General Merchandise

A Growing Opportunity for Private Label Brands

Consumers seek options, larger pack sizes for HBC products

OAKBROOK TERRACE, Ill. -- As more consumers prioritize value in their purchase decisions, a noticeable shift has occurred in how convenience-store customers shop for over-the-counter medications. And for retailers, this shift in consumer behavior can be profitable—if you introduce your c-store as a destination for health-and-beauty-care needs and your product assortment offers the value that shoppers seek.

Lil' Drug Store's take-home packaging

Market Trends Spell Opportunity

Consumer interest in value products has grown significantly since the recession hit in 2008, in large part because private-label products offer a 28% price reduction from brand names, according to Chicago-based research firm IRI. And even though the economy has recovered over the last few years, 40% of consumers still remain financially challenged, said Susan Viamari, editor of IRI Times & Trends, in a recent webinar hosted by IRI.

The increased acceptance of private-label brands against national brands has also led to more opportunities for growth in the c-store sector. Nowadays, 75% of North American shoppers believe private label is a good alternative to name brands, according to the Nielsen Global Private Label Survey from the first quarter of 2014. Likewise, according to The Harris Poll Name Brands vs. Store Brands conducted in February, 60% of Americans regularly purchase private-label products when shopping for OTC medications.

This research, coupled with the fact that private-label brands only take up a small share of the market, suggests that c-stores could easily grow their health-and-beauty-care (HBC) business by offering value alternatives in convenient sizes. According to ACNielsen, private-label HBC product sales comprised 17% of All Outlet (xAOC) dollar sales last year. However, private label currently only accounts for 3% of HBC sales in the convenience channel. As a result, there’s ripe opportunity in the c-store channel to boost sales of value-based products such as private-label HBC medications.

Changing Consumer Demands

The profile of convenience-channel shoppers is changing, as well. Research shows that 32% of HBC-product purchasers at c-stores are routine shoppers that tend to be young, male, urban professionals with above-average income and a very busy schedule; thus, they treat convenience stores as one-stop shops, said Doug Marquardt, director of marketing for Lil’ Drug Store Products Inc., based in Cedar Rapids, Iowa.

“Contrary to the traditional view of convenience-channel shoppers, there is a growing group of routine shoppers who view c-stores as a stock-up destination and are looking to them for more of the HBC products they need,” Marquardt said.

To cater to consumers interested in value and stocking up, Lil’ Drug Store Products recently introduced larger pack sizes of HBC products that offer value compared to national brands found at pharmacies or grocery stores. More consumers in general have accepted private-label brands, hence the reason for providing more choices on the HBC shelf in c-stores.

“Consumers know that many private-label HBC products contain the same active ingredients as national brands, so they trust private label will provide effective relief,” Marquardt said. “During the last six or seven years when the economy was tight, more people were willing to try those brands because of their lower price point. Now they’re sticking with them because they know they work well.”

Click here for more information about Lil’ Drug Store’s private-label products and services.

This post is sponsored by Lil Drug Store Products

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