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Time for Grocers to Take Another Look at Health, Beauty, Wellness

Time for Grocers to Take Another Look at HBW
The traditional HBW section is ripe for innovation

Nobody needs to tell grocery operators how important concepts like organic, freshness, wellness, health and natural are to today’s consumers.  But retailers may be missing significant opportunities by limiting those messages primarily to food departments, when what today’s shoppers really want are holistic solutions that touch every element of their lives.

While most grocers are committed to merchandising more natural and organic offerings in departments such as produce, meats, fish, deli, bakery and meal kits, health, beauty and wellness (HBW) categories offer retailers additional opportunities to expand and underscore their ongoing efforts in those categories, according to “Winning in Health, Beauty, and Wellness,” a study of the HBW market within the food, drug and mass classes of trade conducted by the Global Market Development Center (GMDC) and A.T. Kearney. The study used a combination of Nielsen, survey and executive interviews to uncover hidden HBW retail opportunities.

The Opportunity

Overall, across all retail sectors, these categories are viewed as high-growth opportunities. But their growth has been challenged within the food, drug and mass (FDM) retail classes of trade. Our study found that, in aggregate within FDM, the $64 billion health non-Rx category is growing 1.4 percent across food, drug and mass retailers, while the $38 billion overall beauty category is declining at 0.8 percent. Obviously, each of these trade classes approaches HBW differently, based on their retail positioning and formats, but there are some unique opportunities for grocers.

A quick look around a supermarket tells us all you need to know about how quickly some categories can grow, especially if those categories are tied to health and wellness. Over the past few years, we’ve seen explosive growth in health and functional beverages, for example, led by probiotics such as kombucha and kefir, and new hydrating agents like coconut water and vitamin water, which underscores grocers’ need to react quickly to emerging consumer trends.

The same is true in beauty, where innovations are increasingly tightly connected with food – as in the case of olive oil-infused shampoos, avocado oils and creams, and seaweed marketed as both a food and a beauty item – creating new opportunities for grocers to leverage their existing credibility.

Of course, expanding assortment alone isn’t sufficient to win over consumers, especially Millennial and Gen Z shoppers who demand authenticity and other values from both the products they buy and the stores that sell them. To capture value-based HBW shoppers, retailers need to learn to tell their unique HBW story and transfer the food-based authority, expertise and consumer trust that they enjoy to these critical nonfood categories.

Supermarket operators face a series of specific challenges to accomplishing an integrated vision of health and wellness.

Integrating Food and Nonfood

Your customers need to be educated on the linkages between food and HBW. Even customers with a deep interest in, and knowledge of, the foods they eat need to be made aware of how everything they put in, on and around their bodies can create a healthier personal environment, and to increase their sense of wellness across multiple dimensions, from relaxation to nutrition.

Supermarket operators face a series of specific challenges to accomplishing this integrated vision of health and wellness. Many – perhaps most – currently separate produce, meats, bakery and other fresh items from center store departments, in-store pharmacies and HBW aisles.

The idea of cross-merchandising food and nonfood items isn’t new. It has been executed for decades, with varying success. These initial experiments were forced and failed to take into account the values that today’s sophisticated shoppers are looking for, including authenticity, the feel of artisanal manufacturing, and organic and/or sustainable ingredients. A broader definition of health and wellness in the consumers’ minds never developed. Also, in fairness, technology and modern equipment, such as portable coolers, sensors and packaging developments, make it easier to keep food safer than it used to be when used in earlier cross-merchandising displays. 

Before you reset your entire store, we suggest you stage a series of small, easily executed merchandising experiments to gauge your customers’ response to an integrated approach to HBW.

 Here are a few simple ideas:

  • Use signage promoting connecting the health and beauty aisle to key food trends, perhaps signage pointing shoppers to organic produce placed next to an organic cosmetic line
  • Market high-end teas – green teas, ginseng, herbals – next to Korean beauty items
  • Merchandise avocado masks, oils, etc., on an end cap or other display with actual avocados 
  • Sell probiotic supplements next to kombucha and kefir
  • Stocking omega supplements next to eggs

If these approaches work, the next step is to continue the integration of food and HBW items, ensuring that you supply your customers with signage and educational materials that explain what you’re doing. 

There are other things you can do to expand your share of the HBW market:

  • Clarify ingredient content
  • Create own brands that offer a “healthy choice” or are “diabetic friendly”
  • Select items from branded partners that accomplish the same goals
  • Adopt a “healthy choices” sticker or signage program
  • Provide in-store and/or online access to nutritionists and other wellness experts
  • Make sure that all nutritional information is thoroughly explained and easy to read

Telling a More Holistic story

Supermarket operators have an opportunity to tell their customers a far more holistic story – one that integrates consistent, clear health, wellness and beauty messaging through food and nonfood departments. This can be achieved through better storytelling and education in HBW aisles as well as offering a more tailored food-centered assortment in HBW. The message can also be delivered through services, such as providing education by offering healthy cooking classes that integrate HBW products, helping shoppers shape healthier weekly grocery lists, and offering store tours that identify healthier options.

  • Play to Win

    “Winning in Health, Beauty and Wellness” explores HBW opportunities across a number of categories, including skin care, shampoo and deodorant, and contains an analysis of the critical role that online HBW category management plays in providing consumers with a complete solution in categories where there are clear trends around natural solutions.

    The study’s conclusions are based on suggestions in five critical areas:

    • The role of retailer in the community: Operate format options tailored to the health role you play in the community
    • In-store assortment and presentation:  Tackle complex and personalized lifestyle needs
    • In-store services: Integrate in-store services to enhance the customer experience
    • Category information and education:  Educate shoppers and give them access to experts.
    • Non-store health ecosystems:  Create a connection to consumers through apps, websites and events.

About the Author

Rodey Wing and Andrew Knight

Rodey Wing (picture at right) is a partner in the health practice of A.T. Kearney, a global strategy and management consulting firm with its headquarters in Chicago. He can be reached at [email protected]. Andrew Knight is a principal in A.T. Kearney’s consumer and retail practice. He can be reached at [email protected]

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