The drugstore industry has gone through a turbulent time. The economic crisis and new formulas such as Action, Big Bazar and Op=Op Voordeelshop caused many changes in the market. The total turnover in this sector amounts to € 3.93 billion. In the last twelve months, gross media spending increased by 4% and Kruidvat was by far the largest advertiser with almost € 100 million.
The drugstore market is dominated by traditional chains such as Kruidvat, Trekpleister, Etos and Hema and the self-employed D.I.O. and Da. In recent years, the discount formulas of Action, Big Bazar and Op=Op Voordeelshop have been added on the one hand, which mainly focus on price. At the same time, chains such as De Tuinen, Rituals and Gezond & Wel appeared on the other side of the spectrum, which meet a growing need with their health and wellness range.
Traditional chains significantly expanded store base
In order to curb the growth of discounters and wellness drugstores, the traditional chains significantly expanded their number of stores in ten years. The number of Kruidvat stores increased by 50%, Hema doubled the number of stores and Etos opened a hundred extra points of sale. Turnover rose by an average of only 0.8% in the same ten years. By way of comparison, in the period 1994 to 2003, the average annual growth rate was 6.7%. In the last ten, the share of drugstore chains in total sales increased from 56% in 2004 to almost 84% in 2014.
Significant increase in promotional pressure
Price has always been an important aspect for products for personal and home care, but the crisis has reinforced this even more. With competitive prices in a narrow range in certain categories (bath products, deodorant, oral care), discounters Action and Big Bazar have become formidable competitors for the established order. Both aspects (economic crisis and increased competition) have led to a sharp increase in promotional pressure. In 2008 it was still 23%, in 2014 it is expected to rise to 45%.
than in the same period a year earlier. Almost 90% of that media budget goes to television and folders. Etos, Trekpleister, Douglas and DA follow at a great distance, almost all of whom spent less in the past twelve months. The ‘challengers’ Big Bazar (+36%) and De Tuinen (+19%) on the other hand invested more in media, but with € 4.1 million and € 2.5 million respectively, their media budgets are much lower than those of the traditional players in this market.
This article is an adaptation of the article ‘Impulse by new players’, written by Han Eisma (FactsAct | www.facts2act.nl), that previously appeared in RetailTrends, October 2014, page 15-16 (www.retailnews .NL).