Vitamin specialty, which includes Vitamin Shoppe and GNC, ($1.5 billion); Costco ($1.3 billion); and CVS ($1.2 billion) round out the next three largest outlets for annual VMS sales. TABS found that VMS sales were up 3% compared to 2015 and were being driven primarily by increases in pricing. TABS Analytics estimates the annual U.S. VMS retail market to be $12.8 billion.
The study, which is now in its seventh consecutive year, was conducted in April 2016 by Caravan, part of ORC International, and surveyed 1,017 geographically and demographically dispersed adult consumers between the ages of 18 and 75. The purpose of the study was to determine: how many types of vitamins and nutritional supplements were purchased, what types of vitamins and nutritional supplements were regularly purchased (three or more times per year), and where vitamins and nutritional supplements were regularly purchased.
Amazon continued to lead all online domains with a 35% share of purchase occasions (a proxy for share). Notably, pure play domains (online retailers without brick and mortar stores) dominate online sales with a 78.1% share compared to brick and mortar online sales share of 21.9%. Four pure play domains had an increase in share compared to 2015: Vitacost (+4.4%), Puritan’s Pride (+3.3%), Swanson (+2.4%) and Bodybuilding (+1.5%).
The survey revealed that online brick and mortar domains lost a significant amount of share to pure play domains. However, four online brick and mortar domains posted gains in share over 1% including Vitamin Shoppe (+2.5%), Target (+2.5%), GNC (+2.4%), and Costco (+1.2%). In all, there were seven online domains that dropped in share compared to 2015: Drugstore.com (-6.4%), Walmart (-2.8%), CVS (-1.8%), EBay (-1.8%), Amazon (-1.6%), Vitamin World (-1.5%), and Walgreens (-1.1%).
“Although online regained share losses from 2015, its high water mark was 2014 when it had a share of occasions of 10.8%,” said Kurt Jetta, PhD, president and founder of TABS Analytics. “The studies we have done over the last several years point to online sales in several consumer packaged goods sectors having peaked and are now flattening out. Given their relatively high share in eCommerce, vitamin sales, like baby product sales, are a frontline category for gauging eCommerce success for brick and mortar retailers, particularly for Walmart, Walgreens and CVS. Unlike online sales for baby products, brick and mortar retailers are not succeeding as well in online vitamin sales. Brick and mortar online vitamin sales account for only 22% of online transactions compared to 40+% in online baby product sales.”
Decrease in Heavy Buyers Ominous for Category
A key trend that TABS VMS studies have uncovered is that beginning in 2012, there has been a decline in the number of heavy buyers (those who purchased more than three types of vitamins in a year) and this continued into 2016. Heavy buyer penetration peaked at 40% in 2012. But in 2016, heavy buyer penetration dropped to 30%. This large drop in heavy buyers occurred in the mass market channels, which has caused mass market penetration to decline for the past two years. Specialty stores and online stores have held onto their heavy buyer base and also gained light buyers.
This is the first time since 2010 that TABS has tracked a shift in the vitamin market away from mass market and towards Specialty Brick & Mortar. However, mass market is still the most-shopped channel with 65% of buyers shopping in it exclusively, while only 14% of all buyers shop exclusively at non-mass channels (online or in specialty stores). The study found that 55% of all shopping visits are to Walmart, CVS, Walgreens, online retailers and food stores.
The decline in heavy buyers is particularly noticeable among women. The percentage of female heavy buyers has gone from 45% in 2012 to just 32% in 2016, a noticeable drop of 13 percentage points. Despite this drop in heavy buyers, overall purchase incidence among female buyers has increased to an all-time high of 82%, driven by more light buyers.
The 2016 VMS study also found that heavy buying among younger consumers (ages 18 to 54) has dropped from 25% in 2015 to 21% in 2016. However, consumers 55 years and older are twice as likely to be heavy buyers (43%).
“The softness we’re seeing in the VMS market compared to previous years is directly linked to the decline in heavy buyers” said Mr. Jetta. “This has been isolated to the mass market as specialty and online have held their heavy buyers and picked up volume as a result. The bigger heavy buyer declines are occurring with women and younger buyers between the ages of 18 to 54. Since heavy buyers respond well to category innovation and retailer promotions, these two areas should be a primary focus for manufacturers and retailers going forward.”