Prodotti per la prima infanzia in farmacia: la realtà italiana e le conseguenze di questo connubio qui in lingua originale.
Market Products for Early Childhood is Strategic for Pharmacies
Despite a Drop over the Last Years.
Reference is made to an article published in December’s Puntoeffe which takes stock of early childhood products market. It is an analysis developed by New Line Market Research that examines in detail a sector which is strategic for Pharmacies.
In a period when great attention should be given to the analysis of in-coming traffic to pharmacies and the study of those markets which, by meeting the consumer’s needs, can attract people to enter the store, early childhood product markets, despite the contraction which has been observed over the last few years, is of great strategic importance to the pharmacist. One can observe in fact that more than half of the receipts regarding infant products do not display the presence of any associated products as proof of the fact that the demand related to children’s necessities leads to attracting more people into the pharmacy.
This article analyses this market focusing on the main branches that constitute it (Infant care, Infant hygiene and infant Foods), in order to think of the potential opportunities for the pharmacist wanting to invest in this sector.
The Evolution of the Industry
The early childhood product market, defined by using a cross-cutting definition and on the basis of the functional use of the products addressed to children, has recorded a constant downturn both in terms of volume and value over the last years; this trend is also noticeable in the first ten months of 2019 (Graph 1), although to a more limited extent, in comparison to what occurred in 2017 and 2018.
During the year ending October 2019, the market recorded an overall decrease of 2.9% in value and 3.1 in volume, generating a total revenue of 340 million Euros and 60 million items sold.
The categories which constitute the infant world include infant foods representing 27.9% of the total turnover, Infant care, which contributes 22.1% and Infant hygiene, which develops 20.8% of the total revenue, while the remaining 29.2% is constituted by other infant products (reference to self-medication items and paediatric medicines).
All these sectors have recorded year-to-date negative performances in terms of revenue, in particular the Infant care market having lost 7.9% ; only Other infant products showed a general stability as compared to the previous twelve months (Graph 2).
Geographical Analysis and the Competitive Scenario
The geographic study shows how the market in analysis is characterised by territorial differences: considering the average revenue per regional pharmacies (Graph 3), in particular, what can be noticed is that the regions with a higher average revenue are mainly situated in the Centre and South of Italy, with the region of Trentino Alto Adige as the only exception. In the same area, there are only two regions, Calabria and Abruzzo, recording a positive market growth and showing positive trends, in comparison with the previous twelve months, which are in contrast with the results of the rest of Italy.
Therefore, the infant product market in pharmacies seems to be more dynamic and relevant in the Centre and South of Italy. This situation could be linked to different factors. Firstly, a relevant aspect could be cultural, which makes people living in this area more confident in the pharmacy as a territorial focal point of health and care services at 360°. Secondly, and as a consequence, the pharmacy itself may occupy a different position within this market, thus managing a different kind of offer compared to the average store in the North. Finally, another aspect to be taken into consideration is certainly the minor presence of the large retail chains in these areas.
In fact, analysing the competitive environment of the main sectors within the different channels (pharmacy, parapharmacy and supermarket), the supermarket clearly plays a prevalent role within the infant Food and Infant care sectors, developing over 70% of the total turnover and a strong relevant presence also in Infant hygiene, where it accounts for over half of the revenue. The parapharmacy plays a very marginal role and the remaining part, which starts from 23.1% to 42.7, is developed by the pharmacy, representing the second channel of the market (Graph 4). The above description of the situation is quite consolidated and there are no remarkable variations in the composition of the channels, in comparison with the previous twelve months.
Considering the competitive infra-channel environment outlined, the pharmacy sector has to think of its price positioning, in order to represent more of a channel of choice in a market where the main buyers, the mothers, are generally well-aware of the price of the products. In order to face the great competition of the large retail chains in the infant world, good promotional activity in the pharmacy sector, with an intensity index (promotional strength is determined by the relationship between promotional sales and total number of sales) equal to 7.3% and an average discount of 21.5, over the last twelve months can be noticed. It is worth noticing the fact that promotional impact is higher in diapers, hygiene products and infant food, as well as in high volume categories within the mass market and where the price competitive pressure is greatest.
Moving forward to the analysis of the main market players (Graph 5), what is observed is a fairly high degree of concentration, in that the first ten companies develop 66.2% of the total turnover and the market leader Chicco alone reaches a 12.8% share. In terms of the trend, the companies with the best performance were Humana and Hipp in the year ending October 2019, with positive performances reached also thanks to the extension of their pricelist with many new references. It is remarkable that, in general, the infant product market is quite dynamic in terms of launches, considering both new products and the extension line: 28% of the references placed on the market in the last twenty-four months are launches and stand for 12% of the total revenue.
Traffic into pharmacies
In conclusion, it is of interest to focus on the issue of the traffic into the pharmacy, trying to measure the possible influence that the presence of infant products and the store’s degree of specialisation in this market may have on it.
Some pharmacies from 2018 to 2019 have been identified as to have considerably invested in the infant world, thus increasing the level of specialisation, and with a consequent growth in turnover of more than 20%. As a result of such a higher specialisation, each store has recorded a considerable increase in the average number of monthly receipts containing at least one product of the infant market: we are talking about 180 receipts more per month, which generates an incremental revenue of over €2,300 (Graph 6 highlights that the number of entrances would have been 788 instead of 968 actually recorded). This important result was achieved by being able to better meet demands and needs already inherent to the pharmacy reference consumer base, whose composition in terms of socio-demographic features has not inherently changed over twelve months. Such facts constitute important evidence of the fact that the Infant market, when well organized and effectively managed, can attract people into pharmacies, together with all the related opportunities.