A Stinky Situation: The High Cost of Pricey Diapers
Talk about a hot-button topic: A column I wrote in April describing diaper makers' plans to raise prices 3% to 7% got a huge response (as in 571 "likes" on Facebook). A large number of readers advised parents to do an end run around the price hike by ditching the disposables, and using cloth diapers instead.
Fewer Disposable Diapers
Now, personally, I think that's a fine decision. (At the Smith homestead, our newest baby boy is also clad in cotton.) But according to a recent article in The Wall Street Journal, the price increase has panicked a lot of parents into making rash decisions.
According to the article, many parents are buying fewer diapers, changing them less often, and making up the difference in Desitin. (To the elation, I'm sure, of Johnson & Johnson (JNJ), which makes the diaper rash ointment.)
The Journal reports that diaper sales in America have been dropping steadily since at least August 2010, declining both in terms of units sold, and dollar-sales recorded on those sales. Data suggest that parents are "trading down" from premium brands such as Huggies and Pampers, as well as buying fewer diapers than they had in times past.
When you consider the strong parental instincts built into the human animal over eons of evolution, this clearly goes against everything parents would want to do in an ideal world. Further illustrating how entirely unprecedented this phenomenon is, Consumer Edge Research reports that it has happened exactly "never" before in American history. Or at least not during the time people have been tracking such things.
And lest you think there is some other explanation for diaper sales dropping -- people having fewer kids, for example, or improvements in diaper quality permitting parents to use fewer diapers safely -- consider this factoid: At the same time as diaper sales dipped, sales of diaper rash ointment spiked 8% higher.
The Law of Supply and Doo-Doo
There's only one logical explanation for this phenomenon. People are still making babies. These babies are still making, well, deposits. But, out of simple economic necessity, parents are skimping on the cleanup.
Buying disposable diapers is a big part of the cost of bringing up baby. Procter & Gamble estimates the annual cost at $1,500 per child, per year, for parents who change diapers six times a day. If a parent can shave just one change off that daily figure, that's a $250 savings. Make Baby wait just a little bit longer, and "save" two changes, and that's $500 in your pocket.
Clearly, there's an incentive to skip a change or two. And if it requires a parent to buy an extra tube or two of diaper rash ointment, well, that's not going to make much of a dent in the $500 savings.
But is it worth it?
Let me say right out front: I'm not going to take sides or render judgments here. Every child is unique. Every situation is different. What works for me might not work for you, and vice versa. That said, if you are a parent facing financial hardship, and if cutting back on diaper changes is an option you're considering -- but one you'd rather avoid if you can -- there are alternatives. For example:
- Cloth diapering. See above, and see here, too.
- Cheaper disposables. Store-brand diapers don't necessarily mean lower quality, but do usually mean lower prices. Shoppers patronizing warehouse clubs such as Costco (COST) and Walmart's (WMT) Sam's Club can also score good deals on bulk purchases of name-brand nappies.
- Cheap, with free shipping. Tech-savvy shoppers should also consider giving Amazon.com (AMZN) a try. In a clever attempt to capitalize on the diaper price hikes, Amazon recently launched a new service titled "Amazon Mom." In essence, it's a short-form version of the company's vaunted "Prime" service, but with a twist: Members can clip 30% off the cost of diapers, baby wipes, and related products. To sweeten the deal, Amazon throws in free shipping for your purchases. And just in case domestic budget constraints have caused you to cancel your Netflix membership, too, you'll be pleased to learn that Amazon Mom comes with free access to Amazon's catalog of 8,000 streamable movies and television shows.
- Diapers? We don't need no stinking diapers. A fourth option is to consider potty training earlier. While children in America habitually embark upon this journey around age 2, this is far from a universal rule. Indeed, in other countries it's common to begin potty training -- and begin exiting the diaper racket -- when Baby is as young as three to six months.
Motley Fool contributor Rich Smith does not own shares of any companies named above. The Motley Fool owns shares of Johnson & Johnson, Wal-Mart, and Costco. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson, Kimberly-Clark, Wal-Mart, Netflix, Costco, Procter & Gamble, and Amazon.com, as well as creating a bear put spread position in Netflix and diagonal call positions in Wal-Mart and J&J.