Trade promotion and performance in cough-cold
DSN has partnered with Competitive Promotion Report and IRI to create a new series of exclusive reports that analyzes the impact of trade promotion activity on various front-end merchandising categories — DSN Promo Watch.
In this premiere edition, DSN examines the cough-cold business. Following are key findings from the analysis:
- Average trade spending — defined as all off-invoice allowances and bill backs — is very seasonal in cough-cold, ranging from less than 1% to almost 5.5%;
- Trade spending was highest in cold-allergy-sinus liquids, averaging 5.4% in November 2012. Yet, it is No. 2 in market share, trailing by an average of 51 points;
- There is greater proportional trade spending on liquid products and cough syrup than on tablets and cough drops, yet the latter generate greater retailer margin;
- Increases/decreases in trade spending in tablets have less impact on market share than any other category;
- There is a direct correlation between trade spending and market share in liquids, cough syrup and cough drops. However, only slight increases in cough drop trade spending leads to sharper market share increases;
- Cough syrup had the lowest average retailer margin of any cough-cold category over the past two years at 22.6%, 30.5% and 37.8% in the mass, grocery and drug channels, respectively;
- Cough drops had average market share of less than 10% over the past two years, but the category had the highest margins at 31.0%, 40.9% and 48.3% in mass, grocery and drug, respectively;
- Tablets captured two-thirds of market share with the second-highest margin on the lowest trade spending;
- Cough syrup had the lowest average market share at 7.8% and the second-highest average trade spending at an average of 2.4%;
- Market share increases/decreases perform in inverse relation and lag retailer margin increases/decreases in liquids;
- In tablets, increases/decreases in retailer margin had less impact on market share;
- In cough syrup, significant reductions in average retailer margin most often were followed by increases in market share;
- Margin decreased when trade spending increased in all categories.
- When average margin reached its highest peak over the last two years at 46% in May 2011, unit sales decreased 36% within 3 months);
- Unit sales and spending moved in sync in all four categories;
- When promoted, the average net invoice for liquids, tablets and cough syrup was within a narrow range at $4.78, $4.67 and $4.91, respectively, while the net invoice for cough drops on promotion was $0.75; and
- In June 2013, tablets saw an increase in average list price from $5.10 to $5.29 (+3.6%); however, average retail price increased less than 1% in July from $9.67 to $9.75.
Sources: IRI, a Chicago-based market research firm (@iriworldwide), Cough & Cold, 116 weeks ended May 19, 2013, total U.S. multi-outlet and CPR Detail Report and Retail Price Report, 116 weeks ended May 19, 2013.
DSN lands ‘big one’ for upcoming Industry Issues Conference
NEW YORK — The Drug Store News Group is going to need a bigger boat.
With an all-star lineup of leading retailers and a capacity crowd once again expected for the annual Drug Store News Industry Issues Conference, DSN has added Daymond "The Shark" John as the special guest speaker at this year’s event, which is scheduled for Tuesday, Dec. 3, here, at Manhattan’s New York Athletic Club. An annual event, now in its 15th year, DSN Industry Issues Conference offers a full day of thought leadership and important networking opportunities with many of the industry’s leading merchandising and marketing executives.
Young entrepreneur, industry pioneer and highly regarded marketing whiz, John, who is perhaps best known for his role as one of the original investor-judges on ABC television’s critically acclaimed "Shark Tank," will talk to Issues Summit attendees about his philosophy and theories on brand building, promotion and what it takes to break through in today’s marketplace. The show features rising, upstart entrepreneurs who present their business models to the panel of expert judges in hopes of securing investment dollars from John and other celebrity judges, who also include Canadian business magnate Kevin O’Leary, National Basketball Association Dallas Mavericks owner Mark Cuban and others.
John got his start as the founder of the apparel company FUBU (For Us By Us), which he started in 1992 with a $100,000 mortgage on his Queens, N.Y., home, and at its height, reached worldwide sales of more than $350 million.
Participating retailers confirmed for this year’s event include Ahold USA, AmerisourceBergen, CVS, Costco, H-E-B, Health Mart, Kerr Drug, Rite Aid, Sam’s Club, Thrifty White, Walgreens, Walmart, Winn-Dixie and more.
In all, the DSN Industry Issues Conference features three separate panel discussions, including Issues Summit, which focuses on opportunities for retailers to grow the front-end business; Diabetes Chronic Care Leadership, which explores innovative approaches to disease management; and Health, Wellness and Technology Summit, which examines new and emerging solutions to drive improved patient care.
To learn more, contact Wayne Bennett at [email protected].
Q&A with Rite Aid’s Ken Martindale: Genuine Well Being
Since its debut two years ago, Rite Aid’s Wellness store format has expanded from a handful of stores to nearly one-fifth of the chain. As of June 1, the chain had 905 Wellness stores — out of a total of 4,612 stores — with plans to convert about 300 more over the remainder of the fiscal year. About 150 of the stores showcase the Genuine Well Being format, the latest version of the concept. (For exclusive photos of the new store, visit DrugStoreNews.com/Photos.) Drug Store News recently spoke with president Ken Martindale about how the Wellness format has evolved.
DSN: How do you decide which stores to convert to the Genuine Well Being format?
Martindale: A variety of factors are considered when deciding whether or not a store should be converted to the Genuine Well Being format including: store performance/profitability, customer and neighborhood demographics, previous remodels and renovations, and lease terms.
DSN: What are some key ways in which the concept has evolved that the average customer might not notice at first glance?
Martindale: Two key ways our Wellness store format has evolved are product flow (location and placement of merchandise) and easier way-finding (navigation) throughout the store, both of which enhance the customer experience by creating a shopper-friendly environment.
DSN: What are some elements that can be applied across all converted stores?
Martindale: All elements of the design have the potential to be introduced across the board, if they are successful. Two elements we’re looking at currently are the household department and organic and gluten-free foods.
DSN: How has the NowClinic concept been coming along? Are you planning to expand it or any other telehealth initiatives?
Martindale: We continue to test and evaluate the NowClinic program, which is currently available in approximately 70 stores in Detroit, the original pilot market; Baltimore; Boston; Pittsburgh; and Philadelphia.
DSN: You’ve just launched a major expansion to the Wellness+ program with Wellness65+. Will future expansions to the program focus on patients with chronic diseases?
Martindale: Our goal is to build loyalty among and reward our best customers, while also meeting their individual health-and-wellness needs by offering personal, compelling and differentiating resources, services and products. We will continue to enhance our Wellness+ program to ensure we’re always delivering relevant value, helping us attract and keep our most valuable customers.