Stores stock up on ‘As Seen On TV’
There’s a lot to like about the As Seen On TV category. It has a sell-through rate between 10% and 20%. Margins also are in the double-digits. Best of all, the products that make it to retail shelves are proven winners.
"Our market model is very sound," said AJ Khubani, CEO of TeleBrands. "As a group of companies, we test market hundreds of products on television, then bring the top 10 to retail. Drug chains are only getting the products that are most successful. They are consumer-tested with a known demand and significant advertising support."
Sales in the segment are up 20% over last year, and Khubani said growth could be even stronger this year. Retailers have responded to the success of the category by giving what was once an in-and-out category a permanent home year-round in the center of the store.
The secret to maximizing sales in the segment is to get in while the products are hot and move the items fast. "These products have a short lifecycle, so retailers have to react quickly to be on top," Khubani said.
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.