by Dave Wendland, as seen in HealthCare Distributor magazine, Out of the Box column
March/April 2016
Make no mistake, consumerism is alive and well when it comes to illness recovery, general well-being, and preventive care. During the past few years we have witnessed a cultural shift towards greater self-reliance and self-awareness in healthcare which has resulted in a wave of major acquisitions to gain a foothold for growth. Even food companies such as Nestle, Campbell’s, and Kellogg’s have given attention to making products healthier or packaging them to appeal to health-conscious shoppers. And at the center of much of this awareness is the Internet.
As shared in an excellent blog, "Consumer Health: An End-of-Year Review of 2015 Performance to Advance Market Strategy in 2016 and Beyond," written by Monica Feldman, head of industries research at Euromonitor, Internet retailing has more than doubled between 2010 and 2015. Furthermore, Internet sales of vitamins and dietary supplements outpaced sports nutrition, OTC drugs, and weight management products by a significant margin.
One of the reasons for this increase cited in Ms. Feldman’s blog was the fact that smaller, niche companies are purportedly using the Internet as their primary platform of sales to compete against bigger players, who traditionally have a stronger presence within physical stores. Brands are making better use of social media, healthcare practitioners, and sponsorships of local community events to create awareness of their products and to build an emotional connection while pushing consumers to order products via the Internet.
But it is not just online retailers that are benefiting from this consumerism. Signals of strong performance are occurring within brick-and-mortar retail, as well. Out of 23 categories of health, beauty, and wellness products tracked by Hamacher Resource Group (HRG) based on distributor movement data, the top 11 categories provide 86.6 percent of top-line revenue. HRG’s recent Focus on Growth research detailed the categories driving growth at independent pharmacies with the support of healthcare distributors. While diabetes care is the biggest category, the next top 10 categories account for four times the dollar sales as the bottom 11 categories.
HRG researchers also reviewed trend data over the past five years and concluded that independent pharmacies wanting to increase front-end sales should focus on these categories: diabetes care; cold and allergy; skin care; baby care; and oral care.
From a product standpoint, the proliferation of "new" items continues to dominate the market and attract shoppers to key categories. During 2015, HRG’s team of analysts reviewed and evaluated more than 2,400 new health, beauty, and wellness items. Using the company’s proprietary star rating system, the team awarded one to three stars to 237 of those products believed to have the highest potential for success in independent pharmacies. It is likely that this 10 percent will set the stage for continued growth across the 23 categories reviewed by HRG.
Consumers are undeniably becoming owners of their health and this is something that will continue to fuel a massive shift in the non-prescription industry. A more intense spotlight is put on potential OTC switches, the use of technology in monitoring or guiding product choices, the role of social media, and the prudent deployment of e-commerce initiatives. Make no mistake; consumer healthcare will continue to be propelled by shopper-led initiatives and the future of health and wellness will be directed by consumerism.
What’s the bottom line? OTCs are definitely influencing a pharmacy’s bottom line, a distributor’s product focus, and a manufacturer’s direction. It’s a very good market to work in…after all, OTCs matter.