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Wellness Holds Vital Link to Healthy HBC Sales

Wellness Holds Vital Link to Healthy HBC Sales

Check out this statistic — from an American Greetings Research Council study on consumer purchasing habits — that appeared in a 1997 SN story I wrote on tactics that supermarkets were implementing to win nonfood market share: “Of the $148 billion in nonfood sales last year, both in general merchandise and health and beauty care, grocery continued to lose seven share points at the rate of an estimated $500 million in gross profit per point.” The year before, mass merchandisers had surpassed grocery as the preferred shopping channel for nonfood purchases, according to the study.

What has changed? That's a question I ask as the Global Market Development Center's Health Beauty Wellness Conference makes another run this week in Phoenix.

Supermarket HBC sales are still in a slump. Dave McConnell, who heads GMDC, called this year's HBC performance “lackluster and disappointing” (see “SN Asks,” Page 34).

Statistics run for SN by the Nielsen Co. show that, on a total U.S. basis, the percentage of grocery shoppers purchasing HBC in supermarkets dropped seven points from 2001-2007.

Besides the blurring of retail channels, not much else has changed in more than a decade in terms of supermarkets losing HBC share points to drug and mass retailers. The same old arguments persist: It's not supermarkets' core business. Food retailers don't have the space. There's not enough commitment from the top. It's a problem of cultural orientation. That's all true.

Al Jones, senior vice president, procurement and merchandising, at Imperial Distributors, told me that supermarkets have had the HBC business swept up from under them. “Food retailers were gun-shy with the [HBC] retails, and no one was willing to take a chance. When they did, it didn't work out very well, because they only got halfway into it.”

He said HBC requires a long-term commitment and an investment in labor. It's all about space — generating dollars in square footage — and having the patience to build the business, said Jones.

That's what happened to some dedicated bath and body sections. In the early part of this decade, supermarkets, inspired by bath and body shops, found the space to satisfy consumers' desire for a luxury indulgence. However, if the section didn't quickly make the volume grade, it was folded.

Most retail experts say supermarkets are missing out to their competitors. Drug stores and mass merchandisers, meanwhile, have significantly built their food business. Five hundred million dollars a share point is a lot of profit going to others, especially in this economy.

For food retailers, it is naturally all about food. That's their biggest competitive advantage, and there's the rub. Food is all about nutrition and wellness, health and beauty — the link is too often underutilized. What is really missing is the creative vision and commitment to bring it all together to satisfy consumers seeking solutions to better health and longer life. Sometimes the most obvious is overlooked!