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Giving HBC a Facelift

With space in convenience stores at a premium, retailers continually struggle with how to best utilize it. How much space, for instance, should be dedicated to health and beauty care (HBC) products, a small category but one that nonetheless requires a lot of attention?

According to the 2004 CSNews Industry Report, HBC constitutes 2.5 percent of in-store sales, but for road-weary travelers, the ability to stop and pick up aspirin or an antacid is a mark of true convenience. But with the category shrinking in recent years, c-store operators are left with the task of deciding which HBC products stay and which ones go.

"In the last 10 years, our HBC section has gotten smaller and smaller," said Wayne Wood, divisional marketing manager for the Oklahoma City-based Love's Travel Stops and Country Stores Inc. For Love's, operating 66 c-stores in Colorado, Oklahoma and Kansas and 97 travel stops across the country, HBC sales hover around 1 percent.

Identifying Trends

According to a Strategic Marketing Concept report from McLane Co. Inc., c-store owners need to identify the trends driving this category in order to maximize sales potential. "While HBC may never be a destination category, offering the right mix of products can put the wheels in motion for increased sales and profit," the report stated.

The "wheels in motion" metaphor is accurate because the fastest-growing segment of today's population, according to the report, are people who spend 45 minutes or more traveling to and from work. "As the amount of time spent in the car increases, the car becomes more than a means of getting from here to there," the report said. "The consumer comes to see his car as a resource center, a storage space and an environment for health and personal care activities."

John Gorman, director of convenience and emerging markets for Pfizer Consumer Healthcare, said consumers use c-stores mostly for "fill-in and emergency-need purchases." Statistically, since women handle the bulk of household shopping, the HBC category is marketed to men who are on the go. "Convenience stores cater to people on the move and men in particular. It is essential for the convenience store shopper to know that their favorite store will have what they need when they need it," Gorman continued. "An unmet need means the next trips will be lost to another choice."

As with all categories, placement is everything. "The worst location is behind the counter on request only," said Gorman. "HBC is a very personal category and people do not like to have to request their personal solutions and choices. Carry the best brands in the categories consumers expect to see and use the checkout as a secondary location for top sellers."

More and more c-stores are carrying smaller samples of various items, such as 10- and 12-count vials of Advil, Bayer and Excedrin, as well as smaller doses like "take two" and "take four" packages of the same. "People are going more and more to smaller sizes like your 'take two' products," said Love's Wood. "We sell a lot of these items because people want to come in and get an immediate dose and get back on the road."

However, Wyeth Consumer Healthcare is a proponent of offering consumers multiple package-size choices, from immediate consumption single-serve packets to 24-count bottles in order to satisfy consumer need and boots sales and profits. But to win, retailers must have the best-performing products for each segment of the category, according to Al Squeri, director of special markets for Wyeth, makers of Advil and Chapstick, among other products.

"And that's not just Wyeth products. We want to help the industry grow the entire category," he said.

Some retailers Wyeth is working with, including BP plc, are realizing substantial HBC gains by pulling the category from behind the counter and revamping sets. BP, for example, is realizing a 20-percent spike in HBC sales due to a refocus on the category.

"Before we implemented this new program, the category wasn't growing. It had no vitality," said Bob Gulley, category specialist for BP. "We were on a single-dose craze like everyone else."

So what did BP do that turned the category around? It reinstated a full-line HBC set on the sales floor, backed off of its sole reliance on single-dose packages and discontinued placement of HBC products behind the checkout. "The uplift was really surprising," Gulley said. "Some stores actually saw as much as a 60-percent lift in sales. We knew the program would do well, but when the initial numbers came back, it was amazing how well it did and how immediate it was."

Vial-Size Entry

New vial-size products hitting the market are expected to be a promising package size for the industry, appealing especially to women. These smaller products also mean c-stores can carry the same mix of HBC products on less shelf space. Wood explained that in the mid-1990s, gondolas carrying HBC products ranged between 10 and 12 feet. Today, at Love's, the average is 8 feet long and 72 inches tall; some are even smaller.

"We try and keep it around 8 feet but in some cases it could be 4 feet," he said. "We try and supply the basics, like headache medicines, first aid, indigestion and so on, but we feel that we cover all the bases." In addition, Love's offers Chapstick, Suave shampoo and conditioner, Trojan condoms, Rolaids, Advil, Benadryl, Gillette razors, Tampax, J&J Band-Aids, Vicks Nyquil, Pepto Bismol and Luden's cough drops, among others.

While typical items like toothpaste, mouthwash and deodorant are still top sellers in this category, the number of options has decreased. "We used to carry nine types of toothpaste and now we only carry three," said Wood.

In Georgia, Mike Griffith, president of Athens-based Golden Pantry Inc., which operates 53 stores, said the category has remained even over the last decade, and average HBC sales are roughly 2 percent of their overall sales. Griffith doesn't forecast a change in this category until wholesale distributors give c-stores a more competitive edge.

"There could be a renaissance in this category allowing c-stores to catch up to the 21st-century customer, but that would require a huge shift [from wholesalers]," he said. "We need to have a better size selection and better costs. In our industry, we cater to single-serve customers while supermarkets and pharmacies offer multi-value brands, and we can't compete with that."

While Golden Pantry used to allocate 8 feet or more to HBC, today it uses a 4-foot gondola with three shelves. "Over the last few years, the HBC category has stayed constant and so has the space allocation," Griffith said.

Pricing is always an issue, and both Golden Pantry and Love's offer generic brands, such as 25-count bottles of ibuprofen that may retail for $2.99 compared to the same count of Advil that might be priced at $3.99. "These generic and [consumer value products] brands do very well and in some cases outsell leading brands," he continued. "Some people will not pay $1 for two pills, but will spend $3 for a bottle of pills."
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