Retailers that arrange their HBC assortments to better meet their customers’ needs can succeed in this challenging category.
By Craig Levitt
Objective observers are baffled.
Even as other retailers such a dollar stores, club stores and mass merchants continue to expand their offerings into traditional food stuffs, supermarkets still get more foot traffic than any other format. Why then, these objective observers ask, aren’t traditional food retailers a destination shop for health and beauty care products?
Industry observers say when it comes to various HBC categories there are reasons why supermarkets struggle. Some say it is because too many supermarkets take a “wait-and-see” attitude with new HBC products. Others say supermarkets do not dedicate enough time and effort to the HBC aisle. When the consumer notices this, slowly but surely their visits to the HBC aisle dwindle.
To be fair, there are a handful of grocers that do a fine job when it comes to merchandising and promoting HBC. Many observers often refer to Wegmans and Kroger as retailers that have dedicated the time, space and resources needed to succeed in the HBC aisle—and they are reaping the benefits. Observers say these retailers also have a strong handle on what consumers are looking for and are reacting appropriately. For example, in categories such as hair, skin and beauty care successful retailers have increased their selection of both premium products to attract the shopper who may not be going to the salon as much but want a similar experience at home, as well as entry level price-point products for consumer looking to trade down and save some money.
“The retailers who are doing well are the ones who have created programs to meet the specific needs of their shopper,” Rahul Mehrotra, vice president marketing, retailer brands for Orangeburg, N.Y.-based Nice-Pak. “These programs offer an assortment and pricing to cater to the needs of their shopper instead of trying to force-fit a ‘standard’ program. Their promotional strategy is designed to deliver their corporate and category objectives and this kind of program generates trial, building a business based on strong repeat sales.”
Many grocers have also been able to capitalize on the health and wellness trend. Retailers know that the fresh foods they carry are entry points for health and wellness consumers and that key HBC categories such as vitamins and supplements and baby care are natural extensions for these shoppers. In fact vitamins are the fastest growing category in the HBC aisle.
According to Chicago-based SymphonyIRI Group, for the 52-week period ended July 11, vitamin sales at food, drug and mass were up 10.2%, outpacing all other categories tracked. More promising for food retailers is the fact that sales at grocery increased 9.9%, compared to 9.3% for drug stores.
Although HBC has certainly proven to be difficult for grocers, there are successful retailers out there that are proving there is opportunity as well.
“First and foremost, [grocery] needs to understand the consumer, their changing lifestyles and needs,” says Keith Wypyszynski, vice president, business development/CMO for the Colorado Springs, Colo.-based Global Market Development Center (GMDC). “Grocery retail also has to continue to evolve, decide what categories and products need to be carried and what the proper mix is among health, personal care and beauty.”
Wypyszynski adds that the retailers that have seen significant product and category growth are the ones making product selection easier for consumers by reinvesting in ways to assist and inform their shoppers. One of the best ways, say observers, is to train store employees on how to engage consumers, from stocking personnel through pharmacy staff. Most agree that by doing so retailers will see a dramatic impact on not only category performance, but customer loyalty as well.
Customer interaction is one way to grow the HBC category. Another is to raise consumer attention by staying on top of the latest “hot” product. The benefit, say observers, is that retailers not only make additional sales on the product itself, but it also draws in foot traffic to other merchandised HBC categories.
“Certain category entries may garner greater hype than others. For example weight loss [products] versus deodorant, but new product introductions are an essential component of category growth,” says David Lesiak, director of sales for Los Angeles-based Hyland’s Inc.
One of the areas Lesiak believes supermarkets can make significant advancement is in OTC medications. “Seizing opportunities to address changing and new customer interests, habits and needs is what fuels the success of market-makers,” says Lesiak. “A growing consumer trend has emerged. An interest in OTCs that treat illness naturally, without contraindications or side-effects. Most recently heightened concerns regarding the safety of certain pediatric allergy, cough and cold products is a perfect example of opportunity knocking.”
Opportunity can also come in the form of creative packaging and new delivery systems but Lesiak says retailers should expect long-term success from products that innovate at the core. He says Hyland’s FDA-regulated products, formulated with homeopathic ingredients, intended to stimulate the body’s own healing symptoms are examples of that.
“A few of examples of our most successful products include Hyland’s Calm Forte’ which provides restful sleep without the unpleasant side-effects and Hyland’s Leg Cramps with Quinine, which provides muscle pain relief without liver damaging acetaminophen.”
He says Hyland’s newest introductions, Nighttime Cold ‘n Cough 4 kids and Complete Allergy 4 Kids offer children natural options for addressing nighttime cold and common allergy symptoms. In fact, kids’ products—in all HBC categories—are an area that retailers can do reasonably well.
Take children’s hair care for example. According to Richard Hyken, executive vice president for Pomona, Calif.-based World Trend, some of the more popular “brands” driving sales are Barbie, Hello Kitty and Disney Princess.
“The retailers that take best advantage of the category do so in two ways,” says Hyken. “Either via a planogram or via an off-shelf, in/out type promotion. These products become very good incremental business because they are different from anything else in the hairbrush accessory area.”
Adult oral care is still another category that presents opportunity for food retailers. According to Duff Lewis, marketing director for Grand Rapids, Mich.-based Ranir, dollar sales in the category are up approximately 3%, which he says has been the trend for the past five years. Although primary category drivers such as mouthwash and toothpaste have matured, the category is being driven by new tooth whitening products. Lewis says that while branded products are certainly category leaders, store brands continue to show strong growth as well.
“Store brands in the oral care section offer consumers the option to purchase high-quality products which compare to, or in some cases are better than the national brand, at a price-point that is typically 30% less than the national brand,” says Lewis.
Lewis says that supermarkets can protect and even grow the competitive oral care segment as long as they continue to offer the shopper a wide array both branded and private label products. It would be helpful, he adds, if supermarkets closely monitored price-points and promotional activities of other retail channels to ensure they remain competitive.
While the balance between the national and the store brand is delicate, many observers agree that when executed correctly, the store brand can deliver positive contributions to a supermarkets HBC assortment.
“Retailer brands are seen by consumers as a reflection of the retailer,” says Nice-Pak’s Mehrotra. “If done right, they can build a strong business for the retailer and drive loyalty much more effectively than national brands can.”