Spotlight on OTC remedies

Todays educated and cost-conscious consumers increasingly are choosing private label over-the-counter (OTC) medications instead of more-expensive national brands, according to a new qualitative research study from Market Strategies International, Livonia, Mich. But many consumers are willing to spend more money on national brands when they are faced with urgent conditions such as severe flu or cold symptoms or diarrhea – or need a pediatric remedy – says Barbara Deradorian, senior vice president of the companys Healthcare Division.

\"While they cant pinpoint what makes a name brand better in these situations, theyre still willing to spend more to ensure that they get the best possible results,\" she adds.

It stands to reason that trust-building efforts on the part of retailers could help improve the fate of store brands within these OTC subcategories with higher-than-average national brand loyalty – and overall. And merchandising could play a critical role in such efforts.

We visited three retailers in Scottsdale, Ariz., to see what they are doing to make their own-brand OTC products stand out: a Frys Food store (operated by Kroger Co., Cincinnati), a Safeway store (operated by Pleasanton, Calif.-based Safeway Inc.) and a Bashas store (operated by Chandler, Ariz.-based Bashas). Our visits took place during the afternoon of Tuesday, Sept. 17.

The numerous large yellow tags the Safeway store placed in front of Safeway supplement products could create confusion instead of working to call out the sale.

Safeway
General observations: The OTC section in the Safeway store is situated slightly to the left of the stores center (looking into the store from the front entrance). The section takes up almost a whole side of a long aisle, with pain relievers toward the front of the store, vitamins and supplements toward the rear of the store, and the other OTC products stocked between those anchors. Safeway brand equivalents were available in most subcategories and for the most popular brands and, for the most part, were placed to the right of the national brand equivalents.

The section was neat and well-stocked. Foot traffic was moderate during our early afternoon visit.

The upside:

• Numerous national brand products were on sale, but the sale prices didnt fall below those of the Safeway brand equivalents, even when the store brand products were not on promotion.
• In the supplement section, Safeway brand products not only are plentiful, but also are merchandised in a block-type format that gives the brand a strong presence in the section.

The downside:

• The store was running a buy-one-get-one-free Club Card savings promotion on a number of Safeway brand and national brand supplements. But the numerous large yellow tags placed in front of the products could create confusion instead of working to call out the sale.
• Two large signs extending from the shelves marketed the Pepcid and Advil brands, but we saw no signage related to the Safeway brand.

At the Frys Food store, a large sign protruding from a shelf marketed the new Kroger Arthritis Pain Relief product.

Frys Food
General observations: The OTC section in the Frys Food store is situated in an aisle toward the right of the store (looking into the store from the front entrance); the pharmacy is located directly in front of the aisle. The section takes up approximately three-quarters of the long aisle, with pain relievers and cough and cold remedies toward the front of the store, gastrointestinal remedies toward the back of the store, and the other OTC products stocked in between. The store offers Kroger brand equivalents in most subcategories and for all of the popular national brands. Placement of store brand products, in general, is to the right of the national brand equivalents.

The section was neat, but not well-stocked. Foot traffic was fairly heavy during our mid-afternoon visit.

The upside:

• A number of national brand products were on sale, but the sale prices didnt fall below those of the Kroger brand equivalents, even when the store brand products were not on promotion. And in some cases, the store was shadowing the national brand promotion with its store brand equivalent.
• Sale signage was bright, well-spaced and easy to read, drawing shoppers attention to the shelf.
• In some cases, the Kroger brand is given more
• facings than the national brand equivalent.
• We saw two OTC displays. One of them was a wing attached to the end of the aisle that displayed a Kroger Nighttime Sleep Aid product.
• A large sign protruding from a shelf marketed the new Kroger Arthritis Pain Relief product.

The downside:

• A number of facings – for both Kroger brand and national brand products – were empty.

In some subcategories, the Bashas store gives own-brand products more facings than it gives the equivalent national brands.

Bashas
General observations: The OTC section in the Bashas store is situated in an aisle toward the back left-hand side of the store (looking into the store from the front entrance); the pharmacy is located directly behind it. The section takes up part of both sides of the aisle, with the vitamins and supplements on one side and the remaining OTC products on the other side.

The store offers Top Care OTC equivalents (from Elk Grove Village, Ill.-based Topco Associates) in most subcategories and for the most popular brands. It also offers Topcos Full Circle natural and organic brand within the supplement space. For the most part, the store brand products are placed to the right of their national brand equivalents.

The section was neat, but some products needed restocking. Foot traffic was moderate during our late-afternoon visit.

The upside:

• In some subcategories (e.g., pain relief and anti-diarrheal), the store brand products are given more facings than the national brand products are given.
• The stores supplement selection is more extensive than that of the other two stores, and it is the only one of the stores to offer a natural and organic store brand here.
• The store is the only one of the three stores to offer bagged cough drops under a store brand (Top Care).

The downside:

• A few facings – for both Top Care and national brand products – were empty.
• A display in front of the pharmacy held national brand items but no store brand products.
• The store was offering a 20-percent-off deal on Top Care supplements and a 30-percent-off deal on Full Circle supplements. But the sea of bright signage – combined with that for a number of name brand promotions – could create confusion within that segment.
• To the right of the vitamins and supplements, the store merchandises a variety of medicinal-type teas. However, the store places no store brand teas within this section.

Rethink the package
Retailers could take a number of steps to improve merchandising efforts – and build trust – on the store brand OTC front. And packaging represents a logical starting point.

\"Within certain categories, it appears that retailers are, in many cases, unwilling to deviate from the ... format of the keyed-off national brand,\" notes Mark Finkelstein, national sales director for PharmaSystems Inc., Markham, Ontario. \"If retailers were more willing to break the national brand mold and present their vendors with the opportunity to innovate on the packaging front, this may lead to greater exposure and merchandising opportunities for the private label SKUs.\"

By breaking the mold here, Finkelstein explains, retailers move from a \"me-too\" value proposition to an innovator in consumers eyes.

\"If you take analgesics, for instance, you are asking a consumer to trust a brand and an ingestible product that they know nothing about over a national brand product that they have spent their entire lives using,\" he says. \"If a private label product and the creative artwork/copy can be successful in conveying trust, the consumer is that much more willing to take a chance and save a few dollars in the process.\"

Global market research firm Mintel also points to opportunity within OTC packaging. For example, fast-acting remedies are very important to 67 percent of U.S. consumers the company surveyed, according to Mintels June 2013 \"Category Insight: Digestive & Detoxifying Treatments.\" Retailers, therefore, could stress clearly on-pack how long it takes for a product to work to help consumers in product selection.

And most OTC subcategories also present an opportunity for retailers to go beyond eye-catching, informative packaging on the merchandising side. For example, in the cough and cold subcategory, cough and cold brands (including store brands) could partner with disinfectant companies for cold prevention campaigns or to provide \"care packs\" containing a selection of remedies in smaller formats to be sold, for example, as holiday travel packs, Mintel notes in its \"Category Insight: Pain Relief, Decongestive, Cough, Cold, Flu & Allergy Relief.\"