HOW PRETTY IS THE HBC PICTURE FOR DRUG CHAINS?

CHRISTINA VEIDERS

TUCSON, Ariz. -- Fifty percent of consumers frequently shop drug chains for their over-the-counter medicines, while 41% regularly shop mass merchandisers for their personal care needs, according to a new survey by Gallup Organization, Princeton, N.J. While it's not surprising that supermarkets were ranked as the most favored source for food (94%), beverages (79%) and snacks (74%) by shoppers, the question remains as to health and beauty care's importance within the food channel.

During the Private Label Manufacturers Association Annual Meeting and Leadership Conference here, Brian Sharoff, president of PLMA, New York, spoke with SN about some of Gallup's findings and what they mean to HBC.

The report, "Inside Today's Stores: How Consumers Rate Retail Formats and the Store Brands They Sell," was commissioned by PLMA to study key consumer attitudes toward retailer trends affecting the private-label industry. It was released at the PLMA conference.

The findings revealed that consumers like to regularly patronize five shopping formats (supermarkets, discounters, drug, club and convenience stores), but for specific shopping needs. "Each of the formats has a very specific role to play," said Sharoff. "Consumers understand where they go for what product. Depending upon whether they are mostly price-sensitive or one-stop shopping sensitive, consumers will make some of those purchases [HBC] in supermarkets," he added.

Sharoff said chains in various formats are caught up in "competing and conflicting philosophies of merchandising" that have yet to be reconciled. Either a chain will return to its core competence or compete in a broad spectrum of categories, he said.

Supermarkets are leaning more toward food, especially in response to the pressure from fast food chains. "We are now talking meal solutions," he said. That has become a destination, while HBC in supermarkets is not viewed as a destination category by the consumer, said Sharoff.

What this means for the HBC department is that it becomes "somewhat less important than expanding new categories of edibles," he told SN.

But this doesn't negate supermarkets from competing in the HBC arena. "If supermarkets can offer the same diversity of products as drug chains, maintain the price differential as the drug chains, and offer it because of the convenience of one-stop shopping, than supermarkets can maintain their HBC share," Sharoff said.

The opportunity lies in supermarkets' ability to identify themselves through store brands in health and beauty care, said Sharoff. In a report to nearly 200 manufacturers attending this year's conference, Sharoff showed statistics that store brands were up in all three major channels. Store brands in HBC grew last year at supermarkets to represent 9.2% of the department's dollar volume and 12.5% of its unit volume.