The multiple grocers have had considerable success in building their shares of the packaged groceries and fresh foods markets. Indeed, they now take over half of all consumer expenditure – 56.3 per cent in the fourth quarter of 1995 (source: TN AGB Superpanel Till Roll data).
The multiples have also been successful in building their share of spending on personal care and health and beauty products, the traditional heartland of Boots.
In 1985, multiple grocers accounted for just 1 in every 4 spend on toiletry items, such as shampoo, soap and sanitary protection. Ten years later the amount is nearer 2 in every 4 (figure 1).
In terms of specific categories, the multiple grocers have further capitalised by outperforming rivals in oral care and other toiletries, now accounting for a 59.3 per cent and 57.8 per cent share respectively.
What has been of greater interest over this ten-year period, however, is the degree to which Sainsbury’s, Tesco and Asda have reversed the undertrade which restricted their penetration of the haircare market. Bathroom toiletries, such as deodorants and skincare rpoducts, remain a stronger category for chemists and drugstores, with Boots in particular, concentrating on its Global and Natural Collection ranges.
If one takes chemists, drugstores and other retailers to represent the high street, then the facts clearly support the view that the multiple grocers have grown at the expense of the local town centre and corner shops. But while the most obvious decline in share terms has come from the independent sector, Boots has also lost ground since 1985. Superdrug capitalised on its programme of new store openings and refurbishments during the Eighties and now holds a 10.9 per cent share of all consumer spending on toiletry items. Despite this, over time the number two slot has gone to a multiple grocer – first Sainsbury’s, and in the past 18 months Tesco.
There is uncertainty over what Asda will do in the future to increase its share of toiletries sales. The chain’s stores have large amounts of selling space, and could put in place their own toiletries fixture. Asda has also yet to launch its own loyalty card, which would create more sales of toiletry products.
The introduction of supermarket loyalty cards has improved the multiple grocers’ position relative to personal care retailers such as Boots and Superdrug. The loyalty cards encourage shoppers to go to supermarkets for their groceries, and while they are there, they are likely to pick up toiletries that they would otherwise have bought at Boots.
Supermarkets are also doing much work on improving their own- label offers, with launches of new sub-brands. But despite the undoubted success of the multiple grocers’ out-of-town stores against the high street retailers, capturing an even larger amount of customer spend on toiletries will not be easy. The commitment of the Boots and Superdrug shopper means neither retailer can be underestimated. Boots has the strongest franchise to launch own-label toiletries products. In 1995, 44 per cent of the population, some 19 million individuals, bought at least one toiletry item in Boots. The figures for Superdrug stood at 36 per cent of the population, or 15 million individuals (figure 3).
Not only is the shop traffic of the specialist personal care retailers secure, customer loyalty is also relatively stable over time.
Couple this with the ability of these retailers to understand customers and to merchandise their categories in a way which meets their customers’ expectations, and there is little doubt multiple grocers will face an even more intense battle to up their share to 3 in every 4 spent by the consumer on toiletries.