Got HBC?
Retailers don't need the deep pockets of a CPG giant to develop an innovative store brand health and beauty care program.
When it comes to store brand innovation, retailers — particularly those outside the drugstore channel — often put so much effort into store brand foods and beverages that they neglect to give enough attention to product development on the health and beauty care (HBC) side. But retailers have plenty of opportunity to gain share in the HBC arena. With consumers increasingly accepting of private label food and beverage products, retailers have a chance to convert them over to the HBC side, too.
A healthy program
The health side of HBC might not be as sexy as the skincare or hair care segments, but big opportunities do exist for store brands in this segment. Take the recent recall woes of Johnson & Johnson (J&J). Those cold and pain drug recalls set the stage for store brands to capitalize on the drugs' removal from shelves, according to an August 2010 CNNMoney.com article. Several retailers — including Woonsocket, R.I.-based CVS and Walgreen Co. of Deerfield, 111 — made sure to fill the void with national-brand-equivalent (NBE) items to not only gain share, but also build consumer trust in their store brands.
Moreover, Lou Helfrich, vice president of purchasing for the Boca Raton, Fla.-based Chain Drug Consortium, says J&J's snafu helped benefit the HBC categories beyond over-the-counter.
“That's translated into every category,” he explains. “It's allowed priva;e label better penetration.”
Speaking of items being pulled from shelves, Helfrich says retailers also should consider private labeling products that have been discontinued by the national brands. For example, some retailers began to offer private label glucose tablets after BD stopped manufacturing them.
New formats also spell opportunity. Laureen Schroeder, director of health and beauty for Stamford, Conn.-based broker Daymon Worldwide, says retailers should consider offering vitamins and supplements in easy-to-take forms that have recently become popular, such as gummy, powder and effervescent.
Although store brand first-aid products already boast a high penetration, growth opportunities still can be found. When he approached Walgreens in 2002 with an idea to sell store brand antiseptic skin cleanser (an NBE version of the Hibiclens brand), Hal Burke, national accounts manager with Mount Prospect, 111.-based Xttrium Laboratories, discovered that the retailer's unit sales volume was too small to warrant selling an NBE version. Fast-forward to 2010, and Walgreens was selling quadruple the amount of the Hibiclens product per year, prompting the retailer to roll out an NBE version.
Beauty in the brands
Opportunities also abound on the beauty side. Take hair care, for instance. Helfrich believes retailers could compete against national brand shampoos with store brand medicated shampoos that relieve scalp itching and flaking.
Schroeder also sees opportunities in premium and natural hair products with “free-from” claims. She says she is noticing more store brands that communicate “no parabens,” “no sulfates,” and “no formaldehyde” on packaging, pointing specifically to Kroger's mirra and Safeway's In-Kind brands as examples.
“It is easy to understand by consumers and adds value,” Schroeder says.
Jose Alvarez, vice president of merchandising for Navarro Discount Pharmacy, Miami, adds that the national brands have had strong growth in hair straightening products such as smoothing serums and oils — specifically Keratin and Moroccan oils. He expects these products to have growth potential on the store brand side as well.
Alvarez also points to growth potential in skincare products. For example, Neutrogena introduced a wet-skin sunblock this year, and he believes a store brand version of the product would do well.
For his part, Helfrich says he's seeing retailers releasing more upscale private label products that compete against the L'Oreal, Gamier and Olay Regenerist products on the market. In fact, Chain Drug Consortium is preparing to roll out several high-end SKUs under its Premier Value brand that will retail in smaller, regional chains.
North American retailers also could learn a few skincare tips from their European brothers. Helfrich says European skincare products containing Dead Sea minerals are particularly popular right now.
And Schroeder especially admires PhytoCellTec, a skincare line developed by Swiss retailer Migros. The line incorporates an extract from a Swiss green apple variety called Uttwiler Spätlauber — a variety known for its ability to keep for long periods without shriveling.
On the makeup front, sales of eye cosmetics have been growing on both the national brand and private label fronts, the Mintel report says. Much of the innovation today has been driven by mascaras that make lashes longer, thicker and/or curly — or offer some other benefit.
In the line of sight
No matter how good a product is, if it is out of sight, it is out of mind. Major CPG manufacturers have marketing down — their deep pockets make this possible. Retailers need to be a little more creative to stretch their limited marketing dollars.
Helfrich says the best way to get an HBC product into consumers' hands is by sampling it in-store. This strategy works particularly well with skin creams and body lotions. And if a retailer introduces a new or rebranded product, it should rely on in-store promotions and circulars to “pound away” and get the product in front of the consumer.
“You take Kroger with their mirra brand,” he says, “mirras got to be in their ad every week, mirra's got to be sampled.”
And it's best to have a point of difference from the national brands — and to communicate it, Helfrich notes.
"You've got to be able to have a point of difference on packaging; you've got to be able to point out that difference on circulars; and you've got to be able to point out that difference when you're doing consumer testing and sampling,” he adds.
Properly managed social media and blogs present inexpensive ways to connect millions of consumers with store brand HBC products, Schroeder says.
“The influence of friends, family and online testimonials for these types of products is making a significant difference in how both national brands and store brands go to market,” Schroeder says.