Last updated on February 24th, 2016 at 03:09 pm
According to Acosta, after years on the decline, sales of health and beauty care (HBC) products at grocery stores are showing signs of life.
Grocery stores capture only about 18 percent, or $15 billion, of the $84 billion annual spend in the HBC category, but Acosta’s “Health of Health & Beauty Care in the Grocery Channel Hot Topic Report” signals an emerging trend reversal with more consumers purchasing HBC products during routine grocery shopping trips instead of in other channels.
“Health and beauty care represents a significant revenue opportunity across the board, and grocery stores are seeing an increasingly larger share of those dollars. There’s no question that the health of HBC at grocery is improving,” said Colin Stewart, SVP at Acosta. “With consumers frequenting grocery stores eight or more times per month, the opportunity is ripe for grocery retailers to capture those shoppers in store and convert them into ‘VIP’ HBC shoppers.”
According to the report:
Shoppers are gravitating to grocery to make HBC purchases. Shoppers are changing their behavior and are looking beyond drug stores and mass merchandisers for health and beauty products.
• Fifty-three percent of shoppers are buying HBC products in their local grocery stores.
• Eighteen percent of shoppers are buying more HBC items in the grocery store than they were one year ago.
• HBC is growing at a rate of 3.4 percent, outpacing total store growth of 1.9 percent.
It pays to appeal to VIP HBC shoppers. HBC grocery shoppers are the biggest spenders in the store, putting them at the top of the priority list for retailers.
• The HBC shopper typically spends more than double at the store with an average basket of $82.37 vs. an average basket of $38.74 for non-HBC shoppers.
• Top-performing retailers convert 21 percent more HBC shoppers than bottom performers (59 percent vs. 38 percent).
• Shoppers cite more promotions (69 percent), better selection (60 percent) and better aisle organization (45 percent) as the top three factors that would encourage them to buy more HBC in the grocery store.
Competition for HBC shoppers abounds. Beyond brick-and-mortar drug store chains and mass merchandisers, online retailers are another force competing with grocery stores to attract highly lucrative HBC shoppers.
• One-third of U.S. shoppers buying HBC items online plan to make more online purchases in the coming year. Nearly half of Millennial shoppers buying HBC items online agree.
• Forty percent of U.S. shoppers buying HBC online are using Amazon and mass merchant websites.
“Facing fierce competition, retailers must craft tailored strategies to appeal to and convert these valuable HBC shoppers. Matching these strategies—from assortment to pricing and in-store merchandising—with the top HBC categories that account for the majority of sales will be a winning combination,” said Stewart.
The report was completed using research conducted by Acosta as well as the company’s experience working with the nation’s largest CPG manufacturers and retailers.