Destination: HBC

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Destination: HBC

08/08/2016

For convenience stores that are on the ball, aspirin and lip balm are not merchandising afterthoughts. Advanced seasonal plans work well for candy, snacks and beverages. So, why not the health and beauty care (HBC) category, too?

Generally speaking, HBC has “taken a back seat in the convenience channel and often is rolled in with general merchandise, which is typically the most cluttered and least enjoyable category to shop,” according to Brian DeLong, senior vice president of agency Catapult Marketing.

The forward-thinking trend is to turn around the notion that HBC is just for convenience store customer “emergencies” and instead present it as a front-seat, year-round section, DeLong told Convenience Store News, realizing “the nature of the category means shoppers need to trust that the products sold are safe and effective.”

He advises c-store operators to “focus on small sizes presented in a clean and easy-to-shop organization that convinces shoppers [the retailer] doesn’t just have HBC items on hand, but they are actually selling them” and are committed to the category.

OUTSIDE THE SEASONAL BOX

Part of this commitment means managing a HBC section that goes outside the seasonal box. Paying attention to year-round sales numbers can help in this respect.

Nielsen data, for instance, shows that while cough and cold remedy sales peak during the winter months, consumers still buy about half as much during the summer months. So, it doesn’t make sense to discontinue cough/cold items after the winter season.

Recent Nielsen data also shows double-digit growth of cosmetics in c-stores, mostly at the expense of declining baby care items. This is giving way to expanded “beauty” items. Borrowing from a successful add-on sale at drugstores, some savvy c-stores are latching on to a HBC trend that millennial shoppers, in particular, are gravitating toward — new lip balms being offered in trendy flavors and shapes, and sold singly in fish bowls and other countertop displays.

Experts agree new and trendy items sold like this on the counter give c-store customers the idea there is a dedicated section. Later, the most successful SKUs can be incorporated into the set.

Again, this requires a wide-angle approach, beyond what most in the convenience channel are doing today. Category Management Knowledge Group President Sue Nicholls makes a correlation between the typical HBC section and the typical grocery section in the convenience channel. Both are in need of a “bigger picture” strategy, Nicholls asserts.

“C-stores really need to rely on vendors who are willing to come in with that broader look across the category,” she emphasized. She further explained it’s not just about the one or two items a HBC supplier may offer; “it’s about being able to rely on suppliers that make recommendations beyond the item level. They need to help the c-store meet the most important needs of the shopper coming in for the HBC assortment.” Essentially, this means going with vendors or distributors who don’t subscribe to an assortment that solely meets their own agenda.

A FINE BALANCING ACT

Lil’ Drug Store Products Inc. is one supplier that focuses on taking an overarching HBC category approach. The company identifies 30 subcategories in HBC including analgesics, gastrointestinal, oral care, eye care, cough/cold, feminine hygiene, first aid and antacids.

According to the supplier, the top 15 SKUs in dollar sales very often do upwards of 25 percent to 30 percent of the category’s business, while the top 40 SKUs often account for upwards of 50 percent to 60 percent of the category’s business.

Getting the HBC mix right doesn’t stop with that simple formula, however. Proper management of the category requires a “fine balancing act,” said Beth Noteman, senior director of category management for Lil’ Drug Store Products. A c-store should ideally determine its right mix by weighing what is best-selling currently, what sold within the past year, and what can be sold moving forward, she explained.

“If you always manage to the past numbers, you aren’t giving yourself an opportunity to venture into new subcategories,” Noteman reasoned. She identified antacids as “one of the interesting, evolving subcategories currently,” because it is trending toward “ultra” and “advanced” SKUs. These “premium” products are also priced accordingly, with $1.49, $1.79 and $1.99 price points instead of the typical $1.19 and $1.29 retails.

“You can think about it as being similar to the king-size candy proposition or the 20-ounce soda movement — it’s a way for the category to see continuing profitability,” she said.

FULL-SIZE CONSIDERATION

Lil’ Drug Store Products works with c-stores to identify customer-specific data and geographic-specific data as well, to maximize HBC within the walls of a particular store or with a particular consumer group. The company recognizes there are varied types of stores within the convenience channel, from interstate truck stops to inner-city stores.

Truck stops generally carry a more robust mix of full-size HBC products because truckers “like to take the full-size items on the road with them,” Noteman told CSNews. Also, contrary to the traditional view of convenience-channel shoppers, there is a growing group who view c-stores as a stock-up destination and are looking to them for more of the HBC items they need.

The full-size trend has even opened up another HBC trend in c-stores: a growing opportunity for private label brands. In late 2014, 7-Eleven Inc. launched a private label line of over-the-counter (OTC) medications under its 7-Select brand in full sizes. The products fall into five major segments: pain relief, cold/flu/ allergy, gastrointestinal, cough/throat, and sleep aids.

Sixty percent of Americans regularly purchase private label products when shopping for OTC medications, according to a recent Harris Poll comparing name brands vs. store brands.

“Health & beauty care has taken a back seat in the convenience channel and often is rolled in with general merchandise, which is typically the most cluttered and least enjoyable category to shop.”
— Brian DeLong, Catapult Marketing