Batteries are a very profitable product category for retailers and yet customers are still confused about what’s available to them. Anna Ryland reports what is being done to help both consumers and retailers to benefit from batteries.
The great appetite for consumer electronics products among the British is driving demand and product developments in the battery sector. “The UK has firmly established itself as a nation of gadget lovers. Each household now owns an average of 30 battery-powered devices, while 89% of households have at least one digital device. This means consumers are demanding more long lasting batteries that represent value for money in high drain devices, and signifies continued growth within the high-performance sector.” says Emily Smith, Energizer’s marketing manager.
Society is becoming increasingly mobile and consumers need devices to power their gadgets wherever they are. “Flexibility is at the heart of our product range and our portable charging units, for example, not only offer a range of charging adaptors, ensuring use with a variety of gadgets, but also offer a variety of methods for charging the unit,” says Vince Armitage, divisional vice president at Varta Consumer Batteries UK. The growing importance of environmental principles has also been key. “We have spent time developing rechargeable batteries which are not only more powerful than ever before but also more convenient. We have designed cells which can be used straight from the pack as well as creating charging units to power batteries in less time.”
The market performance
“The value of batteries sales tipped £246 million over the twelve months from June 2009 to May 2010, with just over 396,000 battery cells being sold in the GfK UK panel market. Putting these figures in context, 280,000 cells were purchased in 2005, which is over 115,000 less than the current market size (June 2009 to May 2010). The market has constantly risen over the last five years simply because the number of devices that require a battery has grown. The recent star battery-related purchase has come from the gaming accessories category, such as Wii remotes, which are battery hungry,” explains Ebony Arden, GfK market analyst.
The battery market is dominated by alkaline batteries, which account for 87% of the market by volume and 80% by value (2008/2009 year-on-year; GfK). Sales of alkalines fell by 1.8% to 370 million pieces, with value almost flat at £211 million (a fall of 0.05%). Average price was up 1.9% to 57p.
The economic squeeze prompted many consumers to opt for cheaper zinc batteries, and this sector saw a volume sales increase of 64% to 28.9 million pieces. The fall in the average price of 18p per cell (down 31%) was responsible for such growth. Lithium sales grew by 3% to 9.4 million pieces, but value dropped 10% to £17.9 million. Average price was up 5.3% to £1.91.
In spite of their environmental credentials, sales of rechargeables fell by 6.4% in volume to 12 million pieces, and value dropped 0.6% to £24.3 million. Average price was up by 6.1% to £2.03, suggesting that the economy is the main reason for the decline in this sector.
A word of warning comes from Varta’s Vince Armitage: “Consumers are unaware of battery chemistries and performances, so do not realise that they have downgraded their battery choice for a much inferior product. And given the low performance of such units, compared to alkaline batteries, it means customers buying zinc products will have to buy more of these batteries to do the job they wish to undertake. This all adds up to a false economy, increased environmental issues and finally, a dissatisfied consumer.”
AA batteries account for 63% of sales by volume, and AAAs for 25%. Multi-packs are liked by many consumers and the four-pack version remains the most popular, accounting for 42% of sales by volume.
The choice is wide
Responding to consumer needs, battery manufactures have developed not only longer-lasting products, new ranges of rechargeable batteries and a variety of sophisticated chargers but also made a major investment in developing new PoS material and packaging designed to make it easier for shoppers to choose the right battery for their needs.
This investment was essential as all manufacturers report that consumers are confused by the battery category. A Panasonic market survey has also showed that 50% of battery purchases are on impulse and 75% of customers welcome a reminder from a retailer to top-up on batteries when making other purchases.
Last year Varta launched the Tri-Energy battery range which employs a range of icons and colour coding, reflected on PoS material, to help consumers and retailers to identify which type of battery is right for their device. This year the manufacturer has developed a range of battery chargers which offer a variety of charging methods meeting different lifestyle needs. They include the Power Station, charging up to eight batteries at once in six hours, the Travel Charger working with any global voltage, the Solar Charge and Backup Charger which powers cells via a computer or laptop and which comes with six charging adaptors to power the most popular mobile devices.
In September, Panasonic will be launching two new chargers; the V-Man Home Station that can power-up the majority of gadgets through eight adaptors, and the LCD Charger which shows the charge level of batteries. Later in the year, the manufacturer will release a Lithium 9V cell, ideal for use in smoke alarms, and a Professional USB Charger which can power four AA batteries as well as acting as a power source for laptops.
Panasonic’s has focused on improving its green credentials particularly on its range of alkaline batteries. “The improved production process uses solvent-free sealing of the battery instead of glues that contain solvents, and the can coating is now water-based instead of solvent-based. To highlight Panasonic’s commitment to environmental responsibility, the Green Apple logo has been featured on all AA, AAA, C and D size alkaline batteries in the Pro Power, Standard Power and Alkaline Power products,” explains Tim Clark, sales manager for UK and Ireland Panasonic Energy.
At the end of 2009, Panasonic Corporation completed the acquisition of SANYO Electric which, given Sanyo’s strength in the rechargeable market, will further enhance Panasonic’s standing in this field.
Energizer, the world’s number one rechargeable brand, will soon launch its latest charger innovation – the Energizer Intelligent charger. It features a countdown clock that informs the user how many hours are left until the batteries are fully charged and provides a digital fuel gauge showing how full the batteries are. This year the manufacturer has invested in a new brand identity, reflected by packaging, which will help consumers choose the right batteries for their devices. It also includeds a new type of alkaline battery, High Tech that has been designed to last up to 40% longer that other products on the market. Energizer has segmented its battery offering into its five top selling lines, including Specialist, Ultra+, High Tech, Ultimate Lithium and Rechargeables.
Remember the Directive
The Batteries Directive is an issue of key significance for the battery sector, and retailers have an important role to play in helping the UK to meet its collection targets.
The UK has set interim, non-statutory targets for compliance schemes to meet, the first being to collect 10% of the batteries their producer members place on the market in 2010, and 18% in 2011. However, the figures recently released by the Environment Agency show that, while 9,898 tonnes were placed on the market by producers in the first quarter of this year, just 849 tonnes were collected.
one uses the figures from the first quarter to predict what may happen by the end of the year, then the indicators are that the UK will not meet the interim target of 10% – missing it by 563 tonnes,” explains Vince Armitage. “In order to achieve these targets, extra effort will be required by all, not just the manufacturers, with retailers and end users also playing a big role.”
He argues that retailers should view the Directive as an opportunity to drive footfall to their stores as “supermarkets and larger chain stores have been quick to offer recycling facilities, while smaller, specialist retailers have been slower to comply”.
Don’t miss the opportunity
Since, on average, batteries are only purchased between three or four times a year, and 46-49% of battery purchases happen away from the main battery stand, retailers should carefully consider the location of secondary displays and keep them well stocked.
Also it is worth remembering that gaming devices, toys and electronics gadgets are popular Christmas presents, and the weeks leading up to Christmas create a prime battery sales opportunity for retailers. “Sales during the Christmas period account for one third of all annual battery sales and retailers can capitalise on this important season by increasing visibility in store, using clear signage and secondary siting to drive linked purchases,” suggests Energizer’s Emily Smith.
Sales tips for selling batteries
• Stock a solid selection of the most popular products, with approximately 80% of the category space given to AA and AAA batteries.
• Ensure that the different sizes of batteries are separated and labelled to avoid confusion – incorrect purchases will only frustrate the consumer.
• Consider rationalising your offering. Stocking too many different brands with the same price points and positioning doesn’t work. Stock a primary and secondary brand, giving the consumer two clear options based either on performance, brand or price.
• Ensure that your staff are fully educated on the different chemistries (such as alkaline, zinc and NiMh) and their uses.
• Retailers selling over 32kg of batteries should also have a battery collection point, which should be clearly visible as this is a great way to display your green credentials.
• The location of the batteries fixture within the store needs to be well considered. Ideally this would be within a consumer’s eye line and situated at an appropriate place within the store – beside products which need batteries – or near the entrance or exit of a store.
by Vince Armitage, divisional vice president at Varta Consumer Batteries UK