Convenience store operators preparing to expand their health and beauty care (HBC) category in time for the summer months may be facing some challenges. With the moribund economy depressing impulse sales across retail, this may be a bad summer for new products, while tried-and-true brands of medicines, sunscreen, sunglasses and other warm-weather favorites remain strong.
Given the state of the economy, planned purchases tend to be an easier sell, but impulse items have always been strong for convenience stores. “People go to the convenience store with one or two items in mind that they need on the fly, and maybe they grab something else,” said Roger Leonard, general manager of Janesville, Wis.-based Lions Quick Marts Inc.
By their very nature, drug stores and supermarkets are obviously more list-driven, but in general, people aren’t expecting a lot of impulse purchases these days—even as it relates to a trip to the convenience store.
What all of this almost certainly means for the summer of 2009 is that consumers are going to be using the same products they used last summer, and the brands they know. What c-store operators need to do is get behind the big brands that will drive those purchases.
Seemingly in acknowledgment of slower seasonal sales ahead, Lions Quick Marts does not plan to increase HBC’s allotted merchandising space, keeping it concentrated in a 4-foot gondola. Convenience, Leonard said, remains this channel’s trump card. Summertime HBC items, however, are not a big seller by any means at Lions Quick Marts, largely because of the store locations. “We’re not close to a beach, so it’s not a big upswing for us,” Leonard said.
Indeed, Leonard said HBC accounts for just 1.7% of inside sales at his five stores. Medicinal products and nutritional supplements, both in large packages and single-serve portions, help keep HBC viable as a category.
“In this neck of the woods you basically add suntan lotion to the mix for the summer and maybe insect-repellant spray, but that’s about it,” Leonard said. The HBC category witnessed what he calls “a very big upswing last year in the category of ephedrine-type products,” which are commonly used as a stimulant, appetite suppressant, concentration aid, decongestant and more. Allergy products also saw sales spikes. The company is also reporting some success with smaller-sized packaging.
Small is Big
Medford, Ore.-based Minute Market has also found success with smaller-sized packages. “We’re still at about 8 feet of space with two 4-foot sections to capture customers at different parts of the store,” said Phyllis Simpler, the chain’s general buyer.
Minute Market stores carry a few hundred HBC SKUs, while the mix varies seasonally. Items like cold medicine and nutritional supplements, however, are on the planograms all year.
“In the summertime you’re going to add sunscreen and ChapStick,” said Simpler, whose own HBC sections increased by about 15 SKUs in the past 12 months, without any deletions.
“Many times new items will come in a tub or a box display, and because they are seasonal we try to get them up by the cash register.” The company operates 11 Minute Mart stores, plus two others—one of which Simpler owns, one she operates—called OK Market and Country Store.
Suntan lotion and sun block are strong warm-weather HBC items, Simpler said. “It’s a last-minute item, especially for parents with small children.”
Interestingly, the same suntan lotions sell well during the winter, too. “We have a ski area nearby in Mount Ashland, Ore.,” Simpler said. “So we’ll see our stores down there get it early and carry it longer.”
If a new allergy drug has recently hit the market, Minute Mart will go along with the promotion depending on what the national advertising is. “Right now, during the wintertime, Zicam and Mucinex have sold very well,” Simpler said.
The convenience store industry has long dealt with the stigma of higher-priced medicine, but the times have changed. “We are heavily invested in the single-serve/valet offering,” Simpler said. “Airborne has been very good for us because they come in two or four caps with a little cup to drink it with.
“With other small-sized items consumers will come in and grab one of this and one of that. If they ran out of toothpaste in the morning they’ll come by and grab a small tube of toothpaste and maybe a toothbrush because they’re hardly paying anything for the smaller sizes,” Simpler said. “Now with the economy, that is even better.”
Sunglasses are another strong summertime HBC item, but they still maintain their strength year round. Pricing remains key. “We have them up by our main check stand because some of the lines have gotten to be relatively high, around $11.99 a pair, and they sell,” Simpler said.
Their popularity sometimes pushes consumers to do more than buy, however.
“We want to keep an eye on them because the higher cost makes them a target for theft,” she added. “But we also want the consumer to see them. Depending on the level of sales at a particular store, the manager may choose to go with a counter rack, which carries half the amount as a floor stand. We do floor stands in Mount Ashland because they sell quite a bit to the skiers.”
Focusing on the upcoming selling season, Leonard sees allergy medicine as a potential strong seller. “If you’re able to get a small deal on a tub that has to do with allergies it can prove quite profitable,” he said.
Working in Tandem
Manufacturers are often very helpful when it comes to merchandising assistance for summer add-on items, Simpler said, adding that they’ll “sometimes give you a clear container so the consumer can look right through it and see the product.”
Such containers are usually designed to take up a small area near the checkout stand to spur impulse sales. While other retailers will opt for placing small, inexpensive candies in that space, Simpler said she would rather get a tub of the suntan lotion or something along those lines.
“Something that is perceived to be a summer (HBC) item,” Simpler said. “We’ll do very well with margins that way.”
Knowing this, manufacturers and retailers should be making plans to work together to drive promotions on those tried-and-true brands.
“Don’t waste a lot of time, energy, resources and millions of dollars that, really, no company can afford to spend right now on new products that consumers are probably not going to respond to,” Leonard said. CSD