By Deborah Garbato, Grocery Headquarters
Through special arrangement with Grocery Headquarters magazine, we present these opportunities to discuss the subjects of GHQ's monthly cover stories.
From a supermarket standpoint, health and beauty care isn't all that healthy these days, or particularly good-looking either.
According to Information Resources, Inc., HBC sales in supermarkets totaled $14.1 billion for the 52 weeks ended July 16. This represents a decline of 0.1 percent from the prior year. Drug stores, by comparison, recorded HBC sales of $19.9 billion, a 3.7 percent increase. Sales at mass merchandisers (excluding Wal-Mart) were $6.6 billion and growing.
"There are some real challenges," said Dave McConnell, president and CEO of the General Merchandise Distributors Council (GMDC). "If you look at IRI and Nielsen, there has been slippage in the categories. Wal-Mart has changed the way a lot of supermarkets go to market with these categories. In the traditional food format, it is hard to have a lot of sizzle and excitement."
Experts say supermarkets needn't go toe-to-toe with other formats to achieve significant top and bottom line contributions from HBC. Stores that have achieved the most success are those where HBC offerings are carefully picked, well presented, and frequently updated and replenished.
Some have differentiated from the competition by creating HBC sections that revolve around health and wellness and/or natural and organic products.
"A grocer's assortment is not complete without HBC," said Larry Ishii, general manager of general merchandise/HBC for Unified Western Grocers. "Basics are the biggest keys to success. You must be in stock on items shoppers always want. Lastly, focus and be dedicated to HBC. This will drive incremental sales. If the attitude is just 'we stock that too,' the results will only be negative."
The key to making HBC work, said Bob Spicer, sales director at Procter & Gamble, is for stores to focus on the 20 percent or so of shoppers who represent 75 to 80 percent of sales.
"A supermarket can choose key HBC zones to focus on if they are diligent in their research and understanding of prime shoppers," he said. "It might seem counterintuitive, but when a retailer eliminates the slower sellers, shopper perception is that variety has increased simply because the shopper can find the items they are looking for more quickly."
Something else consumers are looking for in HBC, say the experts, are new products.
"HBC is all about new," said P&G's Spicer. "But new products require much in-store consultation and education. If a supermarket is willing to be first, fastest and flexible with new products, they will be successful with their prime shoppers."
Bill Fogarty, senior vice president of sales and trade development for Adams Respiratory Therapeutics, said some of the challenges faced by supermarkets relative to new items are self-imposed.
"New products come out at different times of the year. But a number of grocery retailers get locked into the idea of this month we do this planogram, so this is the only month we do new items. The most successful retailers are quick to implement new products. If you look at other classes of trade, they often have more flexibility to take advantage of new items," he said.
Price has been and remains an issue with supermarket HBC.
An executive with a major HBC company requesting anonymity told Grocery Heaquarters, "Pricing is the biggest challenge, and not just in HBC. They'd charge $1.49 for Suave one week and 89 cents another. This high/low scenario encourages cherry picking. Supermarkets don't need an everyday low price, just an everyday fair price. While you need an opening price, you shouldn't sell a bottle of shampoo for less than a bottle of water."
Discussion Questions: What are the keys to differentiation and success for supermarkets in health and beauty care? Are there lessons from other channels that supermarkets can learn and apply to drive top and bottom line results?