Nonfood Category Trends: Holding Steady

Supermarkets were able to hold on to most of the biggest and most active nonfood categories over the past year, in many cases managing to eke out slight gains. The improvements come despite increasing competition from drug stores, mass merchandisers, warehouse clubs and even online retailers.

Certain categories in the food channel benefited from universal demand. Growing interest in dietary supplements and vitamins, weight control products and nail-oriented cosmetics was big enough to lift sales in all store segments, including food, drug and food, drug and mass channels (excluding Wal-Mart) combined.

Category Guide Intro: The Value Equation

Across-the-board decreases were also present, though confined largely to OTC painkillers. The internal analgesic category continues to suffer fallout from a series of high-profile recalls that took products off the shelf for long periods while quality-control issues were corrected. Some brands have yet to return.

A new addition to this year’s list is the sleep aid category. The noteworthy 11.2% sales increase recorded in supermarkets was second to drug stores, which enjoyed a 16% bump, and slightly behind the 14% increase seen in food, drug and mass channels combined. But the double-digit growth in an otherwise single-digit world makes it one less thing keeping retailers awake at night.

NONFOOD KEY CATEGORIES
Supermarket dollar sales and percent change from last year
Vitamins | $1.1B | 6.1
Soap| $1.1B | 1.9
Internal Analgesics | $807.2M | -7.7
Weight Control/Nutrition Liquid/Powder| $766.0M | 7.6
Cold/Allergy/Sinus Tablets | $739.5M | 1.0
Toothpaste | $722.1M | -0.2
Gastrointestinal Tablets | $647.1M | -1.4
Sanitary Napkins/Tampons | $634.4M | -0.8
Shampoo | $625.4M | 3.1
Deodorant | $558.4M | -0.2
Batteries | $548.5M | 2.3
Blades | $519.4M | 1.9
Skincare | $519.0M | 0.9
Cosmetics — Nails | $140.3M | 14.1
Sleeping Remedies | $65.5M | 11.2

Vitamins, Soap, Internal Analgesics

Vitamins

Omega-3, vitamin D and calcium were among the top-selling supplements that propelled the vitamin category to $3.6 billion in sales over the past year. Most of the transactions took place in the drug channel, which tallies almost twice as many sales as supermarkets. However, this past year showed that the food channel beat drug stores in growth. Unit sales grew 6% in supermarkets compared with 0.5% in drug stores.

Supplements are more popular today because consumers in a recent poll said they trust the integrity of the products they buy. According to the Council for Responsible Nutrition, 69% of Americans take some form of dietary supplements, and 71% report they are regular consumers of multi-vitamins. As the second-largest subcategory, multi-formulas have become quite sophisticated, with products developed for age groups, gender and health conditions.

The largest subcategory, mineral supplements, enjoyed $528 million in sales. Here is where the hugely popular omega-3 product sales are found.

One of the biggest increases came from single-letter vitamin. This isn’t much of a surprise to experts who point out that consumers continue to increase their intake of B-family vitamins along with vitamin D, after a federal panel recommended increasing the daily intake of vitamin D for most people.

Soap

Convenience and selection help maintain the supermarket channel’s lead in the soap category. Sales increased nearly 2% to $1.1 billion in food stores, outpacing those in the drug channel by a margin of 2 to 1; indeed, drug store sales of soap products were flat over the past year.

Within the category, however, there are some distinct shifts in preference. Deodorant bar soap sales continue to slip at the expense of liquid formulas, as the latter is better able to convey messages related to skin health and softness. Infusing soaps with vitamin E and similar ingredients has helped lather up sales of liquid-based body washes in supermarkets by almost 4% to $383 million.

Specialty soaps promoting beauty benefits surged in popularity over the past year, and currently make up the second-largest subcategory behind body washes.

Sales volume of soap is down across the board, falling 5.5% across food, drug and mass. The hit wasn’t so bad in supermarkets, where volume is down 2%. It’s likely that price increases compelled consumers to purchase larger sizes.

Internal Analgesics

The headache in the internal analgesics category just won’t go away. Sales and volume fell in all channels over the past year, as product recalls of long-established brands continue to take a toll on consumer confidence.

The recalls were directly related to a lack of quality control, causing shoppers to question reliability. Problems ranged from musty smells and foreign ingredients in children’s formulas, to excessive doses of active ingredients and the poor quality of some inactive ingredients.

Subcategories showed no respite. Feminine pain relievers, liquid analgesics and their tablet forms all suffered setbacks. Food, drug and mass channels showed overall sales drops of 4.5%, while the supermarket channel recorded decreases of 8%; drug stores fared little better, with sales down 3.4% on much larger volumes.

Despite the bleary outlook, people still fall ill and want relief. A recent Mintel report notes that the use of headache and pain relievers has remained steady at 81% despite recalls. One side benefit to retailers, reflected in media reports, has been the rise of private label.

Weight Control, Cold/Allergy Tablets, Toothpaste

Weight Control/Nutrition Liquid/Powder

To say that the weight control category has gained mass would be an understatement. Both sales and volume are up across all channels. Total sales for food, drug and mass hit $1.1 billion over the past year, on a hefty volume increase of 9%.

As the preferred channel for this type of purchase, supermarkets attracted more business than other formats, tallying $766 million in sales, compared with $248 million in the drug channel. The vast bulk of the food store sales were made in the grocery aisle as opposed to the refrigerated case.

Weight loss is a category that holds huge potential for supermarkets. The current fight against obesity has attracted heavyweights ranging from First Lady Michelle Obama to store dietitians. In a study released early this year, researchers found no change in obesity rates between 2010 and 2008. Then, as now, about one in three adults and one in six children and teens were obese.

Such sobering statistics mean it’s likely that any store tour today on the subject of healthy eating and diet includes a stop at the weight loss product section.

Cold/Allergy/Sinus Tablets

A mild winter and hot summer across much of the U.S. sent consumers back to the OTC remedy aisle several times over in search of relief. Purchases are seasonal, but consistent in a year-over-year comparison. Sales and volume are also affected by the nature of such purchases: Consumers typically wait until they actually need these remedies before venturing out to the store.

Total category sales in food, drug and mass grew just over 3% to $2.8 billion, even though volume dropped by 2%. The decrease is likely due to customers loading up on daytime/nighttime multi-packs or larger package sizes.

Due to the very nature of these conditions, anyone suffering from a cold or allergies typically heads to the drug store. It’s no surprise then that the drug channel stole the vast majority of business. Sales over the past year increased 3% to $1.8 billion, while supermarkets tallied up sales of $740 million, a sniffling increase of 1%.

Access to these products may also be a factor in volume declines, since federal and state legislation designed to combat drug abuse has been in place for several years now. Some states require prescriptions for certain products that contain pseudoephedrine, ephedrine and phenylpropanolamine, all of which are used in the manufacture of methamphetamines.

Toothpaste

Statistics show that nearly 97% of the population in developed countries today uses at least one variety of toothpaste. With so few new users to build business on, manufacturers have to entice consumers with new products.

The pace of introductions makes this a dynamic category. Total food, drug and mass sales hit $1.6 billion, only a slight tweak above the prior year. Volume slid fractionally due to pricing differentials at the retail level.

Supermarkets still dominate channel sales, brushing up $722 million in the past year. Sales volume was virtually flat, however, while drug stores enjoyed increases of almost 3%. Both formats saw volume declines of more than 2%, again reflecting retail price pass-throughs and a preference for larger tube sizes, which reduced purchase frequency.

Products promoting gum health and brighter smiles continue to be a focus of innovation, while enamel protection and tooth sensitivity have merged as prime areas of product development. The two biggest brands, Colgate and Crest, have steadily built up their portfolios of products in this area.

The once white-hot whitener subcategory has mellowed a bit, as more consumers opt for dentrifices that already contain whitening agents. Despite advancements in bleaching technology, prices for whitening systems remain prohibitive.

Gastrointestinal Tablets, Sanitary Napkins, Shampoo

Gastrointestinal Tablets

Sales of antacids, analgesics and treatments for related digestive disorders have moderated since they peaked during the recession, when layoffs, mortgage failures and inflation conspired to give consumers a giant case of agita. Overall sales in food, drug and mass were nearly $2 billion, an increase of only 0.5%. Unit sales decreased by nearly 1%.

Drug stores continue to be the primary destination for remedies and here, sales actually increased. For the 52 weeks ending June 10, sales in the drug channel increased 1.2%, to $1.2 billion. Volume decreased by the same percentage, however, an indication that consumers were buying more expensive national brands as opposed to private labels, which were more popular during the depths of the economic crisis.

In supermarkets, sales fell 1.4% to $647 million. Unit volume dropped a corresponding 2.6%, evidence that fewer heartburn sufferers are making their purchases in food stores.

The biggest sales gainer was laxatives. Dollar activity grew 7% to $147.4 million. Stomach remedies also showed impressive growth, increasing just over 3% to $11.9 million.

Sanitary Napkins/Tampons

Sales of tampons and sanitary napkins have remained relatively stable over the last three years as most consumers consider them a necessary expenditure no matter the state of the economy. While overall sales have remained steady, one change that continues is the shift to drug stores. Sales in the drug channel have climbed three percentage points per year for the last two years while supermarket sales have steadily declined since 2009.

At supermarkets, sanitary napkins remain the segment leader and sales were flat during the 52 weeks ending June 10, 2012. During the same time period tampon sales were down 2%.

The poor performance was likely not linked to a move to private-label since store-brand tampon share is particularly low, according to a study by market researcher Canadean. Fewer than 10% of consumers purchased store-brand tampons while one in five purchased store-brand sanitary napkins.

Shampoo

Shampoo sales in supermarkets have bounced back to pre-recession levels, with sales reaching  $625.4 million during the 52 weeks ending June 10, 2012 — a 3% improvement versus the previous year. The turnaround began during 2011 after two years of decline, when sales rose 2% to reach $617 million.

The bulk of sales come from regular shampoo, with many boasting plant-based ingredients and a botanical or herbal claim. Beauty-enhancing benefits from moisturizing to protecting damaged hair are also popular, with shampoos featuring UV protection, color preservation and hair straightening formulas. Consumers who want to emulate celebrities are even trying spray-on powder shampoos like Suave Professionals dry shampoos that absorb oils from hair.

Shampoo is also one of the more common nonfood products to bear gluten-free claims. For those with celiac disease, gluten-free hair care products can prevent skin irritation and head off any problems caused by accidental ingestion, especially by children.

Deodorants, Batteries, Blades

Deodorants

The sweet smell of success was just out of reach for the deodorant category, which could not maintain the growth trajectory of years past.

Sales of deodorants and antiperspirants grew 16.4% between 2006 and 2011, according to Mintel, but volume sales were flat across food, drug and mass channels during the 52 weeks ending June 10, 2012.

Given the category’s high penetration, future growth is dependent on further innovation. Gender-specific brands are becoming more relevant, especially in the women’s segment where reports linking antiperspirants to breast cancer could drive demand for aluminum-free or paraben-free products, according to Mintel.

Manufacturers are responding with natural ingredients such as vitamin E, aloe and camomile, according to a Global Industry Analysts report.

Batteries

After two crippling years of dollar sale declines, batteries regained their power during 2011 and the first half of 2012.

Sales tend to reflect the economy overall, as batteries are typically an incidental expense tied to the purchase of consumer products that are the first to be cut when budgets are tightened.

During the 52 weeks ending June 10, 2012, sales of alkaline batteries charged ahead, while higher-end batteries, which represent a much smaller share of the category, continued to slump. Sales of zinc air batteries fell most significantly with a 23.1% drop in dollar sales.

But retail rings aren’t all that’s on the minds behind leading batteries. This year, Duracell, Energizer, Panasonic and Rayovac joined to form the Corporation for Battery Recycling, which is looking to create a national battery recycling program which, under the right circumstances, collection and recycling, could be net environmentally positive.

Blades

After trailing supermarkets in dollar sales of razor blades for years, drug stores finally got the edge on the food channel during the 52 weeks ending June 10, 2012.

Replacement cartridges with their promise of professional results are more popular than disposable razors, holding a 55% share, but as cost remains a factor for most consumers, manufacturers are testing new ways to maximize sales.

Facing increased competition from new brands, magazines pushing the glory of your grandfather’s straight razor, and direct distributors like the Dollar Shave Club, market-leader Gillette released its first television ad that states how long the typical razor blade lasts. Averaging 150 strokes per shave, the commercial states the Gillette ProGlide blade will last five weeks. This is the first time Gillette has announced a time frame for its products with the hopes of increasing the frequency with which replacement cartridges are purchased.

Skincare, Nail Cosmetics, Sleeping Remedies

Skincare

Women continue to skip trips to department stores in favor of lower-priced professional grade options at supermarkets, drug stores and mass retailers.

While sales inched up across all three channels during the year ending June 10, 2012, there is room for growth in the upscale at-home skincare segment.

Currently, just 4% of women have used an anti-aging device but 35% would be willing to try one — a percentage that’s higher than that of women who would visit a professional.

Male-oriented products also have potential and manufacturers are looking to more masculine packaging to help draw men to the skincare category with products encased in boxes made to look like cigar cases or liquor bottles. Research firm NPD Group reports that only one in four men currently use a facial skincare product.

Cosmetics

Nails Continuing the do-it-yourself trend of the last few years, the nail segment saw significant growth of 23.5% across food, drug and mass channels (excluding Wal-Mart) during the 52 weeks ending June 10, 2012.

Nail care didn’t experience the recessionary slump that so many categories did, as it’s a lower-cost alternative to visiting the nail salon. Manufacturers have responded with a slew of products facilitating inventive takes on traditional manicures.

While some women feel nail polish application is best left to the professionals, the emergence of foolproof nail stickers in bold colors and designs have taken the hassle out of doing-it-yourself. Other new products allow for at-home gel manicures that promise a long-lasting sheen free of chips and cracks.

Sleeping Remedies

Supermarkets’ strength within the HBC business is reflected in their sizable share of sleeping remedies sales, which drug stores would be expected to dominate. In the year leading up to June 10, 2012, supermarket sales grew 11.2% to $65.5 million, or about one-third of total food, drug and mass sales, compared with drug stores’ 58.8% share.

While sleeping aid tablets cover the lion’s share of category sales, by far the greatest growth was seen in the sleeping aid liquids segment, which jumped 115.2%.

OTC sleeping remedies should continue to enjoy sales gains, given that, according to the American Sleep Association, approximately 40 million Americans are afflicted by chronic sleep disorders. However, it remains to be seen how much natural alternatives such as herbal supplements will displace traditional OTC remedies. Meanwhile, a recent study found a link between prescription sleeping pills and higher rates of cancer, according to a report in the Los Angeles Times.

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