With the grocery channel challenged for growth, the health and beauty care (HBC) and general merchandise (GM) departments offer significant development opportunities, attractive shopper demographics and high-ticket-value visits. Combined, more than $80 billion are spent each year across these departments in brick-and-mortar stores, yet shoppers are spending the majority of their money on HBC and GM in other channels.
The second annual “The Power of GM and HBC in Grocery” report by Acosta, a full-service sales and marketing agency in the consumer packaged goods (CPG) industry, and the Food Marketing Institute (FMI) provides insights into the state of the industry, developing trends and tactics to help grocers grow their businesses.
“In an industry that’s rapidly changing, we want to consider how GM/HBC categories will transform to create new experiences for customers and a profit center for food retailers,” said FMI Director of Industry Relations and Development Peter Collins. “Fundamentally, Acosta is helping us take the mystery out of what’s hindering the success of GM/HBC products in traditional grocery.”
“It may come as no surprise that e-commerce continues to be a major challenge for traditional retailers, but the other key trend we are seeing is not as predictable—Millennials represent a larger opportunity for in-store purchases, with higher reported buying rates in grocery stores than any other generation,” said John Clevenger, managing director and SVP, strategic advisor at Acosta. “To be successful in increasing GM/HBC revenue, retailers need to create disruption in-store; more than 50 percent of shoppers shop the perimeter of the store weekly, compared to about 20 percent who shop HBC and GM each week.”
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The Power of GM and HBC in Grocery revealed consistencies among top retailers in category growth, strategies employed to increase revenue and tips for growth in these categories:
- Top categories for increased HBC sales were cold/allergy/sinus tablets (11 percent), vitamins (9.8 percent) and toothpaste (5.8 percent).
- Top categories for increased GM sales were culinary (32.3 percent), office products (14.2 percent) and foil pans (12.5 percent).
- To successfully drive GM/HBC growth, winning grocery retailers:
- Promote more often, but not necessarily at deeper discounts, utilizing promotions to drive awareness.
- Remain competitive with pricing, matching other channels and beating other grocers.
- With HBC grouped together in one location, focus on driving traffic to the department by promoting frequently for awareness, instituting prominent “consumer solution” end-cap displays and offering front-page feature support.
- With GM products dispersed throughout the store, focus on bringing the department to the traffic by cross merchandising with complementary products, creating secondary locations and capitalizing on seasonal themes.
The full report can be accessed here.