The past year has proven to be a transformational, once-in-a-generation event for the food and drug industry, as retailers had to rethink nearly every aspect of their operations and consumers embraced new shopping behaviors.
Now that the pandemic appears to be subsiding — thanks in large part to effective vaccine administration on the part of pharmacy operators — a new landscape is emerging in which consumers are expected to gradually resume their pre-COVID shopping patterns. How quickly those behaviors return and which, if any, of consumers’ newly adopted behaviors are retained remains to be seen.
The pandemic also forced many retailers to sharpen their skills in key areas, including e-commerce, curbside pickup and drive-thru operations. Going forward, retailers will seek to convert their learnings into enhanced shopping experiences that meet the evolving expectations of their customers.
Opportunities await the players who get it right in such health-and-wellness product categories as personal and beauty care, eye care, and others, as well as in other nonfood areas, including cleaning products and personal protective equipment.
The following are insights from industry thought leaders that outline where the ongoing challenges and opportunities may lie for an industry that remains very much in transition.
U.S. Consumer and Market Insights team, Unilever
Consumers consolidated their shopping trips for beauty and personal care in channels other than drug stores in 2020, according to Unilever’s CMI team. The share of consumer dollars for beauty and personal care (in Unilever categories) going to the drug channel in 2020 decreased from 20.2% to 17.8%, according to data from Numerator.
However, the drug channel continues to transform into a more health-oriented channel, they said, citing Kantar data. This may mean a shift toward health-oriented options, both for physical and mental health, which can range from vitamins to healthy snacks and drinks to more pampering products within personal care.
For example, in 2020, the growth in the vitamin sector in the drug channel was 17%, which was significantly higher versus 2019, according to IRI data.
As 42% of people indicated to Numerator that their health behaviors have shifted since COVID-19 started and the drug channel is one of the key channels for vaccinations, this could be an opportunity to capitalize on renewed foot traffic to promote products geared toward mental and physical well-being. About 49% of people indicated they will do some shopping while they are at the drug store to get their vaccine, according to Numerator.
In addition to the above, IRI data showed the drug channel increasing partnerships with third-party delivery services, and their online sales of beauty and personal care grew 109% in 2020. As more prescriptions are delivered online, there is opportunity for beauty and personal care products to become a bigger part of that online shop. This is particularly true if the online experience and apps are improved to easily connect to loyalty cards and promotions.
The food channel historically has had a hard time getting shoppers to put beauty and personal care items in their basket, with about 13% of their beauty and personal care dollars going to the grocery channel compared with about 38% of their dollars going to mass channels.
During the pandemic, Numerator data showed household penetration of beauty and personal care increased by 6.5 million households, as people sought one-stop shopping in grocery.
Moving forward, some grocers are seeking to reinvent the beauty and personal care parts of their store to try and keep the newfound traffic. For example, Kroger is revamping some of its beauty sections to be more experientially oriented.