3 Ways to Pump New Life into Your HBC Business
Proven merchandising strategies that increase sales and profit
Brought to you by Lil’ Drug Store Products.
According to the Technomic C-store Market Brief, the ability to get in and out quickly is the most cited reason as to why consumers purchase an item at a convenience store rather than another retailer. So if c-stores can deliver convenience while optimizing other marketing factors, such as product mix and merchandising, they can expect results to follow.
Successful retailers often take a fresh look at the Health and Beauty Care (HBC) assortment and are willing to try new approaches to c-store merchandising strategy. Lil’ Drug Store Products (LDSP), the #1 HBC supplier to the convenience channel, has worked with retailers of all sizes to develop effective category management strategies. LDSP shared three different strategies that delivered the same end-result—increased sales and profits, while maintaining efficiencies that c-store shoppers demand.
Strategy 1: Get In Line
In the first case study, LDSP recommended upgrading from a relatively small assortment of HBC products at the front counter to a permanent inline shelf set. This strategy gave consumers a broader selection of HBC solutions, enabled easier shopping access and increased awareness.
For shoppers coming in for a specific health and beauty item, products were quick and easy to find. The increased visibility and improved access generated incremental sales, as retailers who were not previously thinking to buy HBC products at a c-store were now more aware of the availability of pain relievers, cold and allergy remedies.
Retailers who have employed this strategy not only increased sales, they also exceeded their budgeted gross profit. In one case, a retailer increased profit by 4.5 times in the first year alone.
Strategy 2: Go Big to Go Home
Ask yourself what you want your HBC shelf design to accomplish and then make it happen by using category management best practices. What are the benefits? Lil’ Drug’s experience shows that a well thought out retail planogram strategy can result in increased visual appeal, more effective communication to customers, tightened inventories, improved product positioning within sub-categories and greater productivity within the space.
As an example, LDSP worked with a Top 50 c-store chain to create an HBC shelf schematic that moved larger packs of value brand products from the bottom shelf to eye level on the top shelf. This alignment encouraged some shoppers to trade up to the higher dollar value packs, which contributed to more than 10% category dollar growth for the retailer compared to the channel average 2% category growth versus the prior year.
Strategy 3: Up for the Count
In some channels, giving customers a plethora of product forms, pack sizes and formulations to choose from might be good for business. However, space and time is more limited in c-stores so multiple consumer options may not be feasible. Offering too many choices can sometimes be confusing to consumers and makes the HBC category more difficult to shop. Therefore, it is important for the c-store retailer to focus the assortment on the most productive SKUs.
In this third case study, LDSP recommended that a regional c-store chain eliminate middle tier price points. The retailer concentrated on meeting the needs of the price conscious and value oriented shoppers. The absence of a middle price point did not deter shoppers from trading up to higher dollar ring, multi-dose options. In fact, this retailer gained more than 20% dollar growth after eliminating the middle price point SKU while unit sales remained unchanged compared to the prior year.
C-store retailers have limited space, so it can sometimes be a challenge to increase sales and profits. Fortunately, several tried and true merchandising strategies simply require a different perspective to generate growth. Consider trying one of the proven techniques described above to increase HBC sales and profit at your stores.