November 2005
Distribution Channels, Marketplace

Despite challenging times, HBC category rolls on (by Joanne Friedrick)
From dental and personal care items to vitamins and cold remedies, the health and beauty care section is a wide-ranging one and presents a host of challenges and opportunities for manufacturers, distributors and retailers.

One recent challenge has come from the series of measures taken at the local, state and now federal level to keep products containing pseudoephedrine off the shelves of convenience stores and behind the counter of drug stores.  PSE-based products have been used in the manufacturing of the drug methamphetamine.

The loss of cough, cold, allergy and sinus (CCAS) medications containing PSE has been a major blow to the category, says Jim Groves, president of Convenience Valet.  The CCAS category accounts for nearly 25 percent of Convenience Valet’s c-store business, he notes.  And while many products are being reformulated, “you won’t see a full range until next year,” explains Groves.

Groves says his company’s website contains a section outlining each state’s regulations regarding the sale of PSE products and it is updated daily.  Some states have changed their rules as many as three times within a year, making it difficult for c-store retailers and distributors to keep up with what is required.  “We took it upon ourselves to invest the time, effort and money to put into our website,” he says, “and retailers and distributors are grateful to have one source to go to.”

While Groves says this is a challenging time, especially as retailers head into the peak of cold and allergy seasons, the exit of PSE products from stores has presented an opportunity for retailers to rethink their HBC sets.

“What this means is each c-store needs to be reset and replanogrammed,” says Groves.  His company assists with this effort, using not only its own products, but any others a retailer may carry.

What Groves doesn’t want to see happen is distributors or retailers just drop cold and allergy items from their HBC product mix.

Traditionally these products have been top sellers, says Groves, along with analgesics and stomach remedies.  Rather than exiting the category, Groves says stores need to look for viable substitutions, of which there are many.  “They should make sets as clean and neat as possible.” He says, and use lots of reformulated products. 

Groves says he believes a federal standard on PSE products, as has been put forth in a Senate bill, “will be easier for all of us to deal with.”

Lil’ Drug Store Products, Inc., which distributes convenience-size over-the-counter drugs to various channels, is dealing with the crack-down on PSE-based products by introducing its own line of convenience-size cough, cold and allergy products that are made with phenylephrine, which can’t be used in the manufacturing of meth.

“By making these items available,” says Paul Rossberger, vice president of convenience sales and marketing at Lil’ Drug Store, in a prepared release, “we can provide consumers with they type of relief they expect to find at the shelf as well as minimize disruptions to retailers who are unable to sell PSE items.”

The Lil’ Drug Store line of PSE-free cough, cold and allergy medications are sold in pouches containing two pills each with three pouches per package.

In the meantime, Groves says it’s important “to recognize there is still opportunity in this category, but we have to manage it better.”  He says in addition to strong sales from analgesics, cold and allergy and stomach remedies, the category also gets support from the sale of condoms and lip therapy items.  Having less of an impact, he says, are toiletries, which have succumbed to competition from discount chains and other outlets.

Manufacturers targeting the personal grooming area are doing so with a combination of brand-name items as well as value-priced products aimed at more price-conscious consumers.

Bruce Bartolucci, national customer development manager-shavers at BIC Consumer Products USA, a division of BIC USA, notes that BIC offers a variety of triple-blade shavers to the convenience channel, as well as its original single-blade shaver.

“At convenience stores, the products that are carried are determined by a few factors such as the convenience of the product, how quickly it sells and the overall consumer appeal of the product,” he says.

Of course, Bartolucci says, attention-getting displays and packaging are always helpful when creating sales opportunities, including in the HBC category.  He says an example is the packaging for BIC’s Soliel shaver, “with its eye-catching colors and transparent packaging that clearly shows the product and its premium features.”

With the growth of the dollar stores and the continuing rise of value-oriented Wal-Mart, Gregg Cevallos, owner of Premium Products, says the convenience store channel is watching costs and retail prices.  That has opened the door for price-oriented products that still are of good quality, says Cevallos, who offers a line of dental care products and is soon to launch a shaving razor line.

“Consumers have so many shopping options,” he says, “everyone is trying to get an advantage.”  Having a 99-cent line next to the branded products that retail for $2 or more, gives customers another choice, he says.

Cevallos agrees that packaging needs to be a focal point because customers can’t experience the product in store.  “If they look at a toothbrush on a shelf, they won’t know the quality until they use it,” he says.  “So packaging is extremely important.  It needs to be inviting and practical; not too complicated.”

Also important is offering display options because stores may be merchandising their HBC products in a variety of ways or within different areas of the store.

Premier Products offers a display base for its toothbrushes, as well as making them peggable.  While Cevallos acknowledges that many stores have created an HBC section, he says the products can also be an impulse item that would do well at the checkout counter.  He says one retailer told him the majority of his toothbrushes were sold between 2 a.m. and 6 a.m.  “That was surprising to me,” Cevallos says, “but he’s in an area with an active nightlife.”

The category of diet aids and energy products has been a growing one with the c-store channel, especially among impulse shoppers.

Laura King, vice president-marketing at BDI Marketing/Candy Dynamics, says her company offers an “extensive line of diet aids, energizers, sexual enhancers and asthma relief products.

“All of our products do very well within the c-store channel because they appeal to the convenience-oriented consumer who shops on impulse,” she explains.  “One product line in particular that does the best is our energy category.  Consumers in the c-store industry are always looking for a quick boost of energy to get them through their days.”

Kind agrees that grabbing the attention of shoppers is key to building sales.  “We market our products within their own point-of-purchase displays.  We recognize the importance of shelf space, so we do our best to place much emphasis on this subject during the product development stages,” she says.

Products from BDI are merchandised in pink plexi-glass displays, “which help attract consumers to the category,” says King.  “We also offer window signage to help drive traffic to the product line.”