Emerging Opportunities for HBC

Retailers have come to accept that the health and beauty category (HBC) could never compete with tobacco or foodservice in terms of profits or volume, but it serves an important purpose for convenience store customers. For that reason alone, a diverse offering of cold medicines and personal hygiene products should be a staple on convenience store shelves.

InRhythm Inc.’s “C-Metrics Projected Convenience Store Sales and Distribution” report, which tracks convenience store category sales on a weekly basis, projects that overall sales in HBC for the 13 weeks ended Feb. 11, 2012 will be flat. However, one category that did experience some growth was analgesics.

Analgesics, which the report projected would account for 21.1% of total category dollar share during this period, increased by 1.7 share points. But, cough and cold remedies’ 16.6% HBC dollar share reflected a 1.9 share points decrease and stomach remedies, 7.2% of the category, were down by 1.3 share points.

Trial and Error
Kera Smith, merchandising specialist for Emmaus, Pa.-based Top Star Express convenience stores, said her company’s overall HBC sales have increased 10% from last year. She explains that the growth has come from deploying trial sizes rather than full-sized products.

“Though our full-size OTC products are flat in sales, trial-size sales increased by 16%,” Smith said. “We feel price is a contributing factor to flat full-size sales.”

Top Star’s category strategy at its more than 30 stores, “is to stock the top full-size SKU’s to satisfy the customer who looks for the larger quantity while also offering an even broader variety in our trial size products,” Smith said, adding that the company views this strategy as a key to continued growth.

The chain’s HBC sales have gone up 2% since last year and “we see the category continuing to increase,” she added.
Overall, HBC accounts for .42%  of Top Star’s store sales (excluding gas, lottery tickets and bus tickets). The OTC subset of that category brings in .18% of those sales.

The company’s top subcategories for growth last year were feminine products (23%), family planning (22%), cough and cold (21%) and analgesics (19%).

“There is an opportunity within the subcategory so we will add six more trial-size SKUs in 2012,” Smith said. “Convenience Valet, for example, has helped us planogram our stores, not only for their products, but for the entire category as well as promptly informing us about recalls and manufacturing issues and giving us temporary replacement item suggestions to ensure that our shelves stay fully stocked even if there are manufacturing issues that are out of our control.”

InRhythm reports that the skincare/external care accounts for 10.5% of total HBC category dollar share, grooming aids 5.1%.

Within these subsets, Packaged Facts research firm predicts that consumers will continue their quest for natural.
“The U.S. consumer market for natural and organic skincare, hair care and makeup—which during 2005 to 2010 boomed 61% to $7.7 billion—could top $11 billion as of 2016,” Packaged Facts reported.


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