By focusing on customer-centric marketing strategies to attract HBC shoppers with the right mix of products, grocers hope to lift sales.
By Deena M. Amato-McCoy
A makeover can inspire confidence, and grocers are hoping that the updated look of their HBC aisles will attract new shoppers and lure back some that have strayed.
By using consumer-centric marketing strategies to target shoppers with merchandise to boost their wellness and self-assurance, forward-thinking grocers are creating sparkling HBC aisles filled with the products their shoppers crave, according to experts.
However, industry executives say that shrinking discretionary incomes and shifting shopping patterns in the new economy continue to take a toll on the high-margin HBC category.
“Consumers are continuing to demand more and are not willing to pay as much of a premium,” says Jeff Carducci, national sales director for Simi Valley, Calif.-based derma e Natural Bodycare. The current economy has also put a new spin on competition as consumers continue to seek out the lowest-cost operators.
“Price has become a much more significant factor and as a result, consumers have modified their purchasing behaviors,” says Suzanne Long, retail practice leader for New York-based operations consulting firm SSA & Co.
As more shoppers look for better deals at alternative retail channels, grocers have responded by revamping store shelves—with mixed results so far, according to some industry experts.
“Too many chains are sacrificing assortment for sales volume, and as a result, they are decreasing many key HBC categories to pick up products in other areas,” says David Lesiak, director of sales for Carson, Calif.-based Hyland’s.
Industry experts say consumer-centric marketing strategies can help to woo back these fickle shoppers who have flocked to other retail outlets. They say that by closely scrutinizing shopper purchase patterns, retailers are primed to deliver merchandise and services to shoppers on a local level.
This customer-focused strategy helps grocers determine the proper brands, SKUs and services based on local purchasing trends and demographics and “deliver a relevant, simple and convenient shopping experience that keeps customers loyal,” says Jim Peliotes, vice president of marketing for Grand Rapids, Mich.-based private label supplier Ranir LLC. “Time is something that no one has enough of, but by delivering targeted product in a manner that quickly educates and informs shoppers at the shelf, when she has very little time to make a decision, she can choose a quality product and move on.”
Supermarkets are discovering that private label HBC products appeal to a large segment of consumers.
“Private label continues to be strong for the grocer’s portfolio and it is a unique way for supermarkets to highlight the value of their brand and improve the shopping experience,” says Peliotes.
For San Diego-based Pace Shave, private label blades are holding their own on grocers’ HBC shelves, as the category “is up both in units and dollars,” according to president and CEO?Vince Nelson.
Some retailers still struggle with the proper merchandising strategy for private label. “Devoting a sufficient amount of promotional base to private label brands versus branded products could mean the difference between 25% or 26% compared to only 19%,” Pace Shave’s Nelson explains.
Realizing they cannot put all of their eggs into the private label basket, grocers need to analyze which categories and brands are driving sales. This strategy will help them create a balance of merchandise on store shelves, one that gives shoppers options to trade up when they are ready, according to industry experts.
“Supermarkets cannot only provide basic merchandise, nor can they only sell value-added trade-ups,” says Ranir’s Peliotes. “Companies need to understand who their core shoppers are and what they are purchasing and there needs to be a mix of basics and value-added merchandise so they can trade up if they choose.”
While it may take some time for shoppers to loosen their purse strings, there are still some shoppers who are willing to splurge when it comes to their health and beauty needs.
“Disposable dollars have not increased, but shoppers, mostly women, will not make sacrifices when it comes to looking younger and beautiful,” derma e’s Carducci says. “They may be changing where they look for those products but will not go without them.”
Consumers are also unwilling to sacrifice when it comes to wellness products, experts note. “Shoppers are looking for ways to maintain wellness, without making a costly doctor’s visit,” Hyland’s Lesiak says.
Back to nature
Natural HBC has experienced strong growth over the past 12 months and industry executives expect these sales to get stronger going forward. Hyland’s is riding this trend with strong sales among many of its offerings, however its cough, cold and allergy lines are seeing huge gains. Among the offerings that are driving these sales are the company’s liquid 4 oz. homeopathic children’s health remedies, including Cold ‘n Cough 4Kids, Hyland’s Cough Syrup with Honey, nighttime Cold ‘n Cough, and Allergy Relief 4Kids.
Natural skin care is another HBC segment seeing growth, according to industry experts.
“Personal care is growing, and as the economy picks up and consumers gain more discretionary income, sales will continue to rise,” explains Theresa White, spokeswoman for Natracare, based in Aurora, Colo. Sales of organic HBC is experiencing rapid growth, one-third over the previous year, according to White and North America is following that trend.
It is this consumer commitment that has helped to boost sales of Natracare’s feminine hygiene products. “It follows the trend of ingesting and using healthier products and this translates to personal care,” she says.
While Natracare has a strong presence in natural supermarkets such as Whole Foods, she says more conventional chains have yet to embrace the natural personal care trend. While they may be “hesitant to try something new,” White says, “retailers should be educating themselves in what to offer consumers. They can no longer have a mere impression of what consumers want. If they learn about the merchandise, they will gain a loyal customer base. Natural merchandise is a reflection of your company and what you stand for.”
Supermarkets that have adopted this mantra have also been able to successfully merchandise natural skin care lines, according to experts. However, they say the offerings have to go beyond basic, entry-level products to meet the demands of these shoppers.
“Consumers are looking for professional level products, especially those that provide multiple benefits,” says derma e’s Carducci.
Between delivering innovative new products that provide mainstream skin care benefits and following the natural guidelines, derma e “is driving much of the growth in the natural skincare arena,” he says.