The health of health and beauty care (HBC) sales at grocery stores is improving after years of decline, according to a new research study from sales and marketing firm Acosta. Grocery stores capture only about 18 percent ($15 billion) of the $84 billion annual spend in HBC, but the report, “Health of Health & Beauty Care in the Grocery Channel,” 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,” says Colin Stewart, senior vice president, Acosta. “There’s no question that the health of HBC at grocery is improving. 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, 53 percent of shoppers are purchasing HBC products in their local grocery stores, with 18 percent of shoppers buying more HBC items in the grocery store than they were a year ago. The HBC shopper typically spends more than double at the store, with an average basket ring of $82.37, compared to an average of $38.74 for non-HBC shoppers. Top-performing retailers convert 21 percent more HBC shoppers than bottom performers — 59 percent versus 38 percent.
Still, retailers have tools that could help them drive HBC sales even further. The top three factors that would encourage shoppers to buy more HBC at a grocery store are more promotions (69 percent), better selection (60 percent) and better aisle organization (45 percent). A strong e-commerce program that deals in HBC could also help grocers grow HBC sales: One-third of U.S. shoppers purchasing HBC products online plan to make more online purchases in the coming year, with almost half of millennial shoppers purchasing HBC products online in agreement. However, the report says, grocers will have tough competition to deal with, as 40 percent of U.S. shoppers purchasing HBC products online are doing so via Amazon.com and mass-merchandiser websites.
“Facing fierce competition, retailers must craft tailored strategies to appeal to and convert these valuable HBC shoppers,” Stewart notes. “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.”