By Hugh O’Brian, Tissue World Contributing Editor
“Retail is Detail” is perhaps the most famous slogan in the retailing business. Although I have been working closely with the tissue and paper business for more than 35 years, I must admit that I have missed a lot of details concerning retail. Please forgive me; I’m just a papermaker.
While I have been aware that worldwide turnover for tissue products is estimated at USD 80bn each year and rising, I only very recently realised some other very important facts regarding the tissue category which includes bath tissue, paper towels, facial tissue, handkerchiefs and table napkins, as well as commercial and industrial tissue.
For example, for most retailers the tissue/paper products category is by far their largest non-food category, according to Nielsen data in the USA. And the same data shows the tissue/ paper category is the third largest overall category in dollar terms. That’s big. Really big.
Similarly, while I knew that the tissue/paper category is a big driver of store traffic, as most retailers are also well aware, I just learned that for many retailers tissue has a big influence on basket size or total spend per trip, which is shown to be twice as much when tissue is included in the basket.
Also, as many of you may have heard, Costco (the world’s number six retailer and growing) last year announced that its Kirkland brand bathroom tissue is its single top-selling item, with yearly sales of USD 400m.
Shame on me for missing all of these facts for so long. But with every mistake you make, there is often a learning opportunity hiding in the background.
PROGRESSIVE TISSUE CATEGORY MANAGERS ARE SEARCHING
A few years ago three very senior category directors from one of the world’s largest retailers attended the Tissue World conference in Nice, France. last year in Miami several more key tissue/paper category people were in attendance at Tissue World Americas. In Barcelona this year, a few more retailers came. When I spoke with these people and asked them what they wanted to get out of their participation at Tissue World, the general answer was “we want to learn more about the entire value chain, as well as innovative new products and the technology behind them”.
“CUSTOMER’S CUSTOMER” AND “SUPPLIER’S SUPPLIER”
A lot of people have heard the expression that you want to know your “customer’s customer” as well as your “supplier’s supplier”. It seems that many of the best companies in the world have made an analytical science of knowing their customer’s customer and supplier’s supplier, as it gives them unique insight both into market drivers as well as technological drivers. Clearly these retailers I spoke with were thinking along those lines.
As we dove further into this interesting world of missed details, and talked to more retailers in a more systematic manner, it became clearly and blatantly obvious that Tissue World is only half a world. The event was only covering slightly more than half of the total tissue value chain (perhaps we should have called it “Tissue Hemisphere”.)
Tissue World, which as you may know was started in 1993, clearly dominates the production side of the tissue business. In fact the event was originally launched based on requests from the tissue industry for “a home of our own”, instead of being part of general paper or printing shows. Since then it has developed to become the world’s largest event series for the production of tissue paper products drawing thousands of visitors from 80-90 countries. But the retail and distribution side of the tissue business has largely been ignored by Tissue World. In fact it’s largely been ignored, period.
RETAILERS WANT A COMPLETE VIEW
Here’s what a tissue category manager at a progressive retailer recently told me: “The interaction between the tissue products manufacturers and the retail/distribution side is poor. As a comparison, in the food and beverage business,
there’s much better exchange between the manufacturing community and retail/distribution. The top F&B trade shows are showcasing both the manufacturers and the technology suppliers, so you can get a complete view and interact with all sides of the business very fluently. To me, there is a big opportunity for Tissue World to give all players in the chain that complete view.”
In simplistic terms there are essentially four segments in the tissue value adding chain:
1. Raw Material Inputs – fibres, energy, water, chemicals
2. Papermaking and Converting Technologies – the equipment, machinery and automation options for transforming those raw materials into tissue
3. Tissue Products Manufacturing – the manufacturers that make that transformation into finished products ready for sale
4. Retail and Distribution Channels – the market route these products take to the final user and consumer.
Tissue World is today very dominant in segment two, and quite strong, in segments one and three as well. However it is abundantly apparent that there is a missing link in the interaction with segment four. Thus it is a no-brainer that the retail distribution channels should be more involved and when talking to some key people we realised that they very much want to be involved.
MIAMI WILL CHANGE THINGS FOR THE BETTER
So, despite the enormity of this category, until now there has been no event which brings everything together under one roof. This is about to change at Tissue World 2014 in Miami Beach.
With the encouragement of numerous retail category managers, as well as current participants at Tissue World, the 2014 edition of Tissue World in Miami Beach will add focus on a brand-new segment: Retail and Distribution. We are calling this new aspect TRIF, for Tissue Retailers and Distributors Insight Forum.
TRIF will run in parallel with the traditional technical sessions covering tissue making and converting technologies. It will include four new half-day workshops designed to bring interested retailers up to date on timely issues and potential opportunities facing this critical category:
A. A Plenary Forum – Exploring key topics such as New Sources of Supply, Sustainability and Environment, Consumer Trends, Technology, New Product Innovation, and Distribution and logistics
B. Sustainability and the Environment: Are you leading or Following? – Featuring speakers from NGO’s such as Greenpeace and WWF, as well as retailers, manufacturers and leading experts
C. Brands and Private label: What Strategies are Best – leading experts and opinion leaders will discuss where they see the market going and what advantages each strategy offers
D. On-line Retailing, the Next Generation and Impact on Tissue Sales Channels – With Amazon, Staples and many other big online players getting more involved in tissue paper products sales, how will traditional retail channels change in the coming decade?
‘It seems that many of the best companies in the world have made an analytical science of knowing their customer’s customer and supplier’s supplier, as it gives them unique insight both into market drivers as well as technological drivers.’
FIBRES WILL ALSO GET MORE ATTENTION
There is also an opportunity to do more with segment one especially in the area of fibres. Pulp suppliers have not had very high visibility at Tissue World in the past. But with fibres making up about 60-70% of the production cost for tissue products, and fibre sourcing and certification becoming enormously-discussed (not to mention confusing) topics, fibres will now play a more important role in Tissue World.
TISSUE WORLD WILL BE MADE WHOLE NEXT MARCH
Tissue/paper category managers and other sourcing professionals are therefore warmly invited to participate at TRIF. Tissue World 2014 in Miami will give all players in the tissue value-adding chain an incredibly efficient opportunity to learn about, and conveniently scan the entire chain for, new products, sources, technologies, capabilities and potential.
While some skeptics were worried last year that the world was going to end in December based on the Mayan calendar ending (maybe they just ran out of paper), we can assure you we are doing our best to make the Tissue World whole at Tissue World Americas in Miami in March. Come to learn more details about retail. And tissue.