Give the customer what they want.
It’s a fairly simple mantra that covers just about everything in the c-store, from candy to chips, motor oil to milk. It becomes an even more vital rule of thumb when you consider the complex HBC category. The vast diversity of products often makes stocking and merchandising a complicated venture.
“An ongoing concern is how c-stores can provide greater convenience, given the huge diversity of products that the typical store has to stock, particularly in the complex HBC category,” says Paul Rossberger, vice president of sales and marketing for Lil’ Drug Store Products, Cedar Rapids, Iowa. “The answer is not to be overwhelmed by the diversity of products available, but instead to zero in on the products that consumers really want.”
The most basic goal, then, would be to keep it simple: Offer customers only what they need and cut down the clutter in what could easily become a crowded category. Category management 101 would then suggest carrying the top sellers. But much like the weather, forecasting customers’ needs in HBC can vary day to day and season to season.
As this story came together in early January, the temperature without wind chill was 15 degrees below zero. And yet the forecast was calling for above-freezing temps by the weekend. What’s a retailer to do? Rossberger advises retailers not to get caught up in the moment. “Although it’s tough to guess the weather, warmer-than-average winter temperatures nationwide the past several years have meant an earlier and longer pollen season, with increased consumer demand for over-the-counter allergy relief products,” he says.
When Good Is Bad
According to data supplied by IMS Health, Plymouth Meeting, Pa., the fourth quarter of last year has been 10% better for consumers (or worse, depending on your point of view) than the previous year, meaning we are collectively 10% healthier. IMS predicts that the first quarter will bring a “peak” in illness, but a lighter one than last year, when many people suffered from the particularly nasty H3N1 virus. This year will favor the healthy: It appears all viruses in circulation are covered by the current flu vaccine, the company says.
“When they had the new flu strain [last year], we actually saw an uptick in our cold, flu and allergy products because people that don’t have health care sometimes try to medicate over the counter,” says Tom LaManna of Convenience Valet, Melrose Park, Ill. “What other choice do they have?”
And don’t forget allergy season. According to IMS, mid-December marked 45-50 weeks into the year, and the trend was down 2.8% compared to the same week last year. Only one out of 109 markets remained classified in allergy alert status.
“We monitor the CDC predictions,” LaManna says, “especially for allergy. Because not only do we think that will have an impact on our sales … but when we meet with the retailers, it’s always the cold, flu, sinus and allergy [products] that we keep in top-of-mind awareness as a display.”
Put another way, no matter the pendulum of weather, there are sacred seasonal truths. “Allergy relief in the spring, outdoor skin-care protection in summer and on-demand trial sizes for both,” says Rossberger. “Of course, whatever the season there will continue to be strong demand for the top-selling HBC staples in analgesics and gastrointestinal relief.”
Front and Center
Proper category management of HBC can be a challenge for retailers of any size. But doing the research and making the tough choices about what to sell and where can mean big payoffs.
“The top 10 HBC subcategories make up over 80% of total dollar sales in this category,” Rossberger says. “The basic message is simple: Rather than trying to be all things to all customers, the truly profitable store should not be complicated, confused or cluttered, but focus on the top movers in national and value brands.”
In the summer, it’s also important to remember that there could be more flying off the shelves than just allergy medication. Families on road trips or beach vacations will need travel-friendly HBC “essentials” such as sunscreen and lip balm. These items should be placed in easy-to-shop locations favorable to impulse purchasing.
“Use displays to create ‘points of interruptions’ in primary traffic flow or at the sales counter,” LaManna says. “Small-footprint secondary displays of the best-selling name brand cold/flu and allergy/sinus OTC medications during the cold/flu and allergy/sinus seasons will help maximize sales. By carrying the best-selling SKUs, the retailer has an easy exit strategy by incorporating the SKUs into their in-line set at the end of the season.”
Questioning Category Management
Independent retailer Sam Odeh switches up HBC merchandising at his Power Market store in Elmhurst, Ill., to give better play to higher-margin items.
Before
All HBC items were displayed behind the counter, at customers’ eye level. Stock was more numerous and more varied depending on the season. Despite the higher billing, he says he had “low sales and diminished demands from consumers to the HBC products due to mass merchandisers and national drug chains in the marketplace.”
After
Regardless of the season, his stock remains static. He removed all HBC to the backbar area and the lower shelves of a fixture that also houses tobacco, placing more tobacco product in the area previously held by HBC. Because of dwindling inventory, Odeh had to move HBC from in-store merchandising to a limited cashier area around tobacco merchandisers. But he’s not giving up hope: “We look forward to some involvement from the HBC companies to bring attention and direction to the current state [of HBC] in our stores.”
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