Powering onwards with branded battery sales in-store

People mostly never think about batteries until they need them, and then suddenly they need them fast. That means they want convenience of purchase and are usually willing to pay a premium. As a result, batteries are a high margin category (up to 50 per cent). People want power on tap, and will pay a pound or even two pounds extra for the convenience of getting the battery they need immediately.

The premium means that the category is dominated by big, trusted brands such as Energizer, Duracell and Varta – and unlike online, where own-brand cheap cells proliferate, shop sales are unlikely to change their complexion. Big brand batteries will last a long time in retail, especially in the independent channel.

But at the same time batteries are an irregular purchase item, not often on the shopping list, and for many they can be an annoying item to buy. This is because buying batteries is based on a need to make another object – such as a PS4 controller or a radio –work, so it is a more complicated process.

You can profit by easing the process and merchandising visibly and helpfully with maximum information – do not simply stack a few packs high on a shelf and wait for a request.

The fact is that shoppers remain pretty unfamiliar with the category – in fact on the annoyance scale, Duracell research discovered up to 40 per cent don’t like shopping for batteries, mostly because they don’t know what they are looking for and whether they are buying the right thing.

Purchase often fails on satisfaction when the incorrect SKU is selected by the customer – AAA instead of AA, for example. Cost appears secondary: relief is front of mind, so be proactive in advice and presentation to help the customer. They will reward your expertise with repeat patronage.

Over lockdown, which has seen a big rise in battery sales as people use their devices indoors all day long, the shopping basket in local shops has also gone up even as trip frequency went down, making a battery purchase a much more likely event in the convenience channel. That means the battery category is a great potential source of extra sales and revenue. In fact, eight of the top 10 brands showed double-digitvalue growth over the last few months.

Now – especially with a second lockdown effectively here – is the perfect time to concentrate on merchandising batteries to customers and taking business away from multiples. But to successfully do that, you will need the right range and the right information to help and to educate customers about the category.

This is especially important given the changing nature of electric and electronic devices, which increasingly require lithium cells, as well as the plethora of so-called “coin” or “button” batteries to power ever-more miniaturised gadgets.

The one thing that did not do well under lockdown was the “powerbank” category, typically products providing back-up power for smartphones. With everyone at home during the summer rather than at the beach or up a mountain, phones remained plugged in and charging, as power banks gathered dust on the shelves. That is likely to remain the case for the foreseeable future.

Christmas is battery-powered

The battery market traditionally picks up as Santa’s elves get the toys ready for distribution via Rudolf and his gang. This year has proven different because Christmas effectively came early in the form of the lockdown, which pushed battery demand through the roof (or down the chimney) for obvious reasons: children at home all day draining power playing with toys, together with heightened domestic usage overall. “They’ve been playing more Xbox, pulling out their old Wii and all kinds of things. Home-tech like wireless mice and keyboards, and TV remotes – people have been using them more, and using more batteries,” says Christina Turner, Associate Marketing Director at Duracell UK Ltd.

That means there will be two Christmases for retailers this year – one that started back in the spring and is ongoing, and the traditional Yuletide coming up soon.

This should be taken seriously: 34 per cent of all batteries are normally sold to 11 million households (that’s nearly everybody) in the three months leading up to Christmas Day (IRI). In cash terms, in the three months before Christmas shoppers spend 67 per cent more on batteries than they do on average for the rest of the year.

The most interesting point is that customers in-store visit the battery fixture 50 per cent more during this time – that means an extra 2.7 million extra shoppers to sell to.

Though the over 44s are driving growth in battery consumption, a quarter of all batteries are being used to power children’s toys and gadgets (Euromonitor) and the average household still owns at least 16 battery-operated devices – meaning there remains a cross-generational opportunity in the category.

Retailers should therefore take the chance now to spruce up their battery range and merchandising: people will be less than ever willing to run to the supermarket for urgent purchases, and will most often pick up in person nearby rather than order online for delivery (they forget).

They are likely to have been sent to the shop by impatient, wailing children and will be desperate to buy.

“The pre-Christmas period is a great moment to get your category organised,”says Tatiana Wijeyaratne, Duracell UK Marketing Manager,“given that it will become something of a destination aisle for shoppers over Christmas. We recommend driving cross-category purchase through secondary displays, including eye-catching totems and shelf stoppers that can sit alongside toys and electric gifts, as well as at till point, capitalising on lucrative last-minute impulse purchases.”

An on-off market?

It might appear obvious that as devices grow smaller, and recharge directly from the mains (and last longer between charges), that batteries would begin a long decline, but the opposite is the case.

“The internet of things”, whereby your kettle needs a battery to tell you it needs cleaning, and your fridge needs one so it can warn you the milk is going off, has meant slowly and steadily increasing demand for power cells. And these days is there a toy left that is not powered by electricity (with children owning more toys and devices, not fewer)?

It is a fact that online sales of batteries have to an extent become commoditised, with private label slowly winning out over the well-known brands. However, that is mostly because Amazon (for example) recommends its loss-leading cheap own-brand cells at top of search, and the premium brands have seen sub-listings colonised by fakes that last half an hour if they work at all.

It is not true, as some have observed, that battery sales have diverged from the more focussed brand-seeking that other grocery has experienced under lockdown (demand for well-known brands has firmed up despite higher prices).

It isin the online “auto-buy” state of mind where (apparent) value is paramount that the commoditization effect is most visible. In real life we want the Real Thing.

So shop sales remain very different, and there, brand is as important as ever. Private label might have increased to 18 per cent of the battery market over the last year, up by 1.5 per cent, but during that time online sales of batteries doubled from 5 to 10 per cent. Multiples’ own brands do offer genuine value and find their way into the physical basket, but that need not deter premium impulse sales in the convenience channel.

When the tobacco advertising ban came in, making of the cigarette gantry a blank white emptiness,many retailers freed up some of the display area for sundries such as batteries, placing tobacco under the counter instead.Now the vape fixture has added colour and interest to the counter area, there is good reason to align batteries with it, too.

Using secondary and till-point displays to illustrate the range on offer can be very impactful. Deploy signage to clarify how your category is segmented, and tailor store elements towards a specific audience – gamers for example, or power for toys.

“Making the most of out-of-home awareness and POS will only become more important in the context of top-up shops and impulse purchases,” says Wijeyaratne. And with many store owners now reporting that customers are looking to them to be more like a supermarket in terms of range – saving trips elsewhere and encouraging local custom – smaller items such as batteries are a perfect category for independents to “get good at” to attract repeat custom.

It is worth repeating that batteries are a problem purchase for many customers.  Once at the fixture, there is on average a significant “dwell time” – looking and analysing what’s on offer – that lasts 57 seconds in total. After this, only 58 per cent of customers will make a purchase, says Duracell’s Wijeyaratne. Shortening the dwell time (which introduces doubt and uncertainty) by signposting the route to purchase with helpful information and advice will increase sales

It is worth noting that a third of shoppers consider behind-the-counter purchases a barrier to choice in spending, whilst an additional 47 percent(meaning four out of five shoppers overall) do not consider this way of shopping a convenience at all.

“Let consumers touch-and-feel batteries by placing them at eye-level at the front of check-outs and ideally one more secondary placement in-store, don’t rely on consumers asking for guidance in-store to really boost your battery sales,” suggests Wijeyaratne.

Placing the batteries near the till but close to eye or counter level will normally drive sales, especially when paired with promotional larger pack sizes.Duracell says medium-sized packs are showing the strongest value share growth for both Duracell and the broader market (small: <6 pack, medium: 8-12 pack, bulk: >12), in fact last year they accounted foralmost half of the market and (IRI). Having a small range of specialist batteries will also be worth stocking, especially if you can inform customers (who mostly will be unsure), which they would need for their device.

Storeowners should also consider selling useful items that require batteries – such as flashlights, fans and other gadgets, both practical and novelty.

The rechargeable route

Premiumisation in battery sales is a thing, as it is in so many other categories. The plain fact is that we have never been so wealthy (despite what it might feel like), we are spending slightly more on quality products, and we appear happy to do so, because there are plenty of cheaper alternatives.

The major brands dominate the battery category in-store if not any longer online. Within that area, the brands themselves are innovating with more powerful and longer-lasting or specialised-application sub-brand power cells.

“We are seeing an increasing demand from shoppers for longer-lasting batteries for their devices,” Amanda Broderick, Energizer Marketing Director – Modern Markets, recently commented. “With the type of everyday devices rapidly changing, we are delighted to introduce a product that will power the likes of fitness devices, smart home products and handheld items. The new Energizer Ultimate Lithium coin is our longest lasting specialty battery range so far, which has performed extremely well in consumer surveys as a high performing product to power consumers’ most important devices.”

This is an example of a specialised-application in the lithium coin-battery category, but standard AA and AAA cells, and Cs, Ds and 9Vs are all getting power-ups to differentiate themselves. Use these NPDs to offer a ladder of value to your customers: they can be a persuasive way to communicate extra value and encourage sales.

The rechargeable battery trend is one that might yet have potential for the convenience channel. So far, the problem has been that although this form of power is cheaper over time for consumers, it involves a larger upfront outlay (on the battery charger and the fuel cell itself, which can be three times the price of a specialist premium equivalent), such that it is a deterrent to stock at all.

What might indicate a change in customer attitudes is the fact that so many have been apparently willing to spend quite a large sum of money (often £50) on vaping and heat-not-burn starter technology in convenience stores, which was somewhat unexpected.

If consumers are becoming accustomed to frontloading a saving (paying out more now to save money later), then retailing a rechargeable battery system might become an attractive option – and customers are becoming aware of the potential savings.

A recent Which? survey showed that recharging a pack of four AA batteries 100 times using the Duracell 15-minute CEF15GBL charger costs less than £90, including the cost of the batteries and charger. For an equivalent 400 AA disposable batteries, you would pay between £171 and £649.

The growing awareness around rechargeable batteries also reflects consumers being more mindful of the impact their purchasing has on the environment. In-store signage reminding customers (who know batteries are hard to dispose of and recycle) that rechargeable is far greener, will certainly help spur sales.

That said, there are instances when rechargeable batteries are not recommended –in a smoke detector, for example. This is because, unlike disposables, which start off with a high voltage that drops continually as the battery is used, rechargeables maintain a steady, slightly lower output before suddenly dying. So a smoke detector might suddenly fail without warning (the same danger as with cheap batteries, whose voltage can drop off precipitously).

“Stocking the right range is crucial, as is ensuring you have both the quality and technology in your range that will power your shoppers for longer,” Duracell’s Wijeyaratne sums up.

And keep batteries insight at the check-out. Batteries are something everyone needs and uses, and as such prompting a customer to buy batteries at the till is not trying to sell them something they don’t need – and you will see your revenue on these high-margin products rise.