Applying an innovation mindset to the fundamentals of success in GM and HBW

Applying an innovation mindset to the fundamentals of success in GM and HBW

Naomi Sleeper
Director,  Productivity Improvement
Imperial Distributors


Last month, I attended the 2019 Food Marketing Institute’s (FMI) Mid-Winter Executive Conference. The need for supermarkets to innovate with an entrepreneurial mindset permeated as a theme throughout the conference. This includes new approaches to enhancing the in-store experience to delight shoppers and address new customer demands, as well as integration of artificial intelligence for improved analytics and supermarket operations. These opportunities have important implications for growth of the healthy, beauty and wellness (HBW) and general merchandise (GM) categories in supermarkets.

In a session called, “Power of GM and HBC in Grocery,” manufacturers and supermarket executives discussed approaches to succeeding in these categories. While we know the benefit that carrying GM and HBW in supermarkets can have to boosting shopper spend and basket size, these categories are underperforming in food stores. The opportunity to overcome this negative trend is huge and accessible: according to FMI and Acosta, 80% of shoppers already buy HBW in grocery stores but only for 23% of their category spend, while 71% shop for GM in food stores but only for 12% of their GM spend. Given $50B/yr and $31B/yr spend on HBW and GM in brick & mortar, this leaves $31B and $17B of “fair share opportunity” for purchase of HBW and GM, respectively, in supermarkets among consumers already shopping these categories in this channel.

Common approaches among retailers succeeding in these categories reveal key ingredients for taking advantage of this opportunity. Combining these components with innovative enhancements can lead to big wins in HBW and GM categories.

More Promotions: Promoting in HBW and GM helps to achieve two purposes: overcoming assumption that product in these categories are more expensive in supermarkets than in other channels, and increasing awareness of these products in stores. As noted in FMI’s report “How to Grow GM & HBW Sales in the Grocery Store,” over 63% of shoppers say that more promotions would increase their purchases of HBW in grocery stores. The frequency of promotions matter more than their depth. Because 75% of GM and HBW purchases are planned before the store, increasing customer awareness that these items are available at your stores is a key step to driving in-store purchases in these categories.  Predictive analytics can play a key role in optimizing the frequency, timing and pricing of these promotions. Mixed media approaches to personalizing and advertising these promotions both digitally and in-store can also help retailers maximize the effect of these promotions.

Targeted Assortment Increases: According to FMI, 57% of supermarket shoppers say better selection would increase their HBW purchases in grocery stores. Millennials are experimental in their purchases, often looking to try new products and brands. Speaking to their continuous trial and review of new beauty products, I have heard millennials refer to skincare as a type of technology, always advancing and changing with new research. Selective assortment enhancements that appeal to target shoppers, such as natural product offerings and innovative gadgets for millennials, can help to boost supermarket shoppers’ HBW and GM purchases. Making shoppers aware of product selection is critical. Digital enhancements to gain store-specific shopper insights and personalize awareness of new product availability can help stores make the most of these broader assortments.

Strategic Merchandising: According to FMI, over 44% of shoppers say improved aisle organization would increase their HBW product in Grocery. Careful merchandising for destination HBW and GM aisles is key to meeting shoppers’ needs for efficient in-store buying. With only 20% center store aisle penetration in grocery stores, cross-merchandising HBW and GM product into the perimeter enhances shoppers’ product awareness. Cross-merchandising can also provide a solution for retailers’ often-cited space challenges. While many stores already merchandise kitchen gadgets with fresh food, food retailers have an opportunity to be creative with HBW cross-merchandising to inspire additional customer purchases (think cucumber sheet masks next to cucumbers or coconut based creams with coconuts). However, in-store personnel focused on these categories tend to be limited in supermarkets. Sufficient staffing, especially merchandising experts specializing in GM and HBW categories, is important. Using technology to support routine operational tasks in stores can make way for investment in improved service in GM & HBW categories.

With strategic focus on GM and HBW promotions, assortment and merchandising, grocery stores can unleash “the power of GM and HBW in grocery.”  An innovation and digital mind-set can fuel this approach to success in these categories.