Be prepared for a tough OTC world in Germany
Germany is the largest and one of the most challenging OTC markets in Europe, writes Ed Rowland. Any market where one of the leading chains, dm, actually marks on shelf, “price not changed since (year)” is seriously tough. The German trade can be tougher than the German National Soccer team. You can score an OTC goal but it’s not easy.
The German OTC playing field is also slightly different. Only Pharmacy can sell Rx items, so drug store chains like CVS and Walgreen’s don’t exist. And there are no pharmacy chains because an individual pharmacist can only own up to four locations. The Germany Pharmacy trade has also not developed standardized banners with set planograms as found in Australia.
So, here’s some pre-kickoff rules of the game:
- Both pharmacy and chains sell OTCs and health and beauty aids. Products find their way to pharmacies via wholesalers and there are three that dominate. In general, there are no distributors that are powerful in both channels. While there is no set rule as to which channel to utilize, the chain world tends to focus on products that retail for $30 Euro or less.
- Market observers have long forecast a decline in the number of German pharmacies, but the number has held fairly steady at 21,000 for the last few years. Given the sales challenge of convincing pharmacies one by one to list your product, it’s not easy. However, pharmacy as a whole is looking for non-Rx items. De-reimbursement and government controls on Rx margins have forced the issue. The typical German pharmacist is looking for new non-Rx products.
- Meanwhile, the German Chain Trade went through an enormous downsizing in 2012 when one of the four largest chains, Schlecker, went bankrupt. At its peak, Schlecker had 10,000 stores and when it finally “went under” after a slow painful process, the remaining 6,000 locations were closed. Of the survivors, Rossmanns has 2,000 locations and dm has 1,825 locations. Mueller, which actually mirrors a general merchandiser/medium-sized department store with an upmarket beauty focus, has 535 locations. Overall, however, imagine a major trade channel recently losing up to 50% of its locations over a few years? Tough negotiators are left standing and, after the shakeout, are stronger. For my trade promotion money, they are the toughest in the world.
- Private label is important in both the chain and pharmacy channels but it’s not at level of Boots. Yet at least.
- So, a launch strategy must account for which channel works best. One way is to go to pharmacy first. It’s a slow tedious process, but there are no listing fees, although the wholesalers do take their percentage. Generally, a lower, more affordable retail selling price can be established with potentially a larger margin achievable, but those funds will be needed for consumer marketing. Another route is via the chains. Both Rossmanns and dm are discounters; Rossmans is the heavy promoter, while dm follows an everyday low price approach. Either one is a tough “shot on goal,” to borrow a soccer phrase again. And starting in one, usually pharmacy, and then expanding to chains risks alienating your base business when transitioning. It’s been done but it’s a tightrope trail.
Goals are being scored in the German OTC world but, be prepared for a tough game.
Ed Rowland, founder/owner of Rowland Global LLC ( www.rowland-global.com ) has provided Drug Store News a series of six 2016 blogs focusing on non-U.S. markets. Rowland Global assists companies in their global growth strategies, tactics and execution. He thanks DMV Diedrichs Markenvertrieb friends Lars Diedrichs and Dirk Bichels for their helpful suggestions in preparing this blog.
Southeastern Grocers re-launches supermarkets to focus on Hispanics
Southeastern Grocers has re-launched five supermarkets in South Florida under a new banner, Fresco y Mas, in order to appeal to the region's large Hispanic community.
The first Fresco y Más store launched in June this year and due to popular demand another five Fresco y Más stores opened this month.
Southeastern Grocers says its expansion of Fresco y Más offers customers an authentic Hispanic grocery store that delivers improved product assortment, better value and an enhanced shopping experience, with hundreds of new Hispanic items. The stores have a strong Hispanic focus on produce, meat and bakery, as well as over 3,000 items lowered in price across the store.
Ian McLeod, president and CEO of Southeastern Grocers said, “The overwhelming positive response we received from our first Fresco y Más store in Hialeah gave us the motivation to open additional Fresco y Más stores to bring more savings to more communities. We have been listening to our Fresco y Más customers in Hialeah and have tailored additional stores to reflect our customer’s personality, while providing great value, great prices and great service. Each Fresco y Más store features a wider array of Hispanic items our customers told us is important to them – an expanded product assortment, great low prices and new features, including a full-service Latin Butcher shop and new Cocina."
The company says the stores are focused on delivering lower, everyday pricing as well as exciting special promotions on the items customers buy most, from fresh produce and high quality meats, to expanded local Hispanic products and new store features, allowing families to enjoy authentic, quality food for less on more than 3,000 products throughout the store.
Enhancements in the new Fresco y Más stores include:
- An all-new, full-service Latin butcher shop (Carniceria) offering an expanded selection of fresh, custom cut meats to better serve our customers.
- Refreshed produce department featuring a farmer’s market setting with a wider selection of tropical fruits.
- A new “Cocina” (kitchen) offering daily specials of freshly prepared family favorites made from scratch.
- New Dollar Zone within the store, where customers can get over 600 everyday essentials for just $1, from grocery and cleaning to health and beauty.
- Renovated bakery department offering an expanded selection of Hispanic pastries and local baked goods, including flan, tres leches, croquettes, and custom tres leches cakes, made fresh daily, as well as a wider selection of local favorites.
- An all-new café with expanded seating area serving authentic Hispanic breakfast, pastries, drinks and hot and cold sandwiches.
- An additional Wall of Value section featuring weekly specials on popular items customers purchase most.
- More than 500 new Hispanic items available across several departments.
- A new custom façade and vibrant yellow colors with bi-lingual signage throughout the store.
The first Fresco y Más store concept was launched in Hialeah, Fla., in June. Fresco y Más now includes six locations throughout South Florida, including:
- 948 SW 67th Ave., Miami, FL 33144
- 5850 NW 183rd St., Miami Gardens, FL 33015
- 14555 SW 42nd St., Miami, FL 33175
- 15050 SW 72nd St., Miami, FL 33193
- 541 W. 49th St., Hialeah, FL 33021 (opened in June, 2016)
- 2675 S. Military Trail, West Palm Beach, FL 33415
Air Wick unveils toilet spray in 4 scents
PARSIPPANY, N.J. — Air Wick is launching a new product that promises to eliminate red faces or embarrassed looks after trips to the bathroom.
The company's new V.I.Poo bathroom spray traps unpleasant smells in the toilet bowl and releases a pleasant fragrance to help leave the bathroom smelling better than before.
According to an Ipsos survey, more than half of respondents (52%) said that toilet odors are a problem in their home. In fact, 40% more consumers said toilet odors are a bigger problem than diaper odors. V.I.Poo comes in a small, convenient spray bottle – perfect for the home, office, significant other's home, the movie theater and much, much more.
"Going to the bathroom doesn't have to be awkward thanks to V.I.Poo," said Maui Valdes, Air Wick marketing director. "V.I.Poo ensures a private bathroom going experience by trapping and neutralizing odors so the only thing left behind is a pleasant fragrance."
V.I.Poo retails between $8.99 and $9.99 at retailers nationwide, including Walmart, Kroger and Safeway.
The four available scents are:
- Fruity Pin-Up
- Rosy Starlet
- Lavender Superstar