Lynn Driver reports on the likely changes in the OTC market now resale price maintenance has been abolished After the blaze of publicity surrounding resale price maintenance, multiple retailers have been selective on the prices they have chosen to promote. Some key cupboard stock brands such as analgesics have had the price cutting treatment, with Anadin, Nurofen and Calpol receiving the most attention from the grocery retailers. As a result, volume rose sharply, by 8%, for the week ending May 19, while it was up by 3% for the week ending May 26. Value sales for both these weeks were up only 3%. However, it is too early to say if there is a long term effect, or a knock on effect for the local pharmacy. Tactical promotion is much in evidence and hayfever remedies feature high on the list. This may well indicate the trend for the future ­ to price promote seasonal products where demand is intense and visibility is high. Promoted hayfever remedies have shown a three-fold increase in sales compared with last year. But high temperatures this year and a difference in the start of the hayfever season, combined with the retailers' decision to promote all the key lines in the category blur the picture. Whatever the motivation, sufferers certainly bought heavily and we are almost certainly seeing them buying stocks early, while they can be assured of a major price saving (measured in pounds rather than pence). The growth for promoted lines of analgesics versus last year and versus previous weeks is a more modest 50%. Analgesics and stomach-upset remedies are items which we all tend to have supplies of in our homes. The likelihood is that purchasing at promoted price will lead us to hold more stocks in our medicine cabinet and thus take longer to return to the store to make our next purchase. So what we are likely to see is a short term peak which will not be sustained. Although Asda may claim that some of its shoppers do not self-medicate because of the cost, it is hard to see that the market place will grow dramatically as a result of drawing these buyers in. The markets where price promotions have the greatest effect are known to be those where increased availability in the home will tend to generate increased consumption, such as soft drinks or alcohol. This is not a likely or desirable outcome for OTC medicines although it does pave the way for increased emphasis on preventive medicines, such as vitamins and supplements. The real battle therefore is between the big retailers which are fighting for share. The prime target now emerging is probably Boots, which the grocery retailers see as holding a share of a marketplace that offers them significant growth potential. In an environment where the average UK grocery shopper will shop in multiple outlets and where even the biggest grocery retailers only command 35% of their shoppers total spend on the sector, the opportunity to lose sales to someone else is high. Building a bigger share of the shopper's purse is a prime objective for all retailers. Within the context of developing the consumer's perception of value for money, price promoting key lines in the OTC market plays a role over and above the impact it has on the volumes generated for the lines in question. Based on the initial reaction of the grocery retailers we are likely to see tactical promotions focused on seasonal categories (as in hay fever), on categories where there is scope for increasing the overall buyer base (eg vitamins), with the focus in other areas on a few high profile brands which will develop the status of Known Value Items. If we look to the US for future trends there are no obvious lessons to be learned. As in the UK, channel blurring is taking place with product ranges and consumer propositions starting to overlap where previously they have been distinct. Small independent drug stores in the US are struggling to survive as they are bought out by larger independents or chains. Drugstore chains CVS and Walgreen's have been working to an aggressive expansion plan. They are also stocking wider ranges and offering drive through' facilities for their prescription customers. The ending of RPM will not help those local pharmacies which are struggling at the moment and there will no doubt be closures. However, the business aware will already be seeking to differentiate their proposition from that of the big retailers. Convenience ­ perhaps closer tie-ins with GP surgeries, expansion into additional services, range extensions ­ are all propositions which open possibilities for the local pharmacy. - Lynn Driver is marketing manager, health and beauty services, at ACNielsen {{FEATURES }}