Challenges and Best Practices in the HBC Category

anaging HBC in c-stores is difficult.  Without an appropriate strategy to market and sell products of the HBC category, c-stores may find these items in their slow-moving inventory.

Health and beauty products in c-store might not generate large sales volumes, but they definitely produce significant margins.  According to Statista, in 2020, soap goods alone offered at convenience shops in the United States brought in about 141 million dollars.

Importance of Proper HBC Management

Someone somewhere is always looking for a product in the HBC category.  Despite the fact that total HBC dollar sales are less than 2% of store total, the average industry gross margin is second only to ice.  The average HBC margin in the business is 52.62%, over twice the entire industry average of 27.8%.  There are serious potential earnings if a c-store can generate HBC product sales volume.

“HBC is something customers expect to find in convenience stores.  Retailers are working to move more SKUs to make as much money as possible.  They’re looking at ways to make HBC more appealing, merchandise it better and offer the right product mix.” Richard Ginther, the Category Manager at Kum & Go.

HBC Management – Successful Approaches

To equip yourself with a potent strategy in managing HBC in c-store, you must:

Investing in Profitable Brands

If you want your products of the HBC category to sell, you must focus on filling your shelves with brands that are popular among your customers.  While doing your research on different brands, you must:

• Carry out your research on only one or two of the most well-known brands.
• Stock a small or medium variety of HBC products; this is generally referred to as a convenience-oriented size.
• In terms of advantages, carry the most popular variants or sub-brands.
• Keep a small amount of flavor/fragrance or strength variation on hand.

Research shows that of the 56 HBC subcategories, the top 10 make up nearly 85 percent of total sales share, with all other subcategories accounting for less than 2 percent of HBC sales each.

The 10 category leaders are:

1.  Internal analgesics
2.  Cold/allergy/sinus tablets
3.  Contraceptives
4.  Gastrointestinal tablets
5.  Cough drops
6.  Miscellaneous health remedies (almost exclusively lip balm)
7.  Vitamins
8.  Eye and contact lens care
9.  Sanitary napkins/tampons
10.  Cold/allergy/sinus liquids

Research on the HBC Category You're Targeting

Fully understanding the HBC category may be a difficult category to handle, HBC product suppliers and distributors are ready, willing, and able to assist c-store merchants in evaluating and optimizing their offerings.

Provide Convenience to Customers and Focus More on Small Packages

Being a c-store, your goal is to provide convenience to your customers, and this goes without saying.  Also, it would help if you geared your selling and marketing efforts towards products that come in small packages.

"Convenience is the driving force, and greatest opportunity, for health and beauty brands in c-stores.  Shoppers want to be in and out of the store quickly.  Hence, brands that deliver on product assortment in smaller package sizes and low-entry price points are more likely to win."  Rulynn Hansen, Senior Accounting Director at Epsilon Marketing Agency.

Challenges with HBC Products

Selling products of the HBC category requires effectively managing HBC in c-stores.  The following challenges are faced while selling health and beauty products in c-stores.

• Customers might think that you're selling fake products.
• If the brand you're selling doesn't recognize you as a seller, they might file a trademark infringement claim on you.
• Finding genuine HBC category suppliers is tough.
• Health and beauty goods can present problems with handling and storage.  Liquids, creams, gels, and other non-solids are often used.  Some will deteriorate after a particular amount of time on the shelf, while others may spoil fast at specific temperatures.  Some may leak, or their packaging may be delicate and easy to scratch or scuff.

HBC Product Category Outlook in C-Stores

Because of the diversity, price point and space requirements of beauty products, many retailers don’t sell makeup.

Recently, 7-Eleven, based in Irving, Texas, boasting more than 10,000 locations in North America, took a dive into private-label HBC by introducing a cosmetics collection dubbed “Simply Me Beauty.” The line includes 37 products—from blushes and lipsticks to false eyelashes and eyelash curlers—with price points ranging from $2.99 to $4.99 each. 7-Eleven provides a dedicated endcap and special signage for the new offerings.

Whether a store chooses to serve as a place for emergency purchases or wants to become a health and beauty destination, a focus on HBC can pay off.

Getting started with a section of HBC products or beefing up the existing category can be simplified with help from one of the many wholesalers that are experienced in working with convenience stores and advising on products, planograms and merchandising.

Though the overall future and direction of HBC products in C-Stores is a bit unclear, what is clear is that major C-Store players are looking to give the category room to make traction.