Does General Merchandise Need a Wellness/Environmental Mantra?

All CPG sales through the three mass-market channels grew by 2.5 percent in dollars last year, but, in contrast, sales of general merchandise products alone dipped by 4.7 percent, according to IRI's Times & Trends report. While it's true that the rate of decline in 2006 was slower than in 2005 (when the dip was 8.2 percent), general merchandise sales performance in drug stores, supermarkets and mass merchants (including Wal-Mart) was nothing to write home about last year, even though products were excellent with many innovations and were strongly promoted and widely distributed.

To put this into context, the overall CPG 2.5 percent 2006 sales gain was well in advance of the 1.6 percent gain posted in 2005, and even though IRI tells us that price increases played an important role, real growth was also a significant factor.

To add to this, healthcare products posted a well-above-average 3.3 percent gain last year, the sixth fastest growing category IRI tracks in mass-market channels. So the issue isn't about nonfoods.

But what is the issue? Part of it is the decline in photography supplies, which posted a 36.9 percent sales loss last year as the category continues its adjustment to a digital world. On the other hand, such categories as kitchen supplies and batteries were flat, so the problem is a wider one.

Underlying trends for overall CPG increase provide some insight. Products offering health and wellness benefits very obviously led the CPG growth charge. Among healthcare products, for example, anti-smoking items, clearly health-oriented, experienced sales gain last year. Beverages, fueled by the health and wellness benefits offered by teas, bottled water and sports drinks, were the fastest growing major category with a 4.7 percent increase.

Also according to IRI, consumers are shifting from weight management to total health management, which has boosted beverages as well as functional foods. IRI rated functional foods, which offer health and disease prevention benefits above and beyond basic nutrition, as being "at the cusp of a major growth wave in the U.S."

In another strongly health-and-wellness oriented area, total natural and organic products sales were around 11 percent higher last year than the year before. Indeed, the gain in sales of organic products was close to 15 percent.

IRI's Times & Trends report also noted environmental and social consciousness is becoming increasingly influential. Consumers are predicted to increasingly focus on eco-friendly, sustainable packaging, local sourcing, and "fair trade" practices.

Discussion Questions: Where does the consumer focus on wellness and environmental sustainability leave general merchandise? Does the general merchandise category need a message that positions it as addressing these trends in some manner?