How can retailers capture growth in consumer health care?
Consumers are becoming health-conscious as interest in self-care continues to rise. Many consumers are becoming their own health advocates as they seek new ways to improve their well-being.
There were early indicators of this before the pandemic, but the public health crisis accelerated the shift. As shoppers flocked to stores to purchase COVID-19 supplies and many other OTC products in 2020, consumer health care enjoyed a heady 6.7% sales growth. Many reluctant shoppers tried online ordering for the first time, and became regular e-commerce consumers. In 2021, omnichannel sales in the consumer health category saw 12% growth to the tune of $105 billion, outpacing total store sales (5.3%), with e-commerce sales growing 27%. As innovative leaders strive to capture sustainable growth in 2022 and beyond, there are pockets of omnichannel opportunity in consumer health care.
Is the price right in personal care?
Now more than ever, consumers are on the hunt for cost-effective personal care products and OTC medications to address their health-and-wellness needs. The OTC/personal care category saw impressive growth throughout 2021, bringing in $2.3 billion dollars in sales. Price was a large factor in this 6% increase, driving 90% of growth according to IRI’s 2021 market data.
While price is still on the rise, a strong 2021-2022 cold season led to strong growth in the cold and cough sectors. Cold and cough accounted for more than 50% of the OTC growth in season.
Retail drug stores continue to rebound, with 49 million more trips in 2021 versus 2020. E-commerce OTC sales are on the rise, as many consumers appreciate the ability to price-compare to find the best deal on a digital platform.
Most shoppers purchase both online and in-store, and last year saw strong omnichannel sales growth for OTC products such as suntan items (26.3%) and sleep aids. Manufacturers should focus on the right-value proposition that allows consumers’ to manage their self-care needs and their budget.
Navigating demand for nutritionals
Nutritionals saw great success in 2021 with 10% growth. Increased demand drove about 77% of this growth, as consumers became increasingly interested in products that offer ingredients to boost health, immunity and offer other functional benefits. Weight control liquids and powders was the leading product type in this category, followed by supplements.
However, in the Latest 52 weeks ending July, we are beginning to see growth slow for nutritionals, posting only 7% growth with price increase now driving approximately 43% of that growth. Despite great success during the pandemic, nutritionals may face headwinds moving forward.
Innovation drives medical device sales
COVID-19 revolutionized the medical device industry, as new consumer needs spurred innovation and technological advances. Throughout 2021, medical device sales increased by 8% ($1.2 billion) as new COVID-19 testing solutions emerged.
At-home testing kits were the highest-selling new products in 2021, with BinaxNOW tests garnering a whopping $677 million in sales, according to IRI’s market data. Consistent with 2021, innovation in COVID-19 testing kits remains the primary driver of growth in the medical device sales category.
The future of the consumer healthcare market
Today’s consumers have more places to shop and more ways to connect, and as more people adopt e-commerce ordering and delivery, a deep understanding of omnichannel is essential.
Manufacturers can leverage detailed profiles of high-value shoppers to optimize specific promotions and offers to each group, focus on creating a sustainable consumer experience and double down on social media, especially platforms like TikTok.
By understanding the needs of shopper groups and knowing how to respond to shifting shopper demands, leaders will have a path forward to achieve outsized growth in 2022 and beyond
“Now more than ever, consumers are on the hunt for cost-effective personal care products and OTC medications to address their health-and-wellness needs.”
