Private Label Buyer
Guest Commentary

Plenty Of Opportunities For Retailers In VMS

Vitamins, minerals, supplements set for future growth.

July 3, 2013
Opportunities For Retailers In VMS

We’re not yet out of the woods with a recovery from what is being called “The Great Recession.” Economists and other pundits watch all the indicators looking for any sign of good or bad news; the same set of data often elicits some of each.

While the recovery may be slow, there is little doubt that whatever constitutes “normal” going forward will be different from five years ago.

Private brands are one area that has actually benefited from the foundering economy. The typical shopper response in a recession is to “trade down” to private label when the economy takes a dive and then return to the national brand as things get better. That didn’t happen this time, for a couple of reasons.

First, as stated, we’re not really recovered yet, and consumers are still playing it safe. Second, private brands are no longer just cheaper imitations of the real thing; they increasingly offer quality products with a solid value proposition.

Whatever the reason, the move back to national brands hasn’t happened, and may not, as short-term changes become long-term habits. Growth for retailers remains a problem though, even with higher private label sales. The retail food industry is only growing at about 2 percent annually, which isn’t really growth.

One bright spot – and a major opportunity – is in vitamins, minerals and supplements (VMS).

This category is projected to grow at more than 6 percent annually the next few years, driven by higher consumer awareness and an increasing desire to be proactive about nutrition. Already an $11 billion industry, this growth trajectory shows no signs of leveling off. From 2009 through 2011, supermarkets were the biggest gainers, with more than 10 percent growth in the category overall.

In addition, VMS shoppers are valuable: their annual spend per shopper is nearly twice as high as that of non-VMS shoppers, and basket size is 167 percent greater. Vitamins, minerals and supplements make up the largest HBC category in supermarket sales in the U.S., and 80 percent of consumers buy their VMS products in supermarkets and drugstores.

Add all those numbers up and the result is growth opportunity, no matter how you look at it.

Even better is the private brand aspect. As consumers have become accustomed to buying private labels and are comfortable with the quality of those products, they are also considering private brands for high-end purchases when they wouldn’t have a few years ago. VMS benefits from this change in perspective, as educated shoppers get savvy about vitamins and look for information beyond brand names at the shelf.

There are three important things to remember about the VMS category:

• It’s growing at 3 times the overall growth rate for retail

• Shoppers in this category have larger baskets than other shoppers overall

• Private brands are relevant and set a tone for other categories in terms of quality and value

What VMS shoppers want most is information at the shelf edge. Seventy-four percent of shoppers say they want product and condition-specific information available while shopping the category. Shoppers are hungry for education that is relevant to their needs, and this is where grocery stores can really benefit by providing relevant content on the shelf edge.

Because retailers ultimately control what’s on the shelf edge, they can make certain that they put emphasis on their private labels while providing educational insights for shoppers. Shoppers in this category aren’t any more brand loyal than they are for other categories, and by providing some incremental data points about the private brand products, there is a connection to be made with the shopper that can cross to other store brand categories.

 VMS shoppers are open to buying private brands, have larger-than-average baskets, and are just looking for some added information about the products they buy. Answering those needs by creating a VMS destination will not only grow share for that category – and for the private brands within it – but help overall revenue growth across the store.