Consumers who have long purchased over-the-counter medicines, anti-dandruff shampoo, whitening toothpaste, and cosmetics-with-benefits at food, drug and mass merchant retailers are switching to other places to shop for health, new data from AT Kearney and GMDC have found.
The two organizations have collaborated to launch a new benchmarking study into health-beauty-wellness (HBW) sales, launched this weekend at the GMDC HBW Conference in Orlando.
Overall, 2017 to 2018 year-on-year, HBW sales were flat-to-no growth, notwithstanding the consumer and influencer buzz around the categories.
This study uncovered some very important trends underneath the macro numbers that tell a story of empowered health consumers and the evolving retail landscape.
Story-telling is part of the solution to the challenge that Food, Drug and Mass Merchant (FDM) retailers will increasingly face in and beyond 2019 for HBW goods and services. When we talk about “FDM,” think grocery stores, retail pharmacies (both chains and independents), and stores like Walmart, Costco, and Target, among others.
Some background, before I dive into the insights and implications of the benchmarking study.
GMDC and AT Kearney had a meeting in June 2017. On that day, Amazon announced that it would acquire Whole Foods. That deal was a sentinel event that has come to impact not only the food/grocery sector but the global ecommerce world in general, and health/care specifically.
So back to the benchmarking study results. “Everyone is excited about HBW,” Andrew Knight of AT Kearney observed, but it’s not a guaranteed silver bullet for retailers to put the goods on shelves and see consumers buy them, the study soberly discovered.
FDM retailers are facing unprecedented changes in how consumers shop for health, beauty and wellness products and services, Knight asserted. Why? Because of what the healthcare ecosystem stakeholders know — that consumers and patients are hyper-connected.
Today, technologies like augmented reality are enabling beauty shoppers, for example, to try out products on their own faces via apps now available to them. This allows the consumer to trial products at home before even walking into the pharmacy, mass merchant, or grocery store doors. It also bolsters the opportunity for education and inspiration, via storytelling, to that consumer.
That level of service-around-the-product is garnering loyalty (and spending) among consumers. While sales for HBW via FDM channels were pretty flat between 2017 and 2018, “the basket is upgrading,” Knight said. The average price for many goods is rising, as consumers will increasingly pay more for sustainable corporate practices, ethical sourcing, and more natural and “free-from” ingredients.
One of the categories that’s growing based on premiumization is oral hygiene. “It’s not just about brushing your teeth anymore,” the year-on-year data for oral care showed, Knight said, with the growth in higher-priced dental floss, “sensitive” gum picks, and specialty mouthwashes commanding higher price margins that some consumers are willing to pay.
Note this messaging found on the children’s wellness brand, Jack and Jill, one of the GMDC Showcase participants: “free from all nasties.” This, in products marketed to parents for kids.
This is the sort of branding Millennial Moms and many grandparents seek in health-motivated families.
The key takeaway is that innovation is key, and it’s the “smaller fish,” as Knight coins them, that are nimble and agile, serving up fads and trends and very current demands of health-hungry consumers.
Health Populi’s Hot Points: Retailers can collaborate with producers, Knight recommends, with the Big Fish working with the Small Fish to co-create innovations that benefit consumers’ health and bolster the business at the same time.
The findings of this study are spot-on for healthcare industry stakeholders beyond retailers and CPG companies, as well, especially as we increasingly appreciate the impact of social determinants on patients’ health: food, education, safe and clean environments, transportation, among them.
Knight painted a continuum of wellness at retail: dietitians, nutritionists, cooking schools, flu shots, skincare, supplements like probiotics, water…asking the question, “how can we take these products and string them together?” For example, for a customer with dry skin, it’s not just about buying hand cream, but a continuum of solutions such as appropriate evidence-based supplements, drinking lots of water, and certain healthy food choices that, bundled together, could optimize the consumer-patient skin outcome.
“Be solution oriented,” Knight said.
Integral to that solution is embracing the fact that the consumer is multi-channel and connected, which I speak to so often — the concept of Homo informaticus, described in this Health Populi post.
Along with our being connected, three other factors are converging to re-shape us, Knight called out: aging, consumerization, and demand for personalization.
Together, these trends result in a broader consumer call for ownership of health for personal wellbeing. I see this as part of a growing call for health citizenship with its attendant rights and responsibilities.
With the need for greater consumer health education at retail, there’s a huge opportunity for the trusted, respected experts in the legacy healthcare ecosystem to partner with retail health channels: physicians, nurses, pharma researchers, patient advocates and associations like the American Heart Association and American Diabetes Association, hospital pharmacists and dietitians, in local and national programming.
Remember that consumers believe nurses, pharmacists and physicians are the most ethical and trustworthy professions in America; and, that retailers are valued for customer experience. That’s a powerful combination for health consuming.