Kathy Tyburowski, Industry Insights Manager, The Nielsen Company
SUMMARY: Looking good. Feeling better. Consumers start and end their day with beauty and hygiene rituals using ubiquitous products with high household penetration rates and high perceived value. In the U.S., product loyalty takes a back seat to a strong value proposition across OTC categories. Fully 30% of Americans consider price important when choosing OTC products versus just 17% of global consumers.
Americans spend $368 per year on health and beauty products, adding one HBC product to the cart every fourth shopping trip. That buying rate translates into $61+ billion per year, accounting for 12% of total U.S. packaged goods sales, eclipsed only by dry grocery and perishable food sales. A vast assortment and stream of innovative new product introductions help sustain category interest. Consider the fact that there are more than 2,200 different UPCs of toothpaste alone.
Despite anemic health and beauty unit sales which declined by 2.2% at food, drug and mass merchandisers (including Walmart) for the year ending October 2008, dollar sales increased by 1.9% somewhat due to price increases across the board for roughly half of all categories within the department.
Beauty products including cosmetics, fragrances, skin care, bath/shower and gift sets add up to real assets for mass merchandisers, at which they account for 29% of dollar sales, followed by drug stores at 15%, online shopping and department stores each at 9%, supermarkets at 8%, direct sales at 7%, specialty cosmetics stores at 5% and a host of alternative outlets.
Patronage habits differ by channel with consumers shopping more frequently at mass merchandisers (8.7), but purchase size was lower than most other channels. Interestingly, the TV home shopping channel reported the highest purchase size of 3.8. Cosmetic supply stores (3.5), direct sales (3.4), online (3.3) all recorded higher purchase sizes than traditional channels; drug stores (2.4), mass merchandisers (2.3), department stores (2.2) and supermarkets (1.8).
|8 of 10 households say they are very or somewhat concerned with personal care product prices...|
Economic issues are front and center with consumers, with almost 8 of 10 households saying they are very or somewhat concerned with personal care product prices, and 6 of 10 planning to reduce spending on household necessities in an effort to conserve funds. Careful consumers have opted to capitalize on health and beauty coupon savings, with utilization climbing to 13% by the first quarter of 2008, 2.5 times the rate for total store coupon sales.
As a category, health and beauty traditionally keeps promotional volume to a minimum, selling 26% on deal versus the 35% of promoted sales across all departments. Women’s fragrance, vitamins and cosmetics move the greatest volume on deal, while grooming aids, family planning and feminine hygiene sell the least on deal.
U.S. shoppers are voting with their pocketbook at checkout, emphasizing price and value when choosing over-the-counter (OTC) medications, which stands in contrast to global consumers. Results from a May 2008 global survey conducted by The Nielsen Company and the Association of the European Self-Medication Industry across 51 countries reported that 30% of Americans consider price important when choosing OTC products versus just 17% of global consumers. The only country whose shoppers are even more concerned with price is Japan (33%).
Value ranks high as a decision criterion for 25% of U.S. consumers, while only 15% of global shoppers take it under advisement. Not surprisingly, this corresponds to the growing importance of generic drugs in the American wellness sector. Brand loyalty levels are roughly twice as high among global consumers, at 23%, as among Americans (12%).
Factors influencing OTC medication selections among U.S. consumers include effectiveness (cited by half of respondents), safety (42%) and product confidence (35%), while attributes such as being recognizable, easy-to-take and usually used were least important.
Perhaps reflecting the country’s can-do spirit, the majority of Americans (60%) will usually wait to see if a minor ailment gets better before taking medicine, in large part due to a belief that taking medicine can be harmful. When queried specifically, survey respondents admitted that more advice or support from their physician would help them to take care of their health (44%), as would clearer information on and in the package (36%) and more health education overall (33%).
It seems that, despite the trend toward mini-clinics and a plethora of generic and OTC options, consumers still seek out direction from their doctor and appreciate helpful instructions regarding the use and purpose of medications. Regardless of economic downturns, shoppers want to look and feel good and will figure out ways to stretch the budget for beauty essentials.