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GMDC HEARS IMPACT OF HBC ON INDUSTRY

COLORADO SPRINGS, Colo. -- If supermarkets can maintain their current market share of health and beauty care, by the year 2000 the channel will have generated as much as the projected savings from the industry's Efficient Consumer Response initiative, about $30 billion. This is a statistic that Tim Hammonds, president and chief operating officer of the Food Marketing Institute, related to a record-breaking

COLORADO SPRINGS, Colo. -- If supermarkets can maintain their current market share of health and beauty care, by the year 2000 the channel will have generated as much as the projected savings from the industry's Efficient Consumer Response initiative, about $30 billion. This is a statistic that Tim Hammonds, president and chief operating officer of the Food Marketing Institute, related to a record-breaking attendance of 1,033 health and beauty care executives gathered here last week for the HBC Marketing Conference and the 25th Anniversary of the General Merchandise Distributors Council. If supermarket share can be maintained, supermarket sales of HBC are projected to grow from $11 billion in 1992 to $41 billion by the year 2000, according to Hammond. However, whether or not supermarkets can maintain their current share is "a big if," especially since supermarket HBC marketshare has been steadily slipping, falling to 41% in 1992, he said.

"Look how much effort, time and executive talent we are putting into ECR, (in comparison) to how little we are developing and as energy focused on the HBC category," he said.

FMI has been touting such statistics to top level food executives in an effort to get them to re-focus their attention on HBC. Certainly, a good way to build interest and support for the category is through conferences such as those sponsored by the GMDC and FMI's GM/HBC Conference, scheduled to be held in Philadelphia, October 8 to 10, said Hammonds.

Although FMI's nonfood show has been suffering from declining buyer participation over the last several years, Hammonds told the GMDC audience the show is slated for a turnaround, and already has over 500 retailers and wholesalers registered. At FMI's Midwinter Executive Conference, held in January in Orlando, Fla., Hammonds announced the re-engineering of the nonfoods show. Part of that re-engineering was to offer buyers free registration from January through March. This produced the early registration figures announced by Hammonds. In an interview with SN earlier this month at the National Association of Chain Drug Stores' Executive Conference in Palm Beach, Fla., Hammonds said, "It looks like we are on track to have our largest conference ever." Last year's nonfoods show drew just 352 buyers.

In addition, FMI announced several format changes, including business review sessions similar to the GMDC's control casual conference format, which are short, pre-scheduled meetings. At the conference here, GMDC scheduled over 14,000 meetings with top level executives and suppliers. This format is said to be a key to the success of the GMDC's two annual conferences. While FMI will retain its nonfoods trade show, Hammonds described changes to the nonfoods conference as offering supermarket buyers a " 'smorgasbord' where people can find what they are looking for." Hammonds said he sees a direct correlation between slipping HBC market share and the poor support that FMI's nonfood show has received over the last two years. "If the show is successful, you send very powerful message to the supplier that you are generating excitement in the manufacturer-supplier community," he explained. "When the show is declining you send a very strong message to suppliers that if they want to grow the category they'll have to look elsewhere."

Besides stating the importance of HBC at industry shows such as GMDC, the Midwinter Executive Conference and the Western Association of Food Chains, the FMI staff have been calling on food chain headquarters to encourage participation in this year's FMI GM/HBC Conference and win category support from the highest ranks that of the CEOs. "We are beginning to get the CEOs, and they are realizing there are a lot of bucks to be had and are taking an interest in the HBC category more than they have in past. That is the major reason we are seeing such good attendance increases here," Hammonds said. He added that nonfoods as opposed to other supermarket categories has been "insular inside each company."

He told the GMDC group that the story FMI is trying to tell the industry is that it "supports this category. It's a great one and a terrific way to stay competitive with the supercen-ters and alternative formats." At present, about 108 exhibitors are signed up for FMI's nonfoods show, which is about the same as this time, last year. He expects another 35% to 40% more to register by October. Last year FMI said it tried to limit the size of the show floor because it "didn't want it to outgrow the buyer-seller category" and it wanted to maintain a good balance on the show floor, said Hammonds. With FMI having just come off its largest pharmacy show, the FMI Supermarket Pharmacy Conference in San Antonio, Texas, in April, Hammonds pointed to the importance of having a pharmacy in the supermarket and its impact on HBC. He said the number pharmacies in supermarkets are increasing. "We've found with HBC having a pharmacist within the store adds tremendously to the customers' confidence in over-the-counter products. All of our research shows that a pharmacy will drive your HBC sales up dramatically, and merchandising it correctly in the store design where you have a pharmacy next to HBC is enormously successful. For a lot of these products the population is getting older. We are all going to need prescriptions and over-the- counter medications so it's positioned right for future growth as well," Hammonds said. Finally, Hammond believes the only way to win the market share battle in HBC is for supermarkets to be "the source for HBC products in the customer's mind."