First-aid creams and ointments are providing supermarkets with soothing relief from the scrapes suffered in their competitive battle with mass merchandisers and drug stores.
As a buyer from a major Phoenix chain, who wished to remain anonymous, explained, "It really isn't that tough to compete [with mass merchandisers and drug stores]. You don't necessarily have to give [the category] away, you just have to have the selection and a fair price."
Besides being a strong competitive category against large drug chains and Wal-Mart, retailers polled by SN also noted four other reasons why first-aid creams and ointments are considered a popular category for supermarkets.
Sales of the products have risen 15% to 20% over the past year.
First-aid creams and ointments
reap margins around 30%, but can go as high as 55% in some markets.
The category commands strong brand-name recognition among consumers.
And as new formulations and packaging concepts continue to make their way into the category, first-aid topical sales should, at the very least, continue their strong showing, perhaps even continue to rise in sales.
"All I can say is it's an explosive category," said Bernie Fashingbauer, key account manager for health and beauty care/general merchandise at Gateway Foods, Minneapolis, which represents Rainbow Foods.
In many cases, retailers achieved these positive sales results without increasing space allocations for the category as a whole and without sacrificing profits through margin-cutting or heavy promotional spending. Indeed, retailers see the category's major problem as a lack of space for an ever-growing number of products.
Towne-Oller & Associates, New York, a division of Information Resources Inc., reported sales of first-aid topical products rose 20% for the 12 months ended Dec. 31, 1993. Fashingbauer agreed, saying that was a "safe" number.
"I would say [20% growth] is pretty close. And that's not by giving the category more space, it's just by refreshing the category," said Larry Walker, account manager for McKesson Service Merchandisers, Pompano Beach, Fla.
First aid creams and ointments "aren't high-velocity items, but then again, the profit margins are there. Depending on what market you're in, the margins can go as high as 25%," he added.
Some retailers said margins were even better than that.
"There's a lot of profit. Pretty much the entire category you can get between 45% and 55%," said Taylor Yost, assistant category manager for foods at Alaska Commercial Co., a 20-store chain based in Anchorage, Alaska.
The buyer from the Phoenix chain said his margins on first-aid topical products were "in the mid 30% range overall."
But despite the high margins and sales increases, retailers are still keeping a tight hold on shelf space for first aid.
"I would like to devote more space to it because of all the items out there," said Fashingbauer. "We've had to take our slower movers off to try a new item and vice-versa. Where we used to have double facings, we're single-facing items because of the onslaught of products."
Mark Gillette, manager of HBC at Grand Union Co., Wayne, N.J., said he has witnessed a number of new products in the category aimed at added convenience and cleanliness -- like stick and pump forms of ointments and nongreasy formulas for easy travel.
Other improvements in first-aid topical products are powerful triple antibiotics and anesthetic-antiseptics.
"There are new players that have come into the market and there've been some line expansions," added the Phoenix buyer.
Walker said manufacturers must often scrap old products to make room for their new and improved formulations. Retailers said they have many considerations when allotting the limited space for the category.
Shelf space "is decided strictly on warehouse movement and the uniqueness of the item," said a buyer for a large Midwest service merchandiser, who wished not to be named. "We've got to constantly look at the category, look at reducing stockkeeping units."
The buyer, who stocks more than 400 stores, said the only way he would consider increasing shelf space for the category would be if a new product was introduced with heavy advertising support. "Otherwise, I think we'd just reduce SKUs and add SKUs, keep the category consistent," he said.
Manufacturers' couponing of products and retailer advertising has worked well in increasing sales of first-aid topical products, and it has kept supermarkets competitive with the mass merchandisers and drug chains.
"Some kind of advertising support is important, whether it be an ad or a manufacturer coupon, or both together," said Gillette. When retailers use both together, they are getting 10 times the normal movement of first-aid creams and ointments. "If you get the ad and the coupon and tie them in in the same week, you're going to see 10 times the movement."
He said when the ad is run without tying it in with the coupon event, retailers only triple the movement. "And the most powerful of all seems to be reproducing a manufacturer's coupon in the ad the week you run it so the customers have it when they make out their shopping lists," Gillette added.
"Coupons seem to be doing pretty well," agreed the Midwest service merchandiser.
Fashingbauer said manufacturers offer promotions and incentives for displays, but said he felt creams and ointments "don't warrant a 48-, 60- or 72-piece shipper."
"Most of the major manufacturers have some type of quarterly shippers or promotions," said the Phoenix buyer, "plus they do their bonus packs or their buy-one-get-one-free or their extra sizes, so there always seems to be something going on in the category.
"I would say [the promotions] work well," he said, noting a buy-one-get-one-free takes the consumer off the market for a while. But while many retailers said name-brand promotions moved first-aid creams and ointments most effectively, others said price was becoming more of a consideration, especially with the entry of private-label products.
"You have a few people who will be loyal to a certain brand, but you put the price on a product and it will move," said the Baltimore buyer.
But Jim McCarty, grocery and HBC buyer at Brookshire Grocery Co., Tyler, Texas, disagreed. "There doesn't seem to be anybody that's really extra-sensitive to low prices in that category that I know of," he said. "It seems to be more of a name-brand decision."