Opportunities to recapture HBC share

June 21, 2011

Supermarkets that marry convenience with high-demand brand assortments can become regular resources for health and beauty care.

In the three largest health and beauty care categories – over-the-counter medications and remedies, vitamins and hair care – supermarkets posted higher percentage rates of dollar sales gains than the food-drug-mass channels (including Walmart) rang up in the 52 weeks ended April 16, 2011, according to Nielsen data.

Granted, these gains came on a relatively smaller sales base. But they do correlate with a rise in demand for one-stop convenience:  Harsh winter weather made extra trips tough to justify for many households, and gas prices soared in recent months. If food stores also gain access and devote space to preferred HBC brands in their markets, the convenience they offer would be more relevant to shoppers.

Supermarkets would also have more pull if they connect the nonfood and food sides of the store more fully, and use pharmacists, cosmetics advisors and related staffers to foster a conducive sales environment. If supermarkets pursued health and beauty care business as aggressively as drug stores pursue food business, they could restore some lost trips and market share.

The latest Nielsen data points out some areas of opportunity for supermarkets:

  • Medications/remedies. Food stores with $2 million or more in annual sales (excluding supercenters) grew this category 1.5% to $2.15 billion, on a 0.4% rise in unit sales, in the 52 weeks ended April 16. By comparison, U.S. food, drug and mass merchandiser stores (including Walmart) grew the category 1.1% to $10.51 billion, on a 0.8% unit sales decline in the same period.
  • Vitamins. Food stores posted a 9.2% dollar sales advance to $1.84 billion on an 11.0% unit sales jump in the latest 12 months.  This growth pace handily beat the 3.9% dollar sales rise to $6.52 billion in FDM, achieved on a 4.7% unit sales gain.
  • Hair care. Food stores managed a 0.5% dollar sales rise to $1.59 billion on a 0.2% unit sales decline in the most recent 52 weeks.  However, the category slid by 1.1% to $6.47 billion on a 2.8% unit sales drop in FDM.
  • Oral hygiene. Dollar sales of this #4 HBC mainstay in U.S. food stores grew 1.7% to $1.53 billion, on a 3.1% unit sales gain this past 52 weeks. FDM channels also posted a 1.7% dollar sales rise, to $5.4 billion on flat unit sales.
  • Cough and cold remedies. This is the #5 HBC category in food stores and the last to surpass the $1 billion sales benchmark.  It is also #5 in FDM and the last to surpass the $5 billion sales benchmark. The past 52 weeks weren’t kind:  In food stores, dollar sales slipped by 2.1% to $1.29 billion and unit sales were down even more, at 3.1%. In FDM, dollar sales dipped by 1.6% to $5.36 billion and unit sales fell 3.7%.
  • Among categories that remain, the cosmetics business shows the most promise. It is the eleventh-largest HBC category in food stores and the seventh-largest HBC producer in FDM.  In food stores the past 52 weeks, dollar sales rose 7.4% to $503.3 million on a 4.8% unit sales rise. In FDM, dollar sales were up 4.3% to $4.49 billion on a 0.8% unit sales increase. Supermarkets are making this headway despite keen competition in mass beauty, including reformatted Target stores, the ubiquitous Walgreens and CVS beauty aisles, and Ulta specialty outlets.