The Supply Side: Walmart U.S. focusing more on health and wellness

Health and wellness is a big a category for Walmart U.S., generating more than $32.82 billion in sales in fiscal 2016 and rising more than $1.14 billion from the previous year.

Wal-Mart Stores Chief Financial Officer Brett Biggs has said the retailer would move more resources into the health and wellness category, which is poised for continued growth. In the fourth quarter ending Jan. 31, the category saw single-mid-digit comp sales, according to Biggs.

Biggs said the retailer will invest more into private label brands Great Value and Equate within the health and wellness category. He said the retailer has had growing over-the-counter sales, and the category has seen better traffic.

A recent report from Nielsen indicates untapped potential for suppliers and retailers looking to capture health and wellness sales. Nielsen’s Strategic Health Perspectives survey found 63% of Americans said they’re trying to eat healthier, with 49% saying they consciously eat more fruits and vegetables. Organic and GMO-free food sales are outpacing the average for the rest of the store.

Beyond healthier foods, Nielsen found consumers are spending millions of dollars each year on nutritional diet aids, pain remedies, sleep aids, throat lozenges and diuretic remedies. A Nielsen shopper panel last year found 39% of Americans suffer from an ailment, many of whom manage it themselves. The survey found 47 million households have someone who manages ailments with diet, and these households spend more than $268 billion at food and retail stores each year.

Allergies impact 43% of the households in the survey, 34% experience acid reflux, 33% have high blood pressure, 28% are obese, 25% are closely watching cholesterol and 23% treat themselves for joint pains. Nielsen found 24.8 million households have a diabetic member. The retail spend for diabetics is an estimated $154.1 billion annually. Of that, $92.2 billion is spent on food for diabetics.
With 3.9 million households having a need for gluten-free products, the total category spend is worth $26.1 billion. Nielsen reports $16.7 billion for gluten-free foods.

Roughly 10.3 million households have someone who is lactose intolerant. Those households spend $63.5 billion on products and $38.9 billion on foods that can be consumed by the lactose intolerant consumers each year, according to Nielsen.

Perhaps the biggest opportunity for suppliers and retailers are those households with overweight consumers. There are 34.2 million of households with a total retail spend of $208.6 billion, and a whopping $127 billion is spent on foods.

Nielsen said it’s important for retailers and suppliers to learn more about specific health topics and what it takes for consumers to meet their wellness goals. For example, Nielsen found the average diabetic patient takes 5.4 prescription medications for the ailment, and they also purchase an assortment of specific healthcare items disproportionately than the general public. Nielsen said 65% of diabetic consumers also use diets to manage their conditions with diet like buying products with reduced salt, sugar and fat.

The health craze is not just about eating better. Nielsen said there is real momentum mounting in probiotic sales from vitamin supplements, yogurt and refrigerated teas. The probiotic space is expanding quickly, as the market share of supplements with probiotic claims has grown to 12%, up 26% in dollar sales from a year ago, Nielsen reports.

Nielsen said consumers are also seeking fiber in their diets to promote digestive health with 57% of those surveyed saying fiber content impacts their buying decisions. Nielsen said this is an opportunity for suppliers. The U.S. Food and Drug Administration (FDA) has defined 60% of the products in the canned bean category as an excellent source of fiber. Only 28% of those products, however, include a fiber claim on the package, according to Nielsen.

The Nielsen report also found consumers making adjustments because of rising healthcare costs. Some of the trends involve consumers making trade-offs such as taking a prescription less often than recommended (21%); taking an OTC medication first (20%); asking for cheaper alternatives (27%); and sometimes sidestepping the doctor altogether. Nielsen said the health and wellness category holds significant opportunity for manufacturers and suppliers.

“Food remains a primary driver in health and wellness, but more than 70% of survey respondents agree that eating right is a challenge,” Nielsen noted in the report. “The upside for manufacturers and retailers, however, is that 70% agree that they can manage their health and wellness through proper nutrition, and that means they’re actively looking for an array of fresh items, clear ingredient listings and transparency about nutrition facts/benefits.”

Nielsen said the age of transparency is here, and consumers also want simplicity when it comes to labeling. Consumers are reading labels, and that is shaping their basket purchases. For example, products labeled “gluten free” experienced a combined average growth rate of more than 11% last year. Organic products labeled as such saw a combined sales growth rate of 15% year-over-year. Meanwhile, “natural” and “GMO free” products also had double-digit growth rates last year.

Researchers said there is not a one-size-fits all approach to health and wellness. But consumers are pushing the healthy living trend, and it’s up to retailers and suppliers to provide the solutions, noting generalized and ambiguous solutions won’t suffice. In-store clinics and kiosks that provide health services such as blood pressure and body mass index are becoming mainstream in retail pharmacies at Walmart U.S., Sam’s Club and their competitors. Nielsen said these in store clinics provide big opportunities to influence over-the-counter medication sales.

Another Nielsen report found 53% of adults who visited a health care clinic in-store, were influenced to buy a retail product as a result of their visit. Other findings were that 36% were influenced to buy OTC medication, 27% bought personal care items, 24% purchased food and 18% were influenced to buy household cleaners.

Walmart U.S. operates 19 clinics, with the newest one opening in 2017. The retailer has said the Walmart Care Clinic is a primary healthcare clinic staffed by licensed nurse practitioners who offer a wide range of services. The clinics are located in Texas, South Carolina and Georgia. The last of the retailer’s clinic opened Nov. 11, 2015. Walmart has kiosks in more than 2,200 of its U.S. stores. In the supercenter in Jane, Mo., Walmart has set aside a portion at the front of the store for medical equipment sales and services for items such as lift chairs and walkers.
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Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.