Australian Convenience Store News - Health and Beauty - Health & Beauty - the 'must-haves' of convenience retailing

ith the face of retailing changing, suppliers are now taking notice and tailoring marketing and display strategies for the convenience of your customers.

Health & Beauty products account for less than 1% of shop sales , while taking up considerably more space. So, why bother?

· Core health and beauty products are 'must-haves' for your store to warrant the name 'convenience'.
· Margins average a healthy 35%.

Most sales in this category are 'top-up' and 'emergency' purchases - items your customers usually purchase from the supermarket in their weekly grocery shopping spree. Just wander down the aisles of your nearest large supermarket to see the amazing range of products and SKUs within product lines that sit in this category. The challenge is what to stock?

Product choice partly depends on location - demographics of the area and mix of traffic, size of store and space available. Everyone's list of basics will vary, but based on interviews with a number of industry players, here is our list - the core product lines the customer expects to find on the shelf:

Stock premium brands and market leaders

Returns are enhanced by stocking the market leaders and premium branded lines. For example, Paul Patelis, Senior Category Manager for Kimberly-Clark Australia, recommends stocking a small range of premium paper-based products:

"Kleenex® has 55% market share in facial tissues, follow by Sorbent with 20%," said Paul Patelis, "Pocket packs are ideal convenience products, and LITTLE TRAVELLERS® and Soft Packs are popular for the car glove box. For the winter season, retailers should include the EXTRAcare range. This year, a Eucalyptus pocket pack joins the popular Aloe Vera and a new pocket pack counter display unit is available from Kimberly-Clark. Extra care facial tissues are now 19% of the total market."

Historically, suppliers have left the category in the hands of the distributors. However, as the convenience store expands its position in retailing, some suppliers are starting to take more notice of the channel, and are targeting their advertising, display and distribution accordingly.

1 Australian Association of Convenience Stores, State of the C-Store Industry 2001.

"For Gillette, the channel is now more attractive because of changes in the way people shop. They shop all hours and are looking for premium products in all retail outlets," said Cameron Bruce, Senior Product Manager Grooming, "Therefore, Gillette has changed its strategy and is developing a category management focus. We are implementing plannograms with accounts such as Shell and Mobil. These are category plannograms for the networks and include competitor product where applicable. However, Gillette will be a major supplier of razors, blades, shave creams and gels in both male and female ranges. The convenience channel is a market opportunity to be developed over time across the Gillette range.

"The grocery market for blades is 60% systems and 40% disposables. Gillette is the clear market leader with overall value market share of 64% of all blades. It has 80% share of systems refills, nearly 40% of which is Mac III, and 43.2% of disposables. Sales of systems blades are growing faster partly because that is where the best technology is. They are also more profitable for the retailer.

"Last year, we launched the first shaving system specifically designed for women, called Venus. Within 10 months it accounted for 10% of Gillette's total sales of systems blades. The target market is the younger (18-29) age group which suits the C-store demographic. We will be launching Venus Crystal, a new fashion colour in September to maintain the interest level."

Headache tablets, an old faithful

It may be a headache for the retailer that most Health & Beauty products have low turnover, but there are exceptions, and one of those is Panadol. It is Glaxo SmithKline's largest selling product in the route channel. Panadol Tablets (either 12s or 24s) is the core product unit for the route channel," said Elliot Humphreys, Trade Category Manager Analgesics, "The 24s provide a better return, but the 12s are a better price point for the customer who is usually buying in an emergency to relieve a current condition rather than stocking the bathroom cabinet. We supply a 12 pack dispenser pack for Tablets designed for the channel which can hang up in an aisle or be placed on a shelf.

"Based on route channel sales volume and the performance of Mini Caps in grocery, the variants in the Panadol range are ranked:

"Panadol Mini Caps are new to the route channel but are selling well in grocery. Customers like them because they are small and easy to swallow - they are convenient to use. They also attract a higher price, 60 cents more per pack."

Although Panadol is the most popular paracetamol product, stores need to stock an aspirin product such as Disprin or AsproClear. The older demographic prefers aspirin, and some customers want a soluble pain reliever.

And new products

Another of Glaxo SmithKline's well-known brands, Zovirax, is now being distributed to convenience stores. Restricted to pharmacies until 1 June 2002, Zovirax is the market leader in cold sore treatments in the pharmacy channel with 48% market share. "Zovirax is a perfect convenience store product," said Melissa Doherty, Trade Category Manager with Glaxo SmithKline, "As soon as symptoms appear customers need to find the product quickly. Our television advertising campaign starting in August will emphasise that the product is now available in supermarkets and convenience stores. It will direct consumers to the channel.

"The most popular unit is the tube which accounts for 70% of sales, however the pump pack which sells for $1.50 more, is more convenient. Zovirax can be displayed in clip strips, and is best in a prominent area which will also prompt users to buy a tube to keep in the car or office. The peak seasons are summer when the ultraviolet light stimulates the virus and winter when people are a bit rundown. This year, in particular, we are keen to have the clip strip near the counter to raise consumer awareness of its availability. This will be enhanced by the new bright foil packaging."

Suncare products also sell well when positioned to remind customers that they need them. Australian consumers have a very high awareness of the skin cancer threat and nearly everybody uses a SUNSCREEN. But, people forget to stock up for summer, and on the first hot weekend they go looking in the nearest outlet. People who work outdoors tend to be both mobile and high users of sunscreen which is now a tax deductible purchase for some employment categories.

"The main season is between October and February when high SPF lines are popular. Lower SPFs can sell well early in the season. The suncare range is best located on a separate stand that can be managed for seasonal variations," said Craig Irwin, Marketing Manager Consumer Products with Mayne Health, "We recommend a range of sunscreens with SPF 30s and one or two with lower SPFs and at least one lip balm."

"We launched the Banta brand two years ago, and it now has 15% of the grocery sunscreen market, and peaked at number three in market share. We are targeting the convenience channel for further growth - there was a Mayne Health suncare stand in all Shell outlets last summer - and our clear gel and spray products are ideal for the channel because they are convenient products. The main complaint consumers have is that sunscreen is greasy, sticky and shows white. The Banta clear gel and spray products dry on the skin. They are ideal for playing sports such as tennis and golf. We spent $1m on advertising last year and will spend the same again this year. There will be promotional support in the form of sampling at beaches, sports events, and outdoor events such as beach volleyball championships."

LIP BALMS tend to sell all year round. It is an impulse purchase, and people have more than one on the go at once. "It's the type of product that if you put it in front of people they'll buy it," said Melissa Doherty, "In winter cold winds and chapped lips prompt a purchase, and in summer the SPF 30+ variant of LIP-EZE which is endorsed by the Skin and Cancer Foundation sells well."

The suncare range includes SUNGLASSES, and Red Imports' polarised range is finding a ready market. "Our basic product with a UV lens sells for $15, but we have found the customer is happy to go to $20 for a polarised lens," said Matthew Donovan, Director, Red Imports, "Our range based on fashion trends appeals to the 15-25 age group. We have found that 50% of purchasers are already wearing sunglasses. They are just looking for something new and different such as bright colours. Some buyers have half a dozen pairs. We are at the sharp end of the market, and our volume growth is 20% pa. Red Imports has 50% market share in convenience store channel, and has stands in surf shops, chemists, tourist shops, and variety stores.

"Sunglasses compete with other impulse buys. The stand needs to be visually exciting with contemporary products. Our multi-function display unit is ideal for the convenience and route channel. It uses only one square metre of space, and can retail a dozen products. The basic display has 80 UV lens sunglasses (the $15 range) on one side and 80 polarised lens sunglasses ($20) on the other. We can add extra products, including safety glasses, reading glasses, sunscreen, hats, lip glosses, watches and straps. To make life easier for the retailer, Red Imports retains ownership of the stand and restocks regularly, and supplies on a sale or return basis, replacing breakages.

Protection of another kind

Another 'must-have' product is condoms. Sales through pharmacies are falling and supermarkets and convenience stores are now the preferred locations. Customers are not so easily embarrassed these days, and the health imperative has not gone away. The nature of the product suits accessible stores open 24 hours.

The market leader in grocery is Ansell with 61%. However, sales of Four Seasons (21% market share) are growing at over 30% per annum brand driven by new products and advertising. "We are targeting the convenience channel with radio advertising on Friday and Saturday nights when young people are getting ready to go out," said Daniel Walker, National Sales Manager with Australian Therapeutic Supplies, "This demographic also responds well to innovations such as our Glow-in-the-Dark range - a fun concept but still a registered therapeutic device.

"In convenience stores, packs of 3 and 6 are the best sellers. The price is right at ~$5. The range should include variants such as different sizes. Retailers should also consider stocking a lubricant as well. Surveys indicate that 50% of condom users also use lubricant. Four seasons provide two free lubricant sachets as samples in their condom packs, as part of cross-marketing strategy, and we also supply a Glow-in-the-dark tube."