87% of Grocery Store Shoppers Usually Purchase HBC and GM Products Outside Grocery Channel

Acosta Group has shared the results of its recent proprietary Shopper Community study on Health and Beauty Care (HBC) and General Merchandise (GM) sales in grocery. Every month, 114 million households are purchasing food and beverages at grocery stores, according to NIQ. The Acosta Group study reflects grocery shopper behaviors and perceptions, and outlines strategies to convert a percentage of consumers that are currently purchasing HBC and GM in other channels to shop for these items at grocery. “We identify the biggest challenges grocery retailers face in this study related to HBC and GM purchasing, and present solutions for how to reset shopper perceptions and expectations, addressing category opportunities, pricing, promotion, and product selection,” said Kathy Risch, SVP of Thought Leadership and Shopper Insights for Acosta Group.

Consumer Behaviors and Perceptions

Shoppers think of grocery stores as being just for food and beverage purchases. Nearly 70% of those surveyed say that they typically do not visit the general merchandise, household products, personal care, or health and beauty products aisles at their traditional grocery stores. Most of these shoppers are choosing mass merchandisers for their non-food and beverage products, with a smaller percentage purchasing these products online or at drug stores.

Top shopper considerations for HBC and GM purchases are price and selection. 47% of consumers surveyed say that they shop at their favorite retailer for the lowest everyday prices, while 45% say that it’s because their preferred retailer offers the selection of products they want to buy.

Conversely, 48% of these shoppers say that it’s because of their negative perceptions of price and promotions at grocery that they do not currently shop for these products frequently when making their food and beverage purchases.

Overcoming Challenges to Grow HBC & GM Sales at Grocery

HBC and GM shopping habits are admittedly hard to break. The Acosta Group study focuses on ways retailers can help to shift habits and capitalize on opportunities.

The study identifies the top ten ‘gateway categories’ that represent 85% of volume for HBC and 76% of volume for GM in grocery, per NIQ Panel data, including over-the-counter (OTC), nutrition, oral care, bath/shower, kitchen, outdoor recreation, batteries and others. “In addition to understanding the critical gateway categories for conversion, we’ve identified three key strategies to shift shopper behaviors and perceptions and drive expanded sales at grocery for HBC and GM,” said Shannon Hodock, SVP, Client Development, Acosta Group.

• Overcome perceptions of high prices and take credit for good prices: 80% of shoppers say that better prices and promotions could help grocers gain more business, and grocers have some good stories they need to tell on competitive pricing.
• Drive shopper impulse purchasing: While 90% of shoppers are planners when purchasing food, HBC and GM, 70% admit to buying products on impulse. Shoppers are interestingly far more open to impulse purchases in HBC and GM (27%) vs. food (8%). And if consumers see that an item is on sale, 1/3 are prompted to purchase before or during their shopping trip.
• Expand selection of HBC & GM products and brands: Customers want better variety, selection, and brand availability. Of note, national brands are the fastest path to conversion and trip growth, but 59% of retailers say that they will continue to prioritize private label.

Get on the Grocery List

“We believe grocery retailers have an exciting and expansive opportunity to capture and grow HBC and GM sales,” said Hodock. “Strategically, retailers need to create a targeted ‘get on the grocery list’ campaign for their shoppers, incorporating a holistic omnichannel strategy and a customized marketing plan as they tackle the three key challenges to overcome current perceptions and shopping habits.”

The promotional goal for grocery retailers should be to build their shoppers’ total basket at grocery, focusing on their key gateway categories for conversion. Implementation of simple promotions, such as discounts or temporary price reductions, buy one get one free (BOGOs), and loyalty/rewards programs will drive the greatest shopper interest. Customization of offer types, features, or displays, will help to drive the strongest results.

“Retailers will want to optimize their selections in HBC and GM merchandise, especially in the gateway categories where selection is highlighted as most important to shoppers,” said Hodock. “Harnessing the power of national brands can also assist in driving growth.”

Acosta Group’s Accelerating Growth of HBC & GM at Grocery Study was conducted from Sept. 1-7, 2023, with 1,017 primary household shoppers. Respondents are part of the company’s proprietary Shopper Community.

Acosta Group’s recent Clean Label Insights Study, conducted with its proprietary Shopper Community, provides brands and retailers with insights into the growing value shoppers place on clean labels in purchasing decisions and their attitudes on regulations pertaining to product ingredients, including the California Food Safety Act of 2023.

Clean Label Key Attribute in Shoppers’ Purchasing Decisions

Acosta Group’s deeper dive into clean label comes shortly after the release of its five retail predictions for 2024, one of which stated that consumers will prioritize what’s NOT in their products.

While all consumers may not be aware of recent regulatory legislation, 83% of shoppers are already knowledgeable about clean label products or have heard the term. Not officially defined, clean label products are described in the industry as having as few ingredients as possible, easy-to-recognize ingredients, and no artificial ingredients or synthetic chemicals.

“Our research further defines shopper priorities, preferences and generational differences around clean label products,” said Kathy Risch, SVP, Thought Leadership and Shopper Insights, Acosta Group. “It’s clear that shoppers consider the absence of negatives, or an emphasis on what’s not in the products, to be the most important attribute in their clean label purchasing choices.”

When informed of the term, shoppers say clean label is important or very important for their purchasing decisions, with nearly 8 in 10 shoppers believing the products are better for them/their families and for the environment.

Shopper attitude is reflected at checkout, with clean label sales outperforming total store sales by a compound annual growth rate of 8% versus 6%, respectively, over four years, according to NIQ.

Without a doubt, legislation is accelerating the clean label trend as it forces significant changes to be made to foods that are consumed every day. Brands are reinventing the classics and taking steps to remove chemicals, but more can be done based on product changes that have occurred abroad. Specific to food and/or beverage, 55% of all shoppers believe more regulations are needed. That number increases to 72% for Gen Z and 62% for clean label buyers.

The biggest challenge to clean label purchases is cost, with some shoppers saying the products are “too expensive” or that they “don’t believe the hype.” When prices are higher, 40% of men are willing to pay for clean label products, compared to 28% of women, according to the recent study.

Clean Label Products Skew Younger Overall

Over the past six months, most consumers knowledgeable about clean label purchased some of these products, led by plant-based milk, plant-based meat, and baby food sales. But clean label products skew younger overall, with Gen Z and Millennials stating that they expect to buy more of these products in the future, positioning them as clean label’s strongest advocates.

For younger consumers, clean label purchasing decisions are distinctly driven by health benefits for themselves and their families. In the case of Gen Z and Millennials, a higher value is placed on natural or Certified Organic products.

The Acosta Group study revealed that today, younger buyers are more likely to notice clean label brands or retailer-led clean label programs, both online and in-store, at the retailers they shop most frequently.

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Takeaways for Retailers and Brands

Importantly, 57% of shoppers trust retailers’ clean label efforts, with that number rising to 77% for households with kids, according to the Acosta Group study. In addition, 70% of all shoppers want retailers to help them understand clean label products.

We know that many consumers – especially younger consumers – care about clean label, support legislation, and trust retailers to offer them true clean label products as they also inform them about these products. This lays a solid foundation for ongoing sales growth, supported by savvy, integrated and strategic programming to continue to build consumer trust, allay cost concerns, and educate shoppers about these better-for-you products.

“It’s essential that clean label programming meets consumers as they shop seamlessly in-store and online, through digital and social media campaigns and retail media, in addition to packaging, signage and shelf management. Understanding the differences in key label attributes is valuable to building campaigns, and retailers should leverage AI to provide shoppers with recommended products based on the absence of ingredients, a differentiating attribute we know is key,” said Andrew Fleming, SVP, Natural, Acosta Group.

Shopper research was conducted Jan. 19-22, 2024, with 1,257 U.S. shoppers, members of the company’s proprietary Shopper Community. The Acosta Group Shopper Community is comprised of over 40,000 demographically diverse shoppers across the U.S. and is the company’s proprietary community for survey engagement.