Pricing Pressures and Realities in the US: Impact of Discounters

June 2018

Growth in the US retail tissue and hygiene market has slowed down, as it is fairly saturated and highly competitive. The expansion of discounters in the market, along with the increasing share of private label and sales through e-commerce, have had a negative impact on unit prices. However, opportunity for growth still exists in certain categories, as well as through premiumisation and segmentation.

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US Discounters face Market saturation and reliance on fundamentals

Retail tissue and hygiene in the US is experiencing minimal growth, as the market is already fully developed, with little room for future growth. Due to saturation, further increase is dependent on growth in the population and GDP growth, which is challenging for manufacturers, as these factors are out of their control.

Rise of discounters

The expansion of several discount chains, particularly Aldi and Lidl, has led to declining unit prices. Almost all categories within tissue and hygiene have seen unit price declines. As competition continues in the retail market, prices are expected to continue to decline.

The share of private label is increasing

The expansion of discounters, as well as younger consumers being less brand conscious than older generations, has led to an increase in the share of private label in tissue and hygiene, particularly in retail tissue and sanitary protection. The improvement in private label offerings also contributed to this shift.

Online offerings further amplify price wars

Consumers are increasingly shopping online. Although tissue and hygiene products are slower to shift to e-commerce than other consumer goods, there is still a notable increase in the share of sales through e-commerce. Online shopping provides a full and easy view of competing prices, allowing consumers to find the lowest prices available;this is further driving down unit prices.

Opportunities exist in premium innovation and product segmentation

Adult incontinence and wipes are expected to see the strongest growth in the forecast period. Although they are coming under pricing pressure due to the competition, there is room for premium innovation and segmentation to garner higher price points. Within wipes, baby wipes is the most challenged, but there is opportunity in less developed niche categories such as general purpose wipes and facial cleansing wipes.

Key findings
Most retail tissue and hygiene categories see flat performances
Growth is reliant on fundamentals such as GDP and population growth
Unit prices decline or remain stagnant across categories
The share of private label varies by category
Foreign competitors expand into the US market
Unit price of baby wipes declines…
…however, other wipes categories offer opportunities
Growing number of discounters in US leads to fierce competition
Online shopping offers consumers an easy way to find the best price
Big box retailers Walmart and Target lower prices amidst the competition
Leaders P&G and Kimberly-Clark struggle in their domestic market
Premiumisation : added-value benefits that justify a higher price point
Examples of product innovation
Still room for growth in certain categories
Recommendations for success in a tough marketplace


Data parameters and report definitions


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