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Robust growth for HBC.

There was plenty to cheer about in HBC circles last year. The health and beauty care department in grocery stores closed 1994 with dollar sales of $14.5 billion, a gain of 5.2% from 1993. This is the strongest annual performance for HBC in food stores since 1989's 8.1 % increase. The results reflect a continuation of a trend toward consistently increasing dollar advances. In 1993 dollar sales rose by 3.9%, following a 1.6% gain in 1992. Unit sales, a better measure of traffic growth, increased 3.1% in 1994, compared with a 2.2% gain in 1993 and a 1.8% increase in 1992.

Though the figures reveal robust growth, competition from other retail formats and economic conditions continue to have an effect on HBC in food stores. The dollar increase for the fourth quarter of 1994 was 3.7%, a marked deceleration from the 6.2% and 6.8% gains posted in the third and second quarters, respectively.

The biggest contributor to 1994's growth was the skin care category, which posted an 11% jump, compared with a 4% increase in 1993. Several segments perfortneil particularly well, including bath and shower products and hand and body creams.

Bath and shower products recorded a 36% gain, giving them a 6.9% dollar share of the skin care category, up from 5.7% in 1993. Three of the fastest-growing HBC segments are contained in bath and shower products, including gels/washes/scrubs, the top-gaining segment overall.

Gels/washes/scrubs posted an astounding 184% growth in dollar sales in 1994 and a 176% jump for the fourth quarter, indicating that consumers' interest in liquid bath products remains strong. Of particular interest to food store operators is the comparative growth for this segment in drugstores, where gels/washes/ scrubs posted only a 23% gain for 1994 and a 15% increase for the fourth quarter. Food stores' stronger performance is likely due to the fact that the growth today comes from t bath bar marketers entering the segment, compared with the brands in the early 1990s that were primarily premium-priced European imports more suitable for drugstores.

Bubble baths also enjoyed a strong, but less dramatic, gain in 1994, posting a 17% dollar sales increase. The influential brands in this segment share the common traits of botanical ingredients and a liquid format.

Another strong performer was the children's bath and shower segment, which posted a 26% gain in the fourth quarter. The growth resulted largely from a new wave of products incorporating licensed children's movie and television characters.

Hand and body creams performed well in 1994, as dollars rose 34%. The impetus behind this growth is the introduction of therapeutic-type items promising greater moisturizing. Positioned as having healing qualities, these products retail at a higher price point than the typical hand creams. Some of last year's gain can be attributed to price increases: The average weighted price for these products rose to $3.91, compared with $3.67 in 1993. These creams jumped in category dollar share to almost 10% of overall hand and body preparations, up from 8.2% in 1993.

Within facial preparations, facial moisturizers dominated, with a 54.8% share of dollar sales. The segment continued to grow, with dollars up 16%. The growth is largely coming from brands that are cosmeceutical in nature. Positioned as helping aging baby boomers maintain a youthful appearance, many of the growth brands contain alpha hydroxy acids (AHA).

Sales of first aid products advanced 10% in 1994, the same growth registered in 1993. A closer look reveals some differences, however. Whereas 1993's growth came principally from the 20% sales gain recorded by first aid antiseptics, 1994's gain came from petroleum jelly, sales of which climbed 17%. Much of this growth came from private label, which posted a 27% gain to capture 23% of category dollars and 27.5% of units.

Oral care sales advanced 6%, a strong performance considering its 1% growth in 1993. Baking soda dentifrices maintained their solid showing with dollars up 38%, amounting to 30% of total dentifrice sales. The brand driving the category offers formula containing both baking soda paste and a peroxide gel dispensed simultaneously from a stand-up pump dispenser. Much of the brand's growth came from its refill pack, an indication of the strong following among its users.

Other growth items include baking soda line extensions from mass-market brands entering the popular segment. The pioneer baking soda brand added a peroxide extension in the third quarter, which met with initial success.

In the tooth whitener segment, prices have declined slightly, by 66 cents to $6.25, though whiteners still clearly occupy a premium niche. With a 3.6% share of dentifrice dollars, whiteners are still recording extraordinary growth since their introduction in 1991. In 1994 sales of the products at food stores were up 34%; at drugstores the growth was 38%. However, the segment in drugstores is more developed, with an 11.5% category share. The most influential brand last year in food stores was a whitener line extension from a mass-market brand, the first time that's happened. The introduction of a line extension for sensitive teeth from one of the pioneer brands is also drawing incremental dollars to the segment.

As in the whitener segment, the most influential growth brand in desensitizing dentifrices was a line extension from a mass-market brand. Desensitizing dentifrices, a larger segment than whiteners with a 5.6% share of dentifrice dollars, recorded a dollar gain of 28% last year.

The hair care category regained much of its luster, with a sales gain of 5% last year, compared with a decline of 2% in 1993. The strongest growth came from leave-in conditioners, with sales up 88%. Most leave-in conditioners retail at a premium over traditional conditioners--currently $3.40, compared with an average price of $2.14 for the overall conditioner category.

Men's hair coloring posted strong results in 1994, with dollars up 40%. The most influential growth brand is a line extension from a well-known brand for use on facial hair. Women's hair coloring has also been growing, with sales up 17% in 1994. Many of the growth brands and extensions are semi-permanent formulas, which wash out in fewer than 12 shampooings.

Medications/health care, the largest HBC category with a 37.2% share of HBC dollars, posted a dollar gain of 4%. Blood glucose measurement meters were its top-gaining segment, with sales up 61%. Food stores have benefited from this segment's innovative and lower-priced units. The newer units take advantage of lower-cost components, thereby lowering their retails. That's one likely reason for the drop in the weighted category price to $68.47, compared with $76.62 the previous year.

Meal supplements continued their strong performance, posting a 50% dollar increase. Growth has come principally from pediatric formulations marketed toward parents. An adult line extension with added fiber performed exceptionally, as did a bar format, a departure from the more traditional canned liquid products.

Sales in the vitamins and tonics category advanced 15%, slightly higher than the previous year's 14% gain. Of the 12 vitamin and tonic subcategories, herbal supplements posted the greatest growth, with sales up 41%. Their category share is now 6.1%, compared with 4.9% in the previous year. Private label herbals were the most influential segment, gaining 65% and accounting for 23.1% of herbal supplement sales. Among all the products, garlic and ginseng items were the top performers, although other herbs are beginning to grow.

Calcium supplements strengthened their position with a 24% dollar gain. The item with the greatest impact was a line extension from a well-known calcium carbonate antacid brand. Another growth item in the calcium segment was an extension from a multivitamin brand, which is expanding to the single-ingredient supplements.

Private label's traditional stronghold is in the vitamin category. Both vitamins E and C posted strong gains from private labels. In both of these segments, private label is the largest brand. In vitamin C, private label holds a 52.3% share, with sales up 26%. In vitamin E, private label posted a sales gain of 22% and held a 54.4% share of the segment. Additional growth in these segments has come from two other brands with a multivitamin heritage.

Kenneth Gurin is vice president of marketing, Towne-Oller & Associates, a subsidiary of Information Resources Inc.
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Title Annotation:health and beauty care products
Author:Gurin, Kenneth
Publication:Progressive Grocer
Date:May 1, 1995
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