Vitamins and nutritional supplements can help boost your store’s immunity to dips in wellness sales.
Keeping the bottom line healthy can be a daunting task during the current economic climate, but an infusion of vitamin and supplement sales can supplement sluggish growth in a supermarket’s health care section.
Vitamins and supplements have become steady growth items for just about every retail channel. Whether through brick-and-mortar locations or over the Internet, the sales potential of the category has never been better as consumers take a greater interest in promoting good health by adding these products to their daily diets. “On a national level, consumers continue to maintain positive demand in the category,” says Gary Piggot, SVP of sales and marketing for Miami Lakes, Fla.-based Mason Vitamins.
Retail sales of the vitamin, mineral and supplement (VMS) category reached $11.5 billion in 2012, an increase of 7 percent over the previous year, according to Packaged Facts’ fifth edition of “Nutritional Supplements in the U.S.” Estimates indicate that the VMS category is expected to maintain its steady retail sales growth, rising to $15.5 billion by 2017.
Not only are sales in the VMS category increasing across all retail channels, it’s doing particularly well in supermarkets. Little Rock, Ark-based in-store marketing company Vestcom’s data indicates that from 2009 to 2011, sales in the category grew 10.3 percent in supermarkets, compared with 9.3 percent in drug stores and just 4.8 percent through all other channels.
Vestcom attributes supermarkets’ strength in marketing VMS to the fact that 67 percent of grocery and drug store shoppers who have purchased these products at a supermarket or drug store during the past two years claim that they always purchase VMS products in supermarkets and drug stores. Shoppers at these two channels, especially supermarkets, tend to be much more loyal channel shoppers than those shoppers who bought VMS products at vitamin or health stores, or at other retail channels. VMS sales in 2013 also seem to be doing well at retail.
Scott Patricki, divisional VP for category management at Mission Hills, Calif.-based Pharmavite, cites Nielsen data showing the category grew nearly 6 percent for the year ending in late November at all outlets except convenience stores. “For the latest 52-week period of time, the grocery channel’s rate of growth of 6.8 percent is outperforming the rate of growth in the overall market and the drug, mass and club classes of trade,” he says.
Patricki adds that the VMS category is a significant contributor of growth for retailers, having generated $342 million over the past year, making it the 11th-largest growth-contributing category in the store.
Off the Shelves
The VMS category has always provided shoppers with a wide assortment of products to help them improve their health on every level. Often, VMS manufacturers have reacted to consumer interest by putting out new products and formulations based on what has become popular in the alternative health care culture, as well as the more established medical and nutritional communities.
Unfortunately, too many new products, conflicting benefit claims and active word-of-mouth promotion have increasingly left consumers staring blankly at the VMS displays in supermarkets.
“Among the products that are hot now [are] essential fatty acids and SKUs that offer omega-3, -6 and -9, as well as coconut oil and softgels,” Piggot says.
According to the Vestcom study, traditional vitamins still account for 34 percent of the VMS category, while herbs/botanicals make up 17 percent of sales; sports nutrition, 12 percent; meal replacements, 10 percent; and minerals, only 8 percent. The other 19 percent of VMS sales include other specialty products.
“The health solution platforms within the category that will continue to contribute large-scale growth in the future that supermarkets should be focused on gaining market share on are the men’s and women’s health, digestive, beauty, sleep, and vision health solutions,” Patricki asserts.
While vitamins in general are extremely important to the VMS category, gummi vitamin formulations are especially valuable to retailers now. According to Patricki, these chewy candy-like vitamin formulations represent the largest source of growth for the category; the 29 percent increase in sales over the past year translates to an influx of $125 million, according to Nielsen’s extended all-outlet coverage (xAOC).
“Within the gummi delivery form, 65 percent of the sales are now represented by the adult life-stage products, and 35 percent are children-based,” Patricki says, noting that while adult gummi sales have increased 51 percent for the 52-week period, children’s gummi sales are flat versus a year ago.
Another significant trend within the VMS category is that of probiotics, which have grown 33 percent during the past year. Retailers can also take advantage of other fast-growing product groups, including gender-specific multivitamins, biotin, vitamin D, vitamin B12 and vision formula multivitamins.
Short of having a knowledgeable staff member stationed in the aisle to help overwhelmed and confused customers pick out the best vitamins and supplements for whatever their concerns are, as many health food stores now offer, supermarkets need better visual marketing to help guide shoppers.
“The VMS category is a SKU-intensive category, with most retailers selling 350 to 700 SKUs within that section,” Patricki notes. “Thus, it is a very difficult section to navigate for consumers. The most popular and optimal way to merchandise the category is to group products via brand blocks where all of a brand’s individual products are promoted together within the section.”
In general, shoppers within the category tend to be either brand users or private label buyers, with little crossover between the two. Following this purchasing pattern, it would help both customers and retailers to similarly group all of the private label VMS products together within a block on the shelves, just as retailers do for each of their national brands.
With the high rate of product introductions within the VMS category and the trendy nature of many of the additions to product lines, some supermarkets may not be quick enough to react to consumer interest in a particular type of product, due to the nature of their merchandising operations, Piggot claims: “Most larger supermarkets revise their planograms once yearly, while most other [retail] segments have two cuts during that time.”
Piggot recommends not only revising planograms more often to take advantage of changing consumer trends in the category, but also being quicker to take advantage of manufacturer incentives and promotions to help lead customers to emerging products and trends. “Be more opportunistic — if a vendor offers 100 percent return-guaranteed sale on a product, where is the risk” for the retailer to put it on the shelf? he asks.
Echoing these sentiments, Patricki suggests that retailers and their vendors “meet early and often during the course of the annual business cycle to scoreboard what is working and what is not working.” This helps both maintain flexibility to make course corrections to the business plan whenever necessary.
The health solution platforms that will continue to contribute large-scale growth that supermarkets should be focused on are the men’s and women’s health, digestive, beauty, sleep, and vision health solutions.”
–Scott Patricki, Pharmavite