Americans' growing desire to take health and wellness into their own hands, as well as the increased health needs of aging baby boomers, will impact supermarkets' health and beauty care departments dramatically in the next few years.
The number of Americans 45 to 64 years old is expected to increase by nearly 20 million by 2009, according to research firm Mintel International Group, London.
The increasing costs of prescription drugs and health insurance are some of the chief concerns of this population, said Brent Green, a Denver-based consultant and author of "Marketing to Leading-Edge Baby Boomers."
The rising HBC needs of this group also will influence the way supermarkets' HBC sections are designed. Consultants and retailers who talked to SN for this story expect the space allocation for HBC to grow in the future as demand for health and beauty items increases, taking space from some perishable departments.
"You're not going to see [stockkeeping units] going down. They are ever-increasing," said Al Jones, senior vice president, procurement, Imperial Distributors, Auburn, Mass. The growing health care and skin care needs of the baby boomer population, as well as additional hair, beauty and skin care SKUs for ethnic groups such as Hispanics, will require even more space, Jones added.
To cater to the aging population, supermarkets will add larger, more colorful signage to better call out categories of products, such as makeup, said Robert Gorland, vice president of Matthew P. Casey & Associates, Clark, N.J., a supermarket feasibility research firm.
But boomers are not the only age group that will change supermarkets' HBC product assortment. Generation Y -- people in their 20s and early 30s -- will be buying more beauty and skin care products, and there will be more male buyers in this group, as they become more educated and interested in skin care.
In addition, the growing Hispanic, Asian American and African American populations will have a significant impact on the HBC departments as their buying power rises.
"Multicultural consumers are among the biggest buyers of several key general merchandise and HBC categories, including baby products, beauty and personal care items, bath products [and] cosmetics. They have larger households and, at supermarkets, shop more frequently and spend more per week than market averages," according to GMDC's recent "Multicultural Marketing" study.
Of all the ethnic groups, supermarket executives said they are most focused on understanding and catering product selection to Hispanic shoppers.
"The Hispanic population in the U.S. is growing at a very, very rapid pace. It is one of the most important market segments that we as retailers and manufacturers need to address," said Larry Ishii, general manager of GM/HBC, Unified Western Grocers, Commerce, Calif.
The Hispanic population will grow 68% from 2000 to 2020, according to the U.S. Census Bureau. This group's buying power will jump about 45% to $306 billion, from 2004 to 2009, according to the Selig Center for Economic Growth at the University of Georgia, Athens.
Many other trends, including Americans' growing movement to take care of their own health and wellness, will impact grocers' HBC departments well into the future.
Wellness Clinics
The recent trend of adding wellness centers and clinics in supermarkets is expected to continue to increase in the next five to 10 years, both to meet boomers' demand for affordable, easy-to-access health care and consumers' desire to look after their own health.
"You have a self-care culture going on because insurance is a pain in the neck. Eighty percent of people in 2004 said they would be likely to treat themselves before going to a doctor," said Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill.
Mini-clinics -- added to many supermarkets this year including Kroger, Giant Eagle and H.E. Butt -- also are ideal for aging shoppers who do not want to make a doctor's visit for routine screenings, such as blood tests.
Clinics are expected to expand slowly as retailers decide which stores are best suited for the centers. They will likely designate only certain high-volume stores, possibly with 24-hour pharmacies, for these locations. "You really have to have a high-volume store to add certain departments like a wellness center or clinic," Gorland said.
"We don't have year-round, in-store medical clinics yet, but we are looking into that," said Martha Johnson, director of clinical services and marketing, Ahold USA, Braintree, Mass.
"I wouldn't be surprised to see somewhere in the order of 10% of stores [adding clinics], but it will take five or 10 years for that to evolve," Wisner said.
"It makes sense for retailers to have clinics and to become a place for health information and products," said Curtis Hartin, director of pharmacy, Schnuck Markets, St. Louis. "However, it does not make sense for every store. I'm sure there are certain neighborhoods where it won't go over."
Supermarkets are the retail channel best suited to cater to the growing self-care and wellness trends, Wisner pointed out.
"Supermarkets are the only retail location where you can address all your health concerns because it does involve diet," he said.
Supermarkets will also better integrate pharmacy and HBC departments in the future by encouraging pharmacy and nutrition staff to talk with shoppers in the store.
One Byerly's store, operated by Minnesota-based Lund Food Holdings, is already doing this. "They have a new, highly automated pharmacy, where the pharmacist's primary job is to talk to shoppers," Bishop said.
Ukrop's Super Markets, Richmond, Va., has many stores that include "wellness centers" at the pharmacy, a private office where a pharmacist or dietitian can discuss customers' health regimens and concerns.
John Beckner, Ukrop's director of pharmacy and health services, expects the pharmacist's role in supermarkets to continue to grow in the future.
"Home cholesterol testing kits and other diagnostic kits will be expanded, as well as people coming into the store to take advantage of screenings that the pharmacist would administer," Beckner said.
OTC On The Grow
Supermarkets will likely also expand their over-the-counter health products as they become a more trusted source for health and wellness products and information.
In addition, the Food and Drug Administration will likely continue to approve more prescription medications for OTC sale, causing supermarkets to make room for these medications.
"If the trend continues that products from behind the counter go over the counter, it could likely be that ... our space allocation could get greater," Ishii of Unified Western Grocers said.
Baby boomers will require more of these products.
"If you consider that 50% of all OTC purchases are made by people over 50, this is a huge category that is going to expand," Wisner said. The over-50 group spends an average of $1,000 a year on OTC products, compared to 25-year-olds' $150 a year, he added.
Related HBC categories will be impacted by the aging population, including products that are often missed by retailers, such as reading glasses. "It's a growth category, and most people end up owning several pairs," Wisner said.
The growing Hispanic population will impact health product offerings and screenings in the future as well, retailers predicted.
"Diabetes is a chronic disease in which there does seem to be a higher percentage of Hispanics who contract the disease. We may need to look at expanding the low-carb category and make diagnostic kits and screenings available to that population group," Beckner said.
Beauty Care Is Skin Deep
Aging baby boomers will have an increased need for skin care and beauty care products.
"People think about drugs only [for baby boomers], but skin care is another category impacted significantly. Your individual needs increase at an exponential rate as you age," Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill.
"The aging baby-boomer population will continue to drive sales of anti-aging products. The ongoing demand for products combined with a longer life-expectancy, especially for women, will enable manufacturers to continue to grow anti-aging body care products," according to an October 2005 report on "Anti-Aging Skincare Treatments" from Mintel International Group, London.
Baby boomers are more likely to buy premium body care products and shop at drug stores and supermarkets offering those products, Mintel reported.
To that end, L'Oreal's test-market beauty shop within a Kroger store and Wild Oats' Lifestyle Boutique that was launched in two Stop & Shop stores this summer will "likely be replicated in many stores with a number of variations," the report stated.
In addition to boomers, expect generation Y shoppers to be much more educated about taking care of their skin.
Behind aging baby boomers, the second most important demographic trend is males in their 20s and early 30s who "have become much more interested in personal care products," said Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill.
While females in this age group have always taken a strong interest, young males are now much more active in the category, buying more skin care, hair care and nail care products, Bishop added. The growing ethnic population will also affect this category, since they are more likely to seek out anti-aging products than whites, according to Mintel.
Thirty percent of Asians and 22% of Hispanics said they are willing to spend money on anti-aging products, compared to only 12% of Caucasians, Mintel reported.
Supermarkets need to offer beauty and hair care products tailored to the ethnic groups in their area. For example, Hispanics purchase more red hair color products than other groups, noted Al Jones, senior vice president, procurement, Imperial Distributors, Auburn, Mass.
