Exponential Growth Opportunities in Grocery for Health and Beauty Care and General Merchandise Sales, Per Acosta Group Study

In advance of this week’s 2024 National Association of Chain Drug Stores (NACDS) Annual Meeting, Acosta Group has shared the results of its recent proprietary Shopper Community study on Health and Beauty Care (HBC) and General Merchandise (GM) sales in grocery. Every month, 114 million households purchase food and beverages at grocery stores, according to NIQ. The Acosta Group study reflects grocery shopper behaviors and perceptions and outlines strategies to convert a percentage of consumers that are currently purchasing HBC and GM in other channels to shop for these items at grocery.

“We identify the biggest challenges grocery retailers face in this study related to HBC and GM purchasing and present solutions for how to reset shopper perceptions and expectations, addressing category opportunities, pricing, promotion and product selection,” said Kathy Risch, SVP, Thought Leadership and Shopper Insights, Acosta Group.

Consumer behaviors and perceptions

Shoppers think of grocery stores as being just for food and beverage purchases. Nearly 70 percent of those surveyed say that they typically do not visit the general merchandise, household products, personal care or health and beauty products aisles at their traditional grocery stores. Most of these shoppers are choosing mass merchandisers for their non-food and beverage products, with a smaller percentage purchasing these products online or at drug stores.

Top shopper considerations for HBC and GM purchases are price and selection. Nearly half, or 47 percent, of consumers surveyed say that they shop at their favorite retailer for the lowest everyday prices, while 45 percent say that it is because their preferred retailer offers the selection of products they want to buy.

Conversely, 48 percent of these shoppers say that it is because of their negative perceptions of price and promotions at grocery that they do not shop for HBC and GM products frequently when making their food and beverage purchases.

Overcoming challenges to grow HBC and GM Sales at Grocery:

HBC and GM shopping habits are admittedly hard to break. The Acosta Group study focuses on ways retailers can help to shift habits and capitalize on opportunities.

The study identifies the top 10 ‘gateway categories’ that represent 85 percent of volume for HBC and 76 percent of volume for GM in grocery, per NIQ Panel data, including over-the-counter (OTC), nutrition, oral care, bath/shower, kitchen, outdoor recreation, batteries and others.

“In addition to understanding the critical gateway categories for conversion, we’ve identified three key strategies to shift shopper behaviors and perceptions and drive expanded sales at grocery for HBC and GM,” said Shannon Hodock, SVP, Client Development, Acosta Group.

• Overcome perceptions of high prices and take credit for good prices: 80 percent of shoppers say that better prices and promotions could help grocers gain more business and grocers have some good stories they need to tell on competitive pricing.
• Drive shopper impulse purchasing: While 90 percent of shoppers are planners when purchasing food, HBC and GM, 70 percent admit to buying products on impulse. Shoppers are interestingly far more open to impulse purchases in HBC and GM (27 percent ) vs. food (8 percent ). And if consumers see that an item is on sale, one-third are prompted to purchase before or during their shopping trip.
• Expand selection of HBC and GM products and brands: Customers want better variety, selection and brand availability. Of note, national brands are the fastest path to conversion and trip growth but 59 percent of retailers say that they will continue to prioritize private label.

Get on the grocery list:

“We believe grocery retailers have an exciting and expansive opportunity to capture and grow HBC and GM sales,” said Hodock. “Strategically, retailers need to create a targeted ‘get on the grocery list’ campaign for their shoppers, incorporating a holistic omnichannel strategy and a customized marketing plan as they tackle the three key challenges to overcoming current perceptions and shopping habits.”

The promotional goal for grocery retailers should be to build their shoppers’ total basket at grocery, focusing on key gateway categories for conversion. Implementation of simple promotions, such as discounts or temporary price reductions, buy one get one free (BOGOs) and loyalty/rewards programs will drive the greatest shopper interest. Customization of offer types, features or displays, will help to drive the strongest results.

“Retailers will want to optimize their selections in HBC and GM merchandise, especially in the gateway categories where selection is highlighted as being most important to shoppers,” said Hodock. “Harnessing the power of national brands can also assist in driving growth.”

Acosta Group’s Accelerating Growth of HBC & GM at Grocery Study was conducted from Sept. 1-7, 2023, with 1,017 primary household shoppers. Respondents are part of the company’s proprietary Shopper Community.