
Motivators behind consumers’ choice to shop online
Subscription services as an opportunity in hygiene sales…
…allowing smaller, niche brands to build a consumer base online

Future Developments

Retail hygiene sales expected to continue on positive growth trajectory
Consumer tissue also expected to grow in forecast, but at a slower rate
Need for clear e-commerce strategies as online sales to expand further
Key takeaways

Appendix

Channel definitions
Industry definitions
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