By Sarah Hamaker
Customers in need " those with a headache, those desirous of an energy boost or those wanting some last-minute family planning " often stop by a convenience store because they know the retailer will have a good selection of health and beauty care products in small packages designed for immediate use. And once they walk in the door, these customers will likely pick up something else, too.
Nearly every convenience store (98.18 percent) carries some assortment of health and beauty care items, such as analgesics and other over-the-counter medications, vitamins, energy shots, family planning products and cosmetics. Health and beauty care accounted for 1.24 percent of in-store sales in 2007, up just 0.01 percent from 2006, according to NACS State of the Industry data.
"It's high gross, and the movement is not super but fairly good," said Gary Franson, operations manager for Pacer Fuels in Austell, Georgia. "We move a fair amount of health and beauty care products every week. It brings customers into our stores."
Analgesics and cough and cold remedies make up the biggest chunk of the health and beauty care category, both in sales and number of products. These product groups each increased in sales from 2006 to 2007 " with analgesics advancing from 21.79 percent to 24.32 percent during that period, and cough and cold remedies rising from 15.20 percent to 15.84 percent, according to NACS State of the Industry data.
Most of these sales come from single-dose or multi-dose (two or three doses) packages of over-the-counter medicines. "Our business has been growing," said Beth Noteman, director of convenience marketing for Lil™ Drug Store Products. "We had a good year in 2008€¦partly because in a tough economy, people may be more likely to pick up a package of two-dose Tylenol for $1.59 as opposed to buying a 20-count package."
For convenience stores, multiple companies repackage over-the-counter medicines into smaller sizes, including Lil™ Drug Store, Medex Merchandising and Navajo Manufacturing. "When people have a headache, rather than go to a drug store, they will stop by a convenience store to buy a one- or two-dose analgesic," said Sergio Vazquez, national sales manager for Medex Merchandising.
Along with single- and multi-dose over-the-counter medicines, trial or travel sizes of health and beauty care items can perfectly fit into the often-limited shelf space provided for this category. Current restrictions concerning what size toiletries can be brought on board airplanes have been a boon to travel-size products.
"I think overall, you're seeing more offerings in trial/travel. In part, that's because major companies are seeing this as a more valuable area than they used to," said Vicki Smith, domestic purchasing manager for Navajo Manufacturing. "Now, the trial- and travel-size items have become a [bigger] business because of the airport restrictions, and so the variety of these offerings is increasing."
At convenience stores, Navajo offers several kits of travel-size products, such as ones designed for men, women, emergencies and a new baby kit that will become available later this year. "Last year, sales of our kits increased in volume," said Larry Rupp, president of Navajo Manufacturing. "In this difficult economic time, we€™re finding that the larger bottles are really downsizing in most convenience stores because most purchases are made for immediate or emergency use or travel needs. Sales of our trial-size items have increased, too."
Giving the category an overall boost are energy shots, which "have seen tremendous growth over the past 12 months," said Smith. "The reason why the numbers are really growing has been because of the energy shot subcategory," agreed Rupp.
Pacer Fuel's Franson said energy shots have been selling well in their nine convenience stores. "Energy shots have expanded the health and beauty care category," he said, "making sales increase."
"It's still growing, and still a new product subcategory," said Carl Sperber, director of corporate communications for Living Essentials, maker of the 5-Hour Energy two-ounce shots. "The growth has been absolutely phenomenal Convenience stores are about 60 percent of our business. We had the convenience store in mind when we designed the 5-Hour Energy bottle and kept it small to fit into the smaller footprint of these stores," he said.
Mad Dog Energy Products also has seen its sales increase in convenience stores. "Convenience stores provide a convenient way for customers to purchase Mad Dog Energy Shots," said company spokesman Richard Black.
Energy shots are one subcategory of health and beauty care that benefits from in-store marketing. "5-Hour Energy offers a number of point-of-purchase solutions, like racking, window stickers and posters," said Sperber. In addition, the company partners with retailers to promote its products. Recently, 5-Hour Energy teamed up with ExxonMobil to give customers an option to try a sample at a reduced price. "These types of promotions are a great way to get people to try our product," Sperber said.
Family planning products bring in just over 10 percent of this category's sales, according to NACS State of the Industry data. "Condom growth has been strong, driven by the ongoing introduction of pleasure-focused items, including vibrating condoms," said L. Fazzari, vice president of Australian Therapeutic Supplies Inc., which sells the Four Seasons brand of condoms and other family planning products. "Condoms are a destination category for convenience stores, and customers will walk in specifically to buy condoms."
Fazzari pointed out that convenience stores can sell more condoms if they merchandise them in a location that is more shopper-friendly. "Condoms can drive associate sales of items, such as personal lubricants, energy drinks and even breath mints if the merchandising is properly executed," he said.
Some manufacturers like Navajo and Li Drug Store manage this category for retailers. "Retailers are becoming much more interested in maximizing this sales space," said Lil Drug Store's Noteman.
"Health and beauty care is a very small percentage of sales, and yet in a four-foot set, you can have 100 items in more than 35 different subcategories' s a very labor-intensive category to manage."
Lil Drug Store can plan the entire planagram for the retailer, working with other vendors to maximize the category's sales potential. The company also provides secondary displays, such as cough and cold remedies on a counter display during the winter.
But some retailers like Rhodes 101 Stops in Cape Girardeau, Missouri, do not feel that the category demands much in the way of management. "It has seen a slight up-tick in the last three years, along the same growth plane as what individual stores have achieved, but not at the same overall growth," said Brent Anderson, director of business development and implementation. "Considering health and beauty care ranks 19th out of 30 inside general merchandise categories" and it is considered a destination category, not an impulse category we quite honestly don't spend a lot of space or time with this category."
The only bright spot Anderson sees for this category is in vitamins and supplements. "We believe the consumer will continue to be health conscious, which should keep this category steady," he said.
Despite the relatively small increases in sales, these retailers and manufacturers believe the health and beauty care category will continue to be a part of a convenience store€™s merchandising mix. "I think it will always be a viable category simply because it meets consumers immediate needs's very important for retailers to keep up on the right mix, the right size and the right prices in that category," said Noteman.
Australian Therapeutic's Fazzari concurred, "Health and beauty care will continue to be an important factor in convenience stores to drive both traffic and profitability," adding that keeping a good mix of merchandise in that category can drive other purchases. "The shopper who stops to buy a headache tablet, condoms or a diaper is already committed to the purchase before they enter the store. As the category increases its variety, shoppers will come to understand that convenience stores can provide a solution to every need."
Anderson said Rhodes 101 Stops will keep offering the staples of the health and beauty care category to its customers. "We feel that the shift of consumer spending in terms of tradedowns or trade-outs will affect a few category top lines, but this category doesn't seem to carry the same possibilities," he said. "Customers either need [these products] or they don't, which should hold the category pretty steady."
Sarah Hamaker is a freelance writer in Fairfax, Virginia.