Pets fetch specialized OTC segment
While the recession has caused some pet lovers to cut back spending on toys and treats, when it comes to their pets’ health, consumers aren’t skimping. A recent Packaged Facts consumer survey shows that 43% of dog owners and 36% of cat owners purchase some type of specialty nutritional formula pet food or supplemental nutritional products. In 2012, sales totaled about $1.3 billion, according to Packaged Facts.
Packaged Facts research director David Sprinkle said an aging pet population is driving the market as more pets suffer from such age-related conditions as joint deterioration and cognitive dysfunction. Supplements with glucosamine, omega fatty acids and probiotics — along with such trendier ingredients as bee pollen, green tea and elk velvet antler — have been category-drivers, according to the firm’s research.
In addition to traditional tablets and pills, supplements now come in functional biscuits, soft chews and alternative delivery formats, such as gels and pastes.
Consumers have become more educated about taking care of their pets and understand the importance of preventive pet care. At the same time, pharmacies are filling more prescriptions for aging pets. Drug chains offering a good selection of pet supplements and OTCs are in a good position to gain a bigger share of the pet care market.
Electronic accessories become necessities for consumers
Technology has certainly changed the landscape of the drug channel’s general merchandise department. As categories shift, electronic accessories have become a crucial addition to the mix.
Nearly 40% of all consumer electronic spending in 2012 was on tablets, smartphones, laptops and notebooks, according to the Consumer Electronics Association. "Accessories for these products are the growth drivers for the category," said Chris Ely, a spokesperson for the organization. "They also are margin makers."
Headphones and earbuds have had 18% dollar sales growth in 2012 and are expected to have double-digit growth in 2013. Likewise for smartphone cases, which had 14% dollar sales growth in 2012. The CEA projects growth in the category until 2016.
Bluetooth headsets, memory cards, flash drives, and wipes and cleaners are essential products for a plugged-in, electronics-dependent society. Drug store retailers who create a merchandise mix that meets key consumer needs and positions space-efficient departments near the front of the store can become a destination for consumers who increasingly view these products as necessities.
"Need-it-now" products can command a larger margin, so retailers don’t ever need to be promotional in this category. There also is room for impulse sales as fashion becomes a bigger part of the category.
Frozen foods amp up freshness factor
New technology and types of introductions could bring some heat to the frozen food category. Frozen food sales have been flat to declining for the past few years, according to a recent study from Packaged Facts, with nearly all dollar sales gains coming from higher prices or new products rather than increased consumer demand.
A preference for fresh foods is the top reason shoppers cite for not buying frozen foods in the last three months, according to Packaged Facts. Yet there’s no denying the convenience factor of frozen foods, and manufacturers are looking for ways to tempt consumers back to the category.
One way that frozen food marketers are stepping up to the plate is by emphasizing freshness, according to David Sprinkle, publisher of Packaged Facts. Smaller boutique brands — such as Amy’s, Evol and Cucina Fresca — are "pushing the envelope on taste and health and wellness cues," said Tamara Barnett, an analyst at the Hartman Group. "Even private label is catching up, with Target’s Archer Farm and Trader Joe’s offering more customized options."
ConAgra Foods’ Healthy Choice Baked Entrees and Marie Callender’s Comfort Bakes use a new technology that deliver a baked taste without the oven. New packaging allows for more even cooking, eliminates the need for stirring and minimizes burnt edges. The new technology is credited with giving the Callender brand a 20% boost in incremental sales.
Nestlé’s new Lean Cuisine Salad Additions, which features such premium ingredients as grilled white meat chicken, crisp vegetables, culinary-inspired dressings and satisfyingly crunchy toppings, is designed to be served over fresh lettuce. The product is billed as being the first of its kind on the market.
Nestlé is even taking the product beyond the frozen aisle. The company designed a temperature-controlled refrigerator-freezer display case that can be used to display the product near produce and is cross-marketing the product with Fresh Express salads.