Grocery retailers give shoppers the opportunity to pick up health and beauty care (HBC) and general merchandise (GM) products in-store while shopping for food. But Progressive Grocer shows that shoppers are putting the bulk of their money toward these HBC and GM items in different channels than grocery. In fact, the 2018 The Power of GM/HBC in Grocery study found that while 80% of U.S. households shop for HBC in grocery stores, 77% of their spend in this area is going toward other channels. For GM products, the numbers were 71% of households compared to 88% of spend going to other channels.
According to the Food Marketing Institute (FMI), these items provide a vast opportunity for grocers to gain more market share. In brick-and-mortar stores, $50 billion is spent per year on HBC and $31 billion per year goes toward GM. This means that grocers can capture some of these sales from competing channels. Additionally, data from FMI shows that 69% of shoppers would buy more of these products in-store with more promotions, 45% with improved organization and 60% if they had more options.
Grocers can use this knowledge and the following best practices to improve the marketing and sales of their HBC/GM products.
How Grocers Can Overcome Challenges in the HBC/GM Categories
While there are growth opportunities for grocers in HBC/GM categories, there are also challenges to overcome. They face competition from other channels, but also from what’s considered the “e-commerce threat.” Growth in the e-commerce channel is a top contributor to declining HBC/GM sales in grocery stores. More specifically, Nielsen shows that 43% of GM sales take place through e-commerce today.
To compete with online shopping, grocers need to understand what motivates shoppers to visit physical stores and market to these motivations. According to the aforementioned study, these factors include:
- Coupons or deals
- New products
- Lower prices
5 Strategies From Winning Grocery Retailers
Some “winning” grocery retailers are showing that it’s possible to gain market share in HBC/GM areas. The same study found that successful retailers were able to increase HBC sales by 5.3% in 2017 compared to the retailer average growth of 1.5%. With GM products, the top performers were able to achieve 7.4% growth compared to the retailer average growth of 0.1%.
One way these grocers succeed is by focusing on certain types of products. For HBC products, the top categories for higher sales include cold/allergy/sinus tablets (11%), vitamins (9.8%) and toothpaste (5.8%), explains Progressive Grocer. For GM, these include culinary (32.3%), office products (14.2%) and foil pans (12.5%).
Grocery retailers can follow certain strategies to aim for similar success as top performers:
The top performers promote their HBC/GM products more often. Grocers do not need to offer deep discounts, but simply to increase the amount and visibility of promotions. Overall, 69% of consumers say they would shop more in stores if they had more promotions. The key to getting shoppers to buy more HBC/GM is to run promotions based on themes or regimens (such as oral care or flu season). This lets them know the store is committed to this area of business, and it drives awareness of which products are available in the store.
While grocers should avoid offering discounted prices, they should strive to stay competitive in both brick-and-mortar and e-commerce channels to capture more HBC/GM sales. They need to match the prices of other channels and beat those of other grocers, aiming to gain market share from other retailers. This can help drive shoppers into the store and capture purchases from competing grocers.
Cross-merchandising is a strategy that can help put a product in front of a shopper to increase sales. In the case of HBC products, these tend to stay in one section of the store, so the grocer needs to attract shoppers to that section. They can achieve this goal through increased promotions and end caps that create awareness and draw attention.
On the other hand, GM products can be placed throughout the store in high-traffic areas where shoppers will find them while looking at other products. They can be displayed along with complementary products, included within seasonal themes and added to secondary locations where shoppers will be drawn to them.
Progressive Grocer shows that more than 50% of shoppers visit the perimeter of the store on a weekly basis, while only about 20% shop HBC and GM each week. Grocers need to create destinations and disrupt shoppers’ normal path to drive them to these products.
The leading grocery retailers tend to have a wider assortment of products within key categories they choose. These categories tend to focus on trending segments, such as organic, environmentally friendly and multicultural. This is also another strategy for attracting more shoppers into the store to purchase HBC/GM products, as 60% of them are willing to visit grocers that have a better selection.
One of the reasons HBC and GM departments suffer is because of a lack of dedicated staffing. The key is to improve staffing within management and buying for these departments, as well as in-store staffing for merchandising, customer service and education. More staff can help drive other initiatives, like cross-merchandising and aisle organization, as well as provide additional support for those shopping HBC or GM.
Try these quick tips to maximize grocery HBC/GM product sales:
- Enhance the in-store shopping experience through increased promotions, improved aisle organization and a better selection.
- Promote HBC/GM items to get on the shopping list, as 75% of shoppers decide at home to shop in these categories.
- Price competitively to match or beat other retailers.
- Drive traffic to HBC products via promotions, while placing GM products in front of shoppers through cross-merchandising with complementary items.
HBC and GM sales have been declining for grocery retailers, yet there is opportunity for them to increase their sales and gain a portion of the market share. They face competition from other channels, grocers and e-commerce stores, but they can overcome these challenges with key strategies such as using promotions to create awareness, directing shoppers toward these items in the stores and increasing staffing for these segments. Implement these tactics to better market HBC/GM products, thus increasing your overall grocery sales.