Frequent promotions and competitive pricing are among the top strategies grocery retailers use to drive growth in the health and beauty care and general merchandise categories, according to a new report by Acosta and Food Marketing Institute (FMI).
The second annual The Power of GM and HBC in Grocery report reveals that more than $80 billion combined are spent each year across the HBC and GM departments in brick-and-mortar stores, but consumers are mostly shopping these categories across other channels.
In an industry that’s rife with challenges, HBC and GM departments can offer high development opportunities for grocery retailers, drawing key shopper demographics and high-ticket-value visits. The new report from Acosta and FMI, released on Aug. 20, offers insights into the industry, including emerging trends and strategies to help grocers grow their businesses.
“In an industry that’s rapidly changing, we want to consider hot GM/HBC categories will transform to create new experiences for customers and a profit center for food retailers,” FMI Director of Industry Relations and Development Peter Collins said in a statement. “Fundamentally, Acosta is helping us take the mystery out of what’s hindering the success of GM/HBC products in traditional grocery.”
Cold/allergy/sinus tablets was the top category for increased HBC sales at 11%, according to the report, followed by vitamins (9.8%) and toothpaste (5.8%), while top categories for increased GM sales were culinary (32.3%), office products (14.2%) and foil pans (12.5%).
To drive HBC and GM category growth, the report found several strategy consistencies among top retailers, including promotions and competitive pricing. Based on these findings, the report suggests grocers promote more often—not necessarily to provide deeper discounts, but to utilize promotions to drive shopper awareness of the products—and to remain competitive with pricing, matching those of other channels and offering lower prices compared to other grocers.
Additional tips from the report include:
- With HBC grouped together in one location, focus on driving traffic to the department by promoting frequently for awareness, instituting prominent “consumer solution” end-cap displays and offering front-page feature support.
- With GM products dispersed throughout the store, focus on bringing the department to the traffic by cross merchandising with complementary products, creating secondary locations and capitalizing on seasonal themes.
“It may come as no surprise that e-commerce continues to be a major challenge for traditional retailers, but the other key trend we are seeing is not as predictable—millennials represent a larger opportunity for in-store purchases, with higher reported buying rates in grocery stores than any other generation,” said John Clevenger, managing director and SVP of Strategic Advisors for Acosta. “To be successful in increasing GM/HBC revenue, retailers need to create disruption in-store—more than 50% of shoppers shop the perimeter of the store weekly, compared to about 20% who shop HBC and GM each week.”
The second edition of The Power of GM and HBC in Grocery was completed using analysis and custom research conducted by Acosta’s Strategic Advisors, in partnership with FMI.