Acosta: Health & Beauty Care in Grocery is on the Mend

After years on the decline, the health of Health & Beauty Care (HBC) sales at grocery stores is showing signs of life, according to a new research study from Acosta. Grocery stores only capture about 18 percent, or $15 billion, of the staggering $84 billion annual spend in the HBC category, but Acosta’s Health of Health & Beauty Care in the Grocery Channel Hot Topic Report signals an emerging trend reversal with more consumers purchasing HBC products during routine grocery shopping trips instead of in other channels.

“Health & Beauty Care represents a significant revenue opportunity across the board, and grocery stores are seeing an increasingly larger share of those dollars. There’s no question that the health of HBC at grocery is improving,” says Colin Stewart, senior vice president at Acosta. “With consumers frequenting grocery stores eight or more times per month, the opportunity is ripe for grocery retailers to capture those shoppers in store and convert them into ‘VIP’ HBC shoppers.”

Acosta’s Health of Health & Beauty Care in the Grocery Channel Hot Topic Report revealed that shoppers are gravitating to grocery to make HBC purchases. Shoppers are also changing their behavior and are looking beyond drug stores and mass merchandisers for health and beauty products.

According to the report, 53 percent of shoppers are buying HBC products in their local grocery stores, and 18 percent of shoppers are buying more HBC items in the grocery store than they were one year ago. HBC is growing at a rate of 3.4 percent, outpacing total store growth of 1.9 percent.

HBC grocery shoppers are the biggest spenders in the store, putting them at the top of the priority list for retailers. The HBC shopper typically spends more than double at the store with an average basket of $82.37 versus an average basket of $38.74 for non-HBC shoppers. Top performing retailers convert 21 percent more HBC shoppers than bottom performers (59 percent versus 38 percent).

Shoppers cite more promotions (69 percent), better selection (60 percent) and better aisle organization (45 percent) as the top three factors that would encourage them to buy more HBC in the grocery store.

Beyond brick and mortar drug store chains and mass merchandisers, online retailers are another force competing with grocery stores to attract highly lucrative HBC shoppers. One-third of U.S. shoppers buying HBC items online plan to make more online purchases in the coming year. Almost half of Millennial shoppers buying HBC items online agree.Forty percent of U.S. shoppers buying HBC online are using Amazon and mass merchant websites.

“Facing fierce competition, retailers must craft tailored strategies to appeal to and convert these valuable HBC shoppers. Matching these strategies—from assortment to pricing and in-store merchandising—with the top HBC categories that account for the majority of sales will be a winning combination,” adds Stewart.

The Health of Health & Beauty Care in the Grocery Channel was completed using research conducted by Acosta, as well as the company’s experience working with the nation’s largest CPG manufacturers and retailers.