How consumer shopping habits are changing

A recent report by Global Data in collaboration with Amazon describes changing consumer shopping habits during the Covid-19 pandemic. The report highlights a stark increase in online sales, but stresses that the online channel did not dominate during the peak of the pandemic — the majority of sales during lockdown were made at physical stores that remained open. In addition, the highest growth rates over the past few months are attributed to multichannel retailers, rather than pure-play online retailers.

The pandemic has catalysed closer integration of physical retail and online spaces, with many traditional retailers emphasising or introducing additional services such as curbside pick-up. These services have been well-received; almost 68% of US consumers say they will use curbside collection more, even after the pandemic has subsided. Also, in countries that have reopened post-Covid, there has been a “mini-rush” back to bricks & mortar retailers, highlighting how much consumers – especially in the US, UK and France – have missed the social interaction that physical stores offer.

As a result, the penetration rate for online is coming down as consumers resume physical shopping. According to the survey, penetration will remain elevated compared to 2019 but the peaks seen during lockdown were exceptional, not a new normal. If anything, the report suggests that the role of the physical store is actually being strengthened in some ways. In the USA, Global Data projects around 35.7% of non-food sales transacted online will be supported by a physical store this year – more than in 2019.

Comment from Laura Howard Werling, Market Analyst CIMA, Nicholas Hall Group of Companies: The Global Data report challenges the narrative that the pandemic, and subsequent growth of the online channel, spells the end for physical retail. Instead, retail stores have performed well over the past few months and are successfully utilising a multichannel approach to adapt to the disruption. Consumers have been satisfied with this approach and it should be no surprise: the modern consumer views online and retail stores as one market and navigates both spaces seamlessly to achieve maximum efficiency when shopping.

We are pleased to announce a special Q4 promotional event, which will run until the end of the year! For October only, we are offering a 25% discount on annual subscription rates for Insight and CHC New Products Tracker, alongside up to 50% on selected reports titles. Watch this space — more promotions will be coming in November and December! To find out more, or to make a purchase, please contact melissa.lee@NicholasHall.com

OTC e-commerce: China

The rise of e-commerce, especially in key markets like the USA and China, as well as certain European countries such as Germany and the UK, continues to alter the dynamics of the consumer healthcare market and this is a trend we plan to monitor ever more closely here at OTC DASHBOARD over the coming years.

In addition, regulators across the world are still getting to grips with the issue. The China Food & Drug Administration has said that it is welcoming comments until 12th March 2018 on a draft regulation entitled Provisions for Supervision & Administration of Online Drug Sales. This stipulates that online sellers of medicines must be licensed pharmaceutical manufacturers, wholesalers or retailers. Manufacturers and wholesalers must not sell medicines to individual consumers and retailers must not sell Rx or controlled medicines online (legalising the online sale of Rx drugs has previously been considered in China).

CFDA.jpg

The platforms through which online medicines are sold must also adhere to and assist with product recalls where there are safety or quality issues. The regulation also stipulates that the CFDA will develop a national online medicine surveillance system and supply details of violations to provincial authorities, which will investigate and enforce any follow-up action.

Given the popularity of smartphones in China, and the rise of mobile payments and online shopping sites like Tmall (Alibaba) and Taobao and social media platforms like WeChat, it has become ever more difficult for regulators to monitor the online sale of medicines. This also presents a challenge for those trying to gauge the true size of the OTC e-commerce sector in China, but all indications point to this being a fast-growing channel that can no longer be ignored.

Embark on The Evolving Consumer Journey at our 5th Asia-Pacific OTC Conference & OTC Academy Training Workshop! Held in Singapore on 17-18 October 2018, this meeting aims to help guide you through this complex and ever-changing landscape. The half-day workshop will take a look at Inspiring Self-Care. Book before 15 August to take advantage of our early bird rates! Please contact maricar.montero@NicholasHall.com to book your place today or for more information. 

Online eating in-store sales in Germany?

Despite OTC growth in Germany remaining sluggish in 2014, online sales are starting to make serious advances. Online sales now account for a little over 10% of the country’s total OTC market, according to industry sources.

While market share is still relatively modest in traditional categories like cold & flu and GIs, online turnover for a variety of lifestyle and VMS brands – for which there is no desperate need for immediate face-to-face interaction with a pharmacist – is around 50% of that generated through pharmacies and drugstores. While convenience is, of course, a major factor, price is also significant, as consumers are often able to save €15 on premium supplements online, with savings growing further on jumbo packs. It is also noticeable that many of these double-digit sales increases are being made by products positioned for Germany’s older consumers, in particular eye vitamins with Age Macular Degeneration positioning, joint health products – now equivalent to two-thirds of pharmacy turnover – as well as herbal memory & brain health, with several premium ginkgo-based options chalking up huge increases in 2014. For the potentially less mobile consumer in the 65+ age bracket, a steadily growing demographic in Germany, the home delivery element is crucial.

So just who are the online retailers making headway? German marketing agency Dr Kaske completed a survey analysis of the 15 largest in April 2015, scoring them according to price on a select basket of common OTCs, search engine optimisation, customer service, user-friendliness and, of course, actual visitor numbers. Leader in all categories was Shop-Apotheke, a subsidiary of Netherlands-based Europa Apotheek Venlo, although the more widely known DocMorris – sold by Celesio to Swiss pharmacy retailer Zur Rose in 2012 – was a close contender, featuring the best SEO. Medikamente-per-klick and Sanicare are also noteworthy, with the latter investing heavily in TV advertising in 2014.

For more insight into trends and developments in Germany and elsewhere in Europe, why not enquire about our monthly OTC INSIGHT Europe publication? Contact nino.hunter@NicholasHall.com.