Spotlight on Over-the-Counter Remedies
Recent growth of the U.S. over-the-counter (OTC) remedies market has been primarily driven by Rx-to-OTC switches, states “Rx-to-OTC Switch Pipelines USA: Competitive Assessment,” a May report from Kline & Co., Parsippany N.J. But even outside of such new items, private label OTC remedies continue to take share away from the national brands as more consumers understand that they deliver the same results as the national brands — for less money. For example, dollar sales of store brand internal analgesic liquids rose 4.4 percent during the 52 weeks ending April 19, according to data from Chicago-based market research firm Information Resources Inc., accounting for 40.5 percent of total category sales.
To keep the momentum going, retailers need to continue to communicate the quality-value message to shoppers. And merchandising also can play a critical role in efforts to grow store brands within the OTC space.
To see what retailers are doing well and not so well here, we visited three supermarkets: a Woodman’s Markets store in Carpentersville, Ill., operated by Janesville, Wis.-based Woodman’s Market; a Hy-Vee store in Sycamore, Ill., operated by West Des Moines, Iowa-based Hy-Vee Inc.; and a Jewel-Osco store in Libertyville, Ill., operated by Boise, Idaho-based Albertsons LLC. Our visits took place on a weekday in mid-August.
General observations: The OTC section in the Jewel-Osco store is located on the far left-hand side of the store near the pharmacy (looking into the store from the front entrance). The section occupies two sides of a short aisle.
The store features private brand OTC products under the Equaline brand (offered by Minneapolis-based Supervalu Inc.). In general, product placement is to the right of the equivalent national brand.
Foot traffic was light during our early morning visit. The store was very neat and clean, and the shelves were generally well-stocked. It’s worth noting that a number of items, under both national brands and the store brand, were on clearance, suggesting an upcoming change to the assortment.
■ Some store brand products (e.g., Equaline Cough DM formula) featured large “Compare and Save” shelf tags that called out the savings over the equivalent national brand item.
■ Some store brand products (e.g., Equaline Nighttime Cold & Flu Relief) sported large sale signage (“Red Alert Prices”).
■ A few store brand products (e.g., Equaline Sinus Congestion & Pain tablets) were on display in both old and new packaging, potentially confusing shoppers.
■ The store had two shipper displays of national brand OTC products (Tylenol and Goody’s brands), but no displays tied to store brand products.
■ Usage of the “Compare and Save” shelf tags was inconsistent — some store brand items got the tag treatment while others did not.
■ In most cases, the Equaline products get far fewer facings than their national brand equivalents, so it wasn’t always easy for us to spot the store brand items on the shelf.
General observations: The OTC section in the Woodman’s Markets store is located in the left one-third of the extremely large store (looking into the store from the front entrance). A very large selection of OTC products is housed on both sides of two separate relatively short aisles (sharing space with first aid, foot care and incontinence products); an aisle between those two aisles houses vitamins and weight-control products.
The store sells private brand OTC products under the Top Care brand (offered by Topco Associates LLC, Elk Grove Village, Ill.). In general, product placement is to the right of the equivalent national brand.
Foot traffic was moderate during our mid-morning visit. The store was relatively neat and clean, but a number of products in the OTC section were out of stock.
■ The store gives ample space to the Top Care products — in some cases (e.g., Top Care ibuprofen products), more than it gives to the national brands.
■ In some sections (e.g., analgesics), the store gives the Top Care products the brand-blocking treatment, which helps call attention to the items.
■ We counted 11 shipper displays holding OTC products, but none of them featured store brand items.
■ The store’s shelf tag system lacks coherency. For example, some regularly priced products sport yellow tags, while others sport green tags. But green tags also are used to denote in-store specials. Red tags denoting sale prices sometimes are affixed entirely to the shelf (next to the regular price) and sometimes only partly (hanging slightly below the regular price).
■ Although the shelves housing analgesics and cough and cold products were quite neat and orderly, some of those merchandising digestive aids/laxatives were in a state of disarray.
General observations: The OTC section in the Hy-Vee store is located in two short aisles on the far right-hand side of the store (looking into the store from the front entrance), directly in front of the pharmacy. One aisle is front-facing/one-sided, while the other is two-sided and also houses first aid products and other items.
The store sells private brand OTC products under the Hy-Vee and Hy-Vee Health brands. Product placement varies by category and products within a category.
Foot traffic was fairly heavy during our lunchtime visit. The store was neat and clean, and the shelves in the OTC section were well-stocked.
■ Large at-shelf signage communicated a “Hy-Vee Fuel Saver” discount with the purchase of certain store brand items (e.g., a 3-cent-per-gallon savings with the purchase of Hy-Vee Maximum Strength Acid Reducer tablets).
■ Large at-shelf signage called out “best seller” status, a sale price or a “price decline” for many OTC products.
■ An end-cap display was dedicated almost entirely to store brand OTC items during our visit.
■ A few of the large signs denoting a sale on own-brand items were actually placed to the right of the sale item, under a national brand product.
Play them up
To continue to grow share of their store brand OTC products, many retailers will need to step up efforts to draw attention to such products. And they might want to start with rethinking product shelf placement. Len Smith, vice president of sales for Massena, N.Y.-based PurinePharma LLC, a supplier of liquid and soliddose OTC medicines for private labeling, notes that many retailers dedicate the prime shelf space to the national OTC brands.
End-cap and other displays bundling a variety of store brand OTC products also work to call attention to the items, he says, as does “more vibrant” differentiated packaging.
Speaking of packaging, primary packaging innovations also could attract consumers if called out on the packaging. Smith points to a European packaging innovation for eye drops that dispenses one drop and then shuts off, making the product more convenient and also preventing air from entering the liquid. His company soon will be adopting the technology for some of its products.
And convenience claims are definitely a selling point. According to “Category Insight: Pain, Decongestive, Cough, Cold, Flu & Allergy Relief,” a July report from global market research firm Mintel, convenience claims are on the rise in North America, now accounting for 42 percent of launches. Such claims cater to consumers’ interest in relieving pain as quickly and easily as possible.
“There is growth potential for products marketed as portable and easier to take without water — e.g., single-serve sachets of powder/liquid formats to pour directly into the mouth,” Mintel says, “and for products that offer longer-lasting pain relief.”
Natural claims also could be a selling point. Mintel reports that 84 percent of surveyed U.S. consumers express interest in analgesics with natural ingredients.
“Made in the USA” claims, too, could be an effective on-pack selling point, Smith adds, noting that most retailers are not highlighting this benefit.
And the formation of true partnerships with private label suppliers — partnerships not based solely on price — could help retailers in terms of product and packaging development, as well as merchandising and marketing.
“But you’ve got to partner for the long-term with the manufacturer,” Smith says.