Vitamins: Key Engine of HBC Growth

In a sparkling, just-opened Whole Foods unit in New York's Westchester County, vitamins, minerals and supplements are given massive space. The section, positioned right near the entrance, is part of an HBC valley and consists of nearly 100 running feet, around 540 shelf feet and something like 2400 facings. It includes products from adult multi vitamins to echinacea to quercetin. There’s an 8-ft. cooler case for the likes of flax oil and probiotics. Tags go up to $78 and beyond. A dedicated vitamin clerk helps customers.

Why did Whole Foods do all this?

Well, OK, it’s part of their go-to-market, but there’s an even more compelling reason for this huge investment in space, inventory and sales effort: a recognition that vitamins are an engine of growth, not only for HBC, but for the total store as well. It’s a mantra that works not only for specialists like Whole Foods, but for all mass market retail outlets.

For starters, vitamins have weight. According to Nielsen Scan Data, it’s the second largest category in HBC with $4.8 billion in sales in FDMx for the 52 weeks ended Sept. 3.

Indeed, the vitamin cateogry leverages this weight to become one of the most powerful growth generators in the store. For example, it is the number one category in generating HBC growth. For 52 weeks ended Sept. 3, vitamins experienced a 7.4 percent rate of increase, the highest percentage in the department and a full half point faster than the runner up, cosmetics.  They also produced the largest amount of extra dollars -- $328 million – in the HBC department last year, which represents no less than 29 percent of all extra 2011 dollars produced by the ten largest HBC categories and nearly $125 million greater than what also-ran cosmetics produced.

In addition, vitamins were number 10 in growth compared to all categories in the total store – food and general merchandise as well as health & beauty care. Vitamin’s 7.4 percent growth rate compares very favorably with overall growth rates in FDMx: The total store only increased 2.3 percent and the HBC department 2.6 percent.

The fuel for this “engine of HBC:” the extremely valuable vitamin shopper. He or she spent an average of $7,521 at a retailer in the 52 weeks ended June 11. When on a shopping trip that includes vitamins, that shopper’s basket averaged a solid $90.67 in the same time period. Adequate space and inventory, extra sales effort, and careful management of the vitamin category will bring this valuable shopper to a store help a retailer benefit from the high level of performance of this important caegory is capable of.

Coming in Future Tips
Future Tips will show how to leverage the pharmacy department on behalf of vitamins and how to build a vitamins business with five key retail actions.

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