Stepping up profits in the footcare section

Drug Store News, July 8, 1996 by Mike Troy

Americans' feet hurt. Foot-related conditions, such as bunions, corns, calluses, warts, fun infections, odors, back pain, ingrown toenails and arch difficulties, are common problems. Roughly eight out of 10 Americans experience foot problems, according to consumer research conducted by Schering-Plough HealthCare Products.

Unfortunately for retailers, many people, it seems, are suffering silently and not buying products to care for their feet. Sales of foot care devices in drug stores, supermarkets and discount stores were flat at $240 million for the 52-week period ending March 24, according to Information Resources Inc. Sales of antifungal/athletes foot medications dipped nearly 3 percent to $244 million, according to IRI.

The category's lackluster sales performance can be partially attributed to the growth of less expensive storebrand products and promotional offers. Dollar sales of private label footcare devices increased about 5 percent, to $13 million, while dollar sales of private label antifungals increased 10.3 percent to $21 million.

Long-term, manufacturers and retailers agree that the footcare category has a bright future. The nation's population is aging and the prevalence of foot problems increases as one ages. However, differences of opinion exist over how best to take advantage of the steadily increasing product demand expected to result from changing demographics.

For many retailers, the approach is to rely on Schering-Plough's Dr. Scholl's brand--which accounts for 80 percent of device sales and 50 percent of antifungal sales, according to IRI.

"It is the brand customers look for," according to a footcare buyer at a large regional chain. "They have the best antifungals and footcare products. I don't really have any bad items, so I don't know what I would take out to make room for items from other manufacturers."

The chain's 8-foot planogram consists of four feet dedicated to chemicals such as antifungals and foot powders. "We considered expanding it, but we don't really need to right now," the buyer observed. "With four feet dedicated to devices you can't really put in stuff from other manufacturers if you are carrying Dr. Scholl's."

Other retailers opt for a more varied approach. A buyer for a regional chain in the midwest with a 12-foot footcare planogram said he is trying to move away from relying too heavily on the Dr. Scholl's brand. "We don't think people are that brand loyal if the product is comfortable and works," the buyer said. "We find it is best to offer the broad assortment chain drug customers are looking for and to carry our own label."

The chain stocks 70 Dr. Scholl's SKUs, but believes in also stocking products from alternative suppliers.

Competitors bring innovation

That is welcome news to manufacturers such as Professional Footcare, Pedifix, Spenco, Dr. Fabricant's, Implus, Sentinel and Adcor. These companies contend they bring innovation to the category and can help retailers increase sales.

The obstacle they face is convincing retailers the category's performance can be improved by expanding the category beyond Dr. Scholl's. It can be an uphill battle when retailers are accustomed to reliable performance from the category's leading brand supported by the financial resources of a major manufacturer.

"Some drug chains have a rather myopic view of footcare and view Dr. Scholl's as the beginning and end of everything," said Jim Rystrom, director of sales with Spenco. "Dr. Scholl's is perceived as a product for old people, not for healthy active people who want to take care of their feet."

Rystrom contends Spenco's new molded insole is technologically superior to Dr. Scholl's and costs 25 percent less. Chains such as Walgreens, Long's, K&B, Osco, May's and Med-X stock Spenco products, according to Rystrom.

At Professional Footcare, the category's second largest brand, director of marketing Daniel Feldman believes his company's strength lies in its ability to develop innovative products and new marketing tactics.

"The competition is good for the category because it forces us to come up with newer and more innovative items," Feldman said. "For example, our corn cushions are made out of a closed cell poly foam so they resist moisture, and the adhesive lasts longer."

This year, Professional Footcare expects to increase sales by leveraging its customer database with a system called geo-cluster coding. In a nutshell, the system incorporates the names of about 200,000 Professional Footcare customers then assigns them to one of 60 cluster codes based on 1,600 variables. The cluster codes are indicators of a household's likelihood to buy footcare products. This information is available by zip code thus allowing Professional Footcare to determine where its customers are concentrated and institute more effective advertising and promotional programs.

"What we can do with this information is break an area down by zip code and hand pick the best stores for promotions and which ones should expand their footcare sections," Feldman said. "We can also look at what other products these people buy, which helps establish category adjacencies. This system is going to help us spend our money more wisely and be a more valuable vendor to the chains."