MASS MERCHANTS GRAB MARKET SHARE IN HBC

CHRISTINA VEIDERS

CHICAGO -- Mass merchandisers dramatically captured significant share points away from food and drug outlets in health and beauty care last year, and accounted for 80% of the total growth in HBC sales.

"To those of you in food and drug, this [statistic] should be a shock," said Ted File, senior vice president of Information Resources Inc., Chicago. File delivered what is to be an annual report, "State of Your HBA/ HBC Business," during the Exclusively HBA trade show here March 23 to 25.

The report was a highlight in a show that suffered in attendance because the event came just six months after last September's meeting in Detroit when Exclusively HBA announced its new spring dates and location at McCormick Place here.

This year's fifth Exclusively HBA trade show drew 322 retailer and distributor companies, down 13% from last year's figure of 371 companies, and 592 buyers, down 14% from 692.

Based upon Information Resources InfoScan data on 48 HBC categories, File compared HBC category activity across food, drug and mass merchandising trade channels in 1993. The IRI statistics revealed that "mass merchandisers are gaining a lot of ground if you look at all retail outlets," said File.

Comparing the 48 HBC categories with the total of 170 categories that IRI tracks across four departments, HBC gained 0.6% and represented 63.3% of drug store business, HBC gained 1% and represented 35.2% of mass merchandisers' business, and at

food outlets HBC gained 0.2% and represented 9.5% of business. Mass merchandisers' share of dollar sales of the 48 HBC categories grew from 21.5% to 24.7% last year.

When considering HBC sales growth, which is flat in food and down in drug outlets, File said, mass merchandisers grew at a rate of 21.8%, accounting for $1.61 billion. The effect of the mass merchandisers on HBC sales is demonstrated when combining food, drug and mass merchandiser outlets, for which HBC sales grew at an average of 5.5%, or about $2 billion.

File pointed to price points, sizing and multipacks as reasons the mass merchandisers have picked up significant HBC sales.

"When consumers go into mass outlets the sizes are a little higher and a little larger. This brings consumer consumption patterns along a longer time. When consumers go into a supermarket they are probably downsizing their purchases rather than upsizing," he explained.

File also examined HBC sales trends among regions of the country and measured growth rates of specific categories within the various trade channels.

Categories traditionally strong in either food or drug, such as diet aids, vitamins, first-aid accessories, suntan products, cold and sinus tablets, adult incontinence items, facial moisturizers, hair conditioners, hand and body lotions, and laxatives all showed large increases at mass merchandisers and declines at food and drug stores. For example, vitamins, a hot selling category, were up 43.1% and grew by $100 million at mass merchandisers last year.

File said there were 47 categories in which at least a 1% share point change went to mass merchandisers last year while food outlets picked up only one category, miscellaneous remedy tablets, and drug stores picked up antismoking products. Both were small dollar volume categories.

The report included the effect merchandising has on specific brands. Seasonality effects on certain categories and ethnic HBC were topics touched upon in the report.

Several supermarket buyers questioned after File's presentation were not surprised by IRI's numbers and findings.

Jan Winn, director of HBC-general merchandise at Big Y Foods, Springfield, Mass., said, "What could skew that data is that mass merchandisers have never done a good job in HBA, and now they are doing a much better job, so of course the numbers are going to be up. You have to look at all variables. It is not just a numbers game."

David Bowne, corporate director of general merchandise at Roundy's, Pewaukee, Wis., who did not hear File's report, said he was not surprised that mass merchandisers were taking major HBC share away from food chains. "I believe it. The supermarkets have been too slow to react," he said.

Some supermarket buyers attending this year's trade show expressed disappointment that major HBA manufacturers were absent from the show.

Among companies that did not return this year were Whitehall Laboratories and Schering Plough. Procter & Gamble only participated in one show and has not returned.

Said one buyer from a Western food chain, who wished to remain anonymous, "They should have forgotten this show. I was disappointed because of the lack of participation by some vendors. There were not enough big boys there. There were a lot of little guys, which was nice, but we already saw them last September."

Charles Przekop, division merchandise manager at Meijer, Grand Rapids, Mich., attended last year's show in Detroit and returned for one day this year. "I am not sure it merited even the one day out of my schedule. The people at the show weren't necessarily the movers and shakers," he commented.

Jay Spaulding, show principal, admitted that this year's new dates "caught a lot of companies by surprise." Yet, despite the short turnaround from last year, Spaulding said, "We had to change dates for the future and it all came together nicely. Everything we heard from the show participants was that the timing for the show was far more perfect for everyone."

Winn of Big Y attended the show for the first time. She said her company had a mission that was successfully met by pursuing vitamin companies. "Vitamins and anti-oxidants are hot issues in HBA today. We wanted to take a real good look at our mix and talk to as many people as we could about the category and see what programs are available and who is addressing what needs," she said.

Next year Exclusively HBA will return to Chicago March 22 to 24.