So what are the top selling categories in the drug channel? Six of the top eleven categories are outside the health and beauty care category.  Tobacco leads the way with almost $3 billion in sales, an increase of 18 percent from last year.  Cold/allergy remedies, nutritional supplements, headache remedies and chocolate candy round out the top five.   In terms of growth leaders, pet care products posted a 67 percent increase from last year, followed by depilatories and peanut butter.  Of the eleven categories showing the strongest growth, eight are foods.

But the leading chains such as Walgreens, CVS and Rite Aid are stepping up their efforts to innovate and bring more customers through their doors.  As with grocery stores, private label products are increasing their share of sales, with store branded cold/allergy remedies, nutritional supplements and headache remedies leading the way. Meanwhile, private label pet care, laundry detergent and antacids have shown the most growth.  Some of the chains are establishing in-store medical clinics, where customers can receive services such as blood pressure screenings, treatment for common maladies and flu shots.   Others are making the shopping experience more efficient by re-designing stores and reducing SKUs. 

“Drug retailers are feeling the heat from mass merchandisers and other retail channels.  Look for drug stores to innovate and evolve with more in-store clinics, competitive store brands, and expansion beyond traditional health & beauty categories,” said Tom Pirovano, Director of Industry Insights at Nielsen.

Other drug store facts:

• Drug store shoppers spend nearly twice as much on cigarettes than on cold/allergy remedies.
• Drug stores dominate all channels in the sale of contraceptives, generating 64 percent of sales in the category.
• The two highest growth categories in terms of share for the drug channel are tobacco and feminine hygiene.
• The category that has the highest drug channel private label share: canned nuts (64%).
• The Cleveland market has the strongest drug store channel representing 8.6 percent of total sales compared to 3.8 percent for the U.S. as a whole. Miami, Boston, New York and Sacramento round out the top five.
• Denver, Salt Lake City, Portland, OR have lower-than-average sales in the drug store channel
• Drug stores skew to African Americans, households without kids, lower incomes and older households than other channels
• Where one lives plays a huge role in the channels one shops: those living in cosmopolitan centers and struggling urban cores spend more of their money in drug stores than those in suburbia or rural communities.

“It appears that more people are trying to quit smoking by using over-the-counter aids in 2009 than in recent years.  Whether that is the result of new taxes or just a plain desire to improve their health – or a combination of the two – is unknown, but Americans are spending more money on these products to help them kick the habit,” said Todd Hale, Senior Vice President, Consumer and Shopper Insights at Nielsen.

For the 52-weeks ended April 18, 2009, sales of these products on an equivalized unit volume (EUV) basis grew 4.4 percent over the same period in 2008 (1,747,202,576 versus 1,673,456,878).  In 2008, EUV grew 9.3 percent over the same time period in 2007.

More telling, however, are figures from the first four months of 2009.  For the four-week period ended January 24^th, EUV was up 14.2 percent from the previous four-week period, and up 10.2 percent over the same time period in 2008.  For the four weeks ended February 21^st, EUV increased 12.3 percent over the previous four-week period, and up almost 20 percent the same period a year ago.  The four weeks ended March 21^st showed a 4.6 percent increase from the preceding period and a jump of 23.3 percent over the same period last year.  Finally, for the four-weeks ended April 18^th, sales on an EUV basis declined 3.5 percent from the previous period, but posted a 20.2 percent increase over the same period in 2008.

“The data does suggest that smokers may have used the recent tobacco tax hikes as an opportunity to quit,” said Todd Hale, Senior Vice President, Consumer and Shopper Insights at Nielsen.  “We will continue to track the sales of over-the-counter smoking cessation aids to determine if sales increase further or whether this is a temporary trend.”

“Plain Rural Living” households — a Nielsen Spectra lifestyle segment that includes households in small towns and rural areas with the lowest population densities — account for 21% of all American households.  These households represented 43% of canning/freezing supplies product dollar sales, 31% of automotive product dollar sales, and 29% of tobacco and accessories product dollar sales.

Other categories skewing to rural households include insecticides, pesticides, and rodenticides, as well as fresh meat, flour, sugar/sweeteners, pet food, and carbonated beverages.

Nielsen’s Marketing Tip:
Retailers targeting rural households may want to promote these categories (above) with feature ads, displays, and product assortments. Manufacturers should consider cross-promoting and cross-couponing items in these categories.

Nielsen’s Dollar Volume Index identifies demographic groups that account for above or below average dollar volume purchases for a given product category.

Data for the index was collected via Nielsen’s Homescan consumer panel, a nationally representative sample of U.S. households that provides a stratified, proportionate, non-biased representation of the U.S. population. Homescan panelists scan all of their UPC coded purchases after every shopping trip, allowing Nielsen to capture their complete shopping and buying behavior.

Although households are often assumed to be conventional families with children, most U.S. households do not have children under the age of 18.  In fact, households without children account for roughly 65% of all U.S. households. 

According to Nielsen, these households represent 77.5% of liquor and wine dollar sales, 74% of vitamin dollar sales, and 73.6% of floral/gardening product and tobacco dollar sales.

Other categories skewing to households without children include medications/remedies, pet food, books and magazines, and beer.

Nielsen’s Marketing Tip:
Retailers targeting households without children may want to promote these categories (above) with feature ads, displays, and product assortments. Manufacturers should consider cross-promoting and cross-couponing items in these categories.

Nielsen’s Dollar Volume Index identifies demographic groups that account for above or below average dollar volume purchases for a given product category.

Data for the index was collected via Nielsen’s Homescan consumer panel, a nationally representative sample of U.S. households that provides a stratified, proportionate, non-biased representation of the U.S. population. Homescan panelists scan all of their UPC coded purchases after every shopping trip, allowing Nielsen to capture their complete shopping and buying behavior.