General Merchandise

General Merchandise: College Prep

How four campuses are selling more in the HBC aisle

The convenience-store business at Vanderbilt University is big, generating 42% of all revenue for the dining department, under which c-stores fall. And while five of the six Varsity Market stores have extensive, sophisticated foodservice offerings—a hallmark of campus life at Nashville-based Vanderbilt—the health and beauty care (HBC) sections generate a decent 3% to 5% of total sales.

Such is the case for many campus convenience stores, where HBC is also a part of many students’ campus lives.

The key to the category’s success for Spiros Vergatos, assistant director of campus markets for Vanderbilt, is that the items are small and well-priced.

“Single-dose packs of things like Advil and Tylenol for 99 cents are the big sellers,” he says. “In the past, we’ve sold the larger bottles, but the prices are ridiculous and a regular student customer would just see the huge price.”

There are a few larger products—Listerine and toothpaste, for example—but Vergatos strives to maintain lower margins in order to keep them within financial reach. The single-dose packs have much higher margins, though the prices seem low because they’re small. “That affords us to provide items for a quick fix for students so we don’t get that bad rap of kicking them while they’re down,” he says.

It’s a different picture at Michigan State University in East Lansing, which carries mostly larger-size HBC products in its 20 Sparty’s convenience stores.

“They’re a better value,” says Dennis Meersdom, convenience-store operations manager, who points out that products such as facial tissue and analgesics also come in smaller packs. “And we make the pricing very comfortable. Our standard margin is about 30% to 35%, which is very reasonable.”

Meersdom and his staff do price checks with their competitors at least twice a year to make sure they’re competitive.

As is the case at Vanderbilt, the HBC category at Michigan State isn’t a huge part of c-store business, “but it’s an essential part,” Meersdom says. “If you live in a residence hall, the last thing you want to do is to walk off campus.”

HBC is a destination shopping trip, he says, which helps drive other impulse sales. “Students come in for something to take care of a headache or a cold, and while they’re here they buy some soup, or their

favorite candy,” Meersdom says. “When students aren’t feeling well, they’re in that ‘Let’s treat me’ mood. And we are in the business of making our students feel better—in one form or another—helping with their headache or helping them find their favorite food or drink.”

At Colorado State University in Fort Collins, small sizes reign in HBC in the two c-stores that are run under housing and dining services. Shampoo and deodorant are two of the few large products sold; condoms sell very well, with one location even carrying 10 types.

HBC “is there as a convenience,” says Jason Scott, project and program manager for residential dining services, and sales in this category are far outranked by sales of food and beverages.

“These items are more add-ons, as convenience for the students,” Scott says. “We’re not here to make money off these products, and we try to keep our retail prices low.”

Big Sellers on Campus

At the University of Massachusetts at Amherst, the best sellers in the Market stores are toothbrushes, cold/allergy/aspirin medications and feminine products. Everything is offered in small sizes, “because large [sizes] are a little cost-prohibitive for this age group,” says Van Sullivan, director of retail dining. Students come for HBC products when they run out of what their mom has packed them up with, “and they just need us to tide them through,” he says.

The biggest sellers at Michigan State are toothbrushes and toothpaste, followed by cough and cold items, and then shampoo. Skin-care products such as lotions also do well, and hand sanitizer flies off the shelves in three sizes, though the smallest is the most popular and is merchandised from a goldfish bowl by the cash register. “We carry the things people run out of, forget to buy, and lose,” Meersdom says. “We carry emergency things so people don’t have to go off campus.”

The best sellers at Vanderbilt’s Varsity Markets are single-dose painkillers, all-natural shampoos and hair products, and condoms. Condoms do well, in single- and three-packs—even though the school’s health services gives them out for free, Vergatos says.

Condoms sell from the regular shelves at Michigan State, though at one point Meersdom says he considered putting them behind the counter to prevent theft. “But it takes away the privacy,” he says. He also considered putting them in the cashier’s sight line but, again, didn’t because of privacy.

“We need to merchandise our locations for the customers that pay for our products and do the right thing, not for the customers who do the wrong thing,” he says.

Merchandising Matters

Meersdom doesn’t do a lot of seasonal merchandising for HBC at Michigan State, though in the winter months he draws attention to cough and cold items, featuring them on the regular shelf and in smaller sizes on counter displays.

At the University of Massachusetts, Sullivan puts up a sign at the cash register to remind students that stores carry cough and cold products in the winter.

Vergatos changes things up seasonally, such as calling out sleep aids and eye drops in finals week at Vanderbilt, and cough and cold products and vitamin C during flu season.

And when there’s a new item, Vergatos calls attention to it “to give the kids time to see we carry the product,” he says. He typically does this by displaying items on endcaps; with small products such as lip balms, he also uses the checkout counter. “To catch students’ eyes, you want to do an endcap, but you can’t keep it there for too long. After two weeks it becomes like a regular shelf to the customer, so you need to change it up.”

Vergatos uses this marketing to get some deals from his supplier. “I’ll tell the rep I’ll put it on the counter if he gives me a box free,” he says. “Or I’ll do a nice endcap if I get a 50% rebate off my initial order.  Basically I’m selling space.”

At Sparty’s stores, new items simply get a “new item” sign for a short time. As few items as possible are behind the counter at Vanderbilt’s Varsity Markets. “If you put condoms behind the counter, where they have to ask the clerk, you’ll sell fewer,” Vergatos says. “It’s the same when someone is sick: If they have a migraine, they don’t want to talk to someone.

“It’s that small-package mentality,” he says. “We make it as easy as possible for the students to look at it.”

A Natural Beauty

As the demand for natural and organic foods increases, the trend is also permeating the health and  beauty care (HBC) set.

According to a March 2017 report from market research company Mintel, 37% of consumers said they bought more natural and organic products last year than in 2015. Popular items, according to the Chicago-based firm, are hand and body lotion, facial skin care, hair care and body cleansing products.

Vanderbilt University has proof. Through his twice-yearly focus groups, Spiros Vergatos, assistant director of campus markets, has learned that Vanderbilt students are looking for more natural HBC products in the school’s Varsity Markets.

So he has added some locally made natural soaps and also carries shampoos, lip balms, toothpastes, toothbrushes and a line of face masks.

He even has added a line of natural school supplies, featuring pens, folders and other items made from bamboo.

“Very few schools have these products, so they make us seem special and progressive,” he says.

Vergatos doesn’t invest a lot in natural HBC products, usually purchasing only two or three cases and then creating a nice display.

“Even if it bombs, I am not putting a lot of money out there,” he says. He purchases such products through United Natural Foods Inc. instead of his traditional wholesaler. Big sellers are shampoos from Alba and lip balms from Burt’s Bees. “It’s a higher mark on these products, but the students expect that, and you’re not going to find them in a regular c-store.”

Natural and organic HBC products haven’t yet caught on in East Lansing, says Dennis Meersdom, Michigan State University’s convenience-store operations manager, “but I know it’s up and coming. More students are interested in natural foods so it’s logical that they’re seeking out more natural health and beauty products, too.”

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