Low prices, niche marketing move HBA

DSN Retailing Today, Feb 28, 2005 by Antoinette Alexander

The creation of destination points for its health and beauty shoppers through innovative, yet no-frills merchandising is hard to miss when perusing Wal-Mart's aisles.

With robust proprietary technology, enticing price promotions and strategic merchandising, Wal-Mart has secured a top spot as a destination for health and beauty products.

In 2004, health and beauty accounted for 7% of sales in discount stores and supercenters, according to Wal-Mart's latest 10-K filing with the Securities and Exchange Commission.

Through its utilitarian merchandising, Wal-Mart not only is able to keep down costs but also make it easy for consumers to shop the department by creating easy-to-find, easy-to-shop destination points.

Such merchandising techniques were evident at a Woodbridge, N.J., store that opened in October. In that location, the retailer set up--aside from its standard gondolas--several feature displays to highlight such categories as teen/tween cosmetics, bath and body merchandise and nail care products. In addition, the endcaps of the feature displays were used to spotlight such products as Olay Regenerist.

Meanwhile, in the power aisle near health and beauty were several displays highlighting such products as Colgate toothpaste for $2.44 and Crest SpinBrush Pro for $6.88.

"If you are a manufacturer willing to build units to fit their specs, then you can display items on [the endcaps of the feature displays]," said Roslyn Chapman, president of The Chapman Edge, a sales and marketing consulting firm specializing in drug, food and mass. "It creates excitement for new products."

Much of Wal-Mart's merchandising success comes from its proprietary technology, namely Retail Link, which enables the retailer to better understand the consumer and forge strong relationships with vendors. Retail Link is its private trading exchange that can help suppliers understand the consumer buying behavior of a specific store. The goal: to have the right items in the right stores at the right time.

"Wal-Mart is improving its understanding of who the customer is by store location and the nuances of the local community," stated Smith Barney analyst Deborah Weinswig. "For example, at its Monticello, N.Y., store, Wal-Mart offers Suave Lavender shampoo and regional barbecue sauces, which are favorite local items."

Shawn Haynes, senior vp of marketing for Markwins Beauty, concurred: "Wal-Mart is best at understanding the best way to communicate with its consumers. We have a great partnership with our buyers and collaborate with them on how to improve packaging, merchandising and signage in stores.... It has a ripple effect to their store personnel, which improves execution. And if you have improved execution, your inventory is better and your sell-through is better."