What Would Mr. Wipple Say About All Of This?

Despite the government's best efforts to rebalance the economy, our prosperity still overwhelmingly relies on consumer spending. There are a lot of ways to measure the strength of shoppers via surveys, retail sales reports, and various calculations of net worth. Did you know that some of the most intuitive indicators are the sales trends for simple, everyday products that are the basic necessities of life, such as toilet paper?

Believe it or not, what we wipe our bottoms with is a surprisingly sensitive economic area, according to marketing studies. The success of new premium toilet paper, along with an increase in demand, suggests that people are feeling confident enough to open their wallets and upgrade their bathroom experiences. This does not indicate a return to the free-spending housing bubble-boom times, but this is another sign that some sense of normalcy is returning to the shopping aisles and that things are getting better.

A simple shift from one-ply to two-ply (and in some cases, three-ply) toilet paper may not seem significant, but to ignore it causes us to miss an important point. Because people are literally flushing the money they spend on this particular product down the toilet, spending habits in this very personal area can reveal important clues about the financial health of shoppers, which reflects on the growth potential for the economy as a whole. It all depends on how the roll turns, and it's definitely turning.

For example, the manufacturers of Charmin brand toilet tissue reported a sales growth. They also noted that people are moving back toward higher-priced discretionary items after a long focus on value. The downshift that was driven by the recession is what spurred the manufacturer to create "Charmin Basic" for consumers, which offers a lower-cost option to fend off less-expensive generic and store brands.

However, now it is being reported that innovation is moving the other way. Thanks to this bounce-back in consumer interest, manufacturers like the makers of Charmin are increasing their focus on new products and marketing to win the dollars of consumers moving up to higher-quality items like moist wipe tissues. Such small luxuries are the first steps up for people who are becoming more optimistic as they exit the dark recessionary mindset that has preoccupied so many of us over the past three years.

This trend isn't only focused on toilet paper either. It also includes many other personal-care paper products. Perhaps you’ve seen some of the new commercials for Kleenex hand towels, which are designed as a more sanitary way to dry your hands in the bathroom. Huggies diapers now come in a denim-look material, while Pampers are thinner and more absorbent with the debut of “Dry Max”, which the manufacturer calls its biggest innovation for Pampers in 25 years.

According to a marketing research study done last year, toilet paper was the hottest new product in 2009. The honor of best new non-food consumer launch went to the manufacturers of Quilted Northern Ultra Plush toilet paper, the first three-ply product of its kind ever sold in the United States. Over the past 15 years, less than one-quarter of all new consumer-product brands have exceeded the sales hurdle required to earn what's called "pacesetter" status.

The manufacturers of the new three-ply toilet paper earned enough in its first year to outpace second-place "Tide TotalCare" detergent. The latter's claim to fame is its ability to help keep clothes looking new longer, while Quilted Northern Ultra Plush is all about comfort. The manufacturers acknowledge that a lot of skeptics, both inside the company and out, question if it was right to launch this ultra-premium product, but the traction it has gained indicates the strong desire for affordable indulgences in even the worst of times.

Despite the worst consumer-led recession in a generation, consumers were remarkably loyal buyers of name-brand toilet paper. Meanwhile, consumers traded down from casual restaurants to fast-food, such as McDonald’s. Discounters like WalMart benefited from people moving from Macy’s and other department stores. On the other hand, Kraft and General Mills saw declines, as consumers turned away from name-brand cheeses and cereals. But, people didn't compromise nearly as much on toilet paper. We may have used fewer squares to make the roll last longer, but we stayed with quality.

After all, there are certain non-negotiable aspects of the modern American lifestyle. They include clean water, indoor plumbing, a basic education, and soft toilet paper. Even after recent claims that our insistence on using tender, quilted, multi-ply toilet paper is ruining the environment, consumers haven't turned away from using it and the claims are largely ignored. Did you know that Americans use 50% more toilet paper (nearly 24 rolls per year per person) than our counterparts in Europe and Japan? And, if anyone tried to force a rougher toilet paper on us, there would surely be a revolt!

According to Nielsen, 72% of consumers believe store brands are good alternatives to name brands. Moreover, 62% of consumers consider store brands to be as good as name-brand products. But, that sentiment hasn't taken away from the big name-brand providers of toilet paper, though it has for other products, such as paper napkins and paper towels. Given the special place that toilet paper has in the hearts of American consumers, how should we translate the recent rebound in fortunes for premium products such as Quilted Northern Ultra Plush? Perhaps, it is evidence that consumers are doing better financially and becoming more comfortable than is commonly perceived.

It was recently reported that personal incomes expanded in April, helping households to make somewhat of a comeback by increasing their savings and paying off debt. On the other hand, it is still being reported that a large percentage of the population is underemployed and unemployed. In essence, I guess it all boils down to what you believe and even more importantly, what is your personal reality? As for me, I always have and always will be loyal to Scott toilet paper, no matter what the American economy is doing. Hey, despite the fact that I distinctly remember this particular brand being two-ply when I was growing up and becoming "one-ply-on-the-sly" after I became an adult, it still works for me (Shout Out)!

At any rate, if this scenario continues to play itself out, with consumers trading back up to more premium and name-brand products, it won't be just the manufacturers of these products that will benefit. The entire consumer-staples sector should start attracting some attention after lagging very badly over the past two years. This means the flashy stock-price increases in companies like Amazon.com and Ford Motor could give way to the growth of less profitable companies, which is exactly what happened in 2004 as the economy transitioned from early recovery to mature growth.

So, the next time you're in the grocery store trying to decide whether to buy one, two, or three ply toilet paper, think before you leap because, if all this is true, the economic recovery of our country may very well depend on which one you decide to buy. Of course, you could always decide to "ruff it" and give your financial support to our dying newspaper industry instead. (Ouch!) But, always remember... Whatever you do... "Please don't squeeze the Charmin!"

Footnote: Dick Wilson (aka "Mr. Wipple") died of natural causes on November 19, 2007, at the age of 91, in California. On November 28, 2007, a new commercial-tribute debuted on television, featuring old clips honoring Dick Wilson and Mr. Whipple. The tribute indicated that the deceased actor would be in our hearts forever. If you want to know more about "Whatever happened to Mr. Wipple?", click on the above image to view his Wikipedia page. Yes, he has one too!