Private Label Buyer
Special Report

The Hot List

April 10, 2012


Made up of non-food categories that saw dollar sales across food, drug and mass merchandise outlets (excluding Walmart) expand 10 percent or more during the 52 weeks ending Jan. 22, 2012, PLBuyer’s Hot List includes fewer categories than last year’s version (38 vs. 51).

And while the number of categories making the list fell by 13, some of that is due to private label success in those categories, according to Jim Wisner, president of Libertyville, Ill.-based Wisner Marketing Group.

“When you have a lot of categories that are starting off with low bases, as they tend to gain some success they go from 1 to 5 percent, then from 5 to 10 percent, then from 10 to 12 and then 12 to 13, all of which in dollars are probably significant numbers,” says Wisner. “By the time they get to the fourth year of growth, it’s tapering off, because they’re not working with a low base anymore. They’re not a 1 percent share, they’re a 14 percent share and where going from 1 to 2 percent would double their growth, going from 13 to 14 percent, which is the same growth of dollars is not the same percentage wise. We’re seeing that in a lot of categories.”

Health and beauty care items popped up repeatedly on the list again this year, as was the case last year.

That may be partly due to the fact that the national brands have lost some credibility due to product recalls.

“OTC and HBC items also tend to be expensive, and, as consumers continue to feel pinched by rising fuel costs, private label alternatives have become particularly compelling in these categories,” says Carol Spieckerman, president of newmarketbuilders, a Bentonville, Ark.-based marketing firm.

Agrees Ben Ball, senior vice president of Deerfield, Ill.-based Dechert Hampe, “The fact that the top private label penetration items are HBC, and in particular OTC is not surprising at all.”

“The rationale is simple,” he says. “Consumers know that OTC medications are typically ‘monographed’ in much the same way the prescription drugs are. At a minimum, the key ingredients are. For example: a branded acetaminophen might have more or less of the active ingredient in it, and it may have different inert ingredients, but when it comes down to the acetaminophen itself it is identical for all intents and purposes. So when the label says ‘compare to the active ingredients in Tylenol’ you can. That gives consumers great confidence in private label OTC, and makes those huge price differences even more compelling.”

When it comes to non-food private label categories, some consumers may also have less attachment to national brands.

“I think that shoppers are finding private label options more agreeable than ever before,” says Jon Hauptman, partner at Barrington, Ill.-based consulting firm Willard Bishop. “While shoppers need to contend with small differences in flavor profile between the national brands and private label in food categories, they don’t have the same issue when it comes to non-foods. Consequently, one of the perceived barriers to trial (uncertainty about taste) is avoided. Also, as quality of all private label has increased, shoppers are more likely to try new private label items because their previous experiences with private label have been positive.”

Looking at the list overall, private label non-food categories had an average dollar share of 10.65 percent, down 0.71 percent from 2010. Total unit sales reached 555,030,380, a gain of 9.64 percent from 2010.

Nine out of 10 categories fell out of the 2010 Top 10 for non-food items including disposable foil pans, household/kitchen storage, laxatives, dental accessories/tools, liquid vitamins/minerals, acne treatment, tights, anti-smoking tablets, facial anti-aging. The only category that repeated in the Top 10 from 2010 was oral pain relief, or analgesics.

PLBuyer once again further analyzed the category data to bring you the top 10 lists by dollar sales, top 10 by unit sales, top 10 by changes in unit sales and the most costly and least costly per unit categories.

As mentioned above, consumers’ penchant for private label healthcare items continued as 7 out of the top 10 by both dollar sales and unit sales were HBC related items. In terms of dollar sales, cold, allergy, sinus tablets and packets head that list, followed by cold, allergy, sinus liquid and powder. Eye/lens care solutions, laxative and stimulant liquid, powder and oil, muscle and body support devices, foot care devices and vaginal treatments round out the top 10 with dog/cat needs and rawhide dog chews at numbers four and five respectively.

In terms of unit sales, cold, allergy, sinus tablets and packets leads the list with 137.9 units sold at an average price of $6.73, just 2 cents higher than in 2010.
Blood pressure kits are the most expensive item per unit on the Hot List this year, averaging $42.29 per unit. Unit sales in this category rose 23.22 percent last year. Anti-smoking tablets came in second, in terms of unit cost, at an average of $34.43 each.

Items with the lowest average unit costs were nail polish removers at an average of $1.77 each, shaving cream at an average of $2.00 each and nail polish at an average of $2.20 each.

In dollar sales terms, private label cold, allergy, sinus tablets and packets once again are the biggest category on the list with sales of $928 million last year, up 14.19 percent from 2010 on unit sales of 137.9 million, up 13.92 percent from 2010.

What will the Hot List for non-foods look like next year?

Expect to see beauty and HBC in general making gains, predicts newmarketbuilders Spieckerman.

“Dollar stores have identified it as a growth area and that alone will move the needle,” she says. “Tens of thousands of stores (and growing) operate in that channel and dollar stores are getting serious about expanding their online offerings at the same time. That’s a lot of business without looking any further.”

Agrees Wisner, “I think we’re going to continue to see growth in HBC. I think the subcategory of medical devices such as blood glucose monitors and blood pressure monitors will continue to grow as well. That will be an intriguing one to watch. I think we will continue to see growth in non-foods in the beauty side as well. Retailers are figuring out how to do these upscale brands or exclusive brands in categories that never used to be good for private label. So, I don’t want to say it’ll be an encore for those, but I suspect we’re going to see a lot of those on the list again next year.”