Drug stores anticipate robust holiday sales

Drug Store News, Dec 15, 2003 by Antoinette Alexander

NEW YORK -- Drug stores have been as busy as Santa's elves, shoring up the front end with toys, last-minute stocking stuffers and even Christmas trees to prepare for what some industry observers say could be a jolly holiday shopping season.

If holiday sales predictions ring true, retail sales could increase 5.7 percent this year compared with last year, bringing in estimated revenues of $217.4 billion, according to the National Retail Federation.

By Dec. 1, the average consumer had completed less of his or her holiday shopping compared with Dec. 1, 2002--indicating that perhaps the best is yet to come, NRF noted.

A new Gallup Poll released late last month found that shoppers are planning to spend an average of $734, slightly higher than last year's estimate of $690.

With front ends that are shaping up to look more like general merchandise stores, drug chains are hoping that convenient locations, fast service and, in some cases, exclusive merchandise will lure in shoppers.

This year, Walgreens took a page from the department store and mass merchandiser handbook and held its first ever five-hour sale from 7 a.m. to noon on Black Friday.

Walgreens sale, which was included in November's sales results, helped boost front-end same-store sales 8.3 percent last month.

"Over the years, shoppers have become trained to look for real aggressive deals the day after Thanksgiving, especially early in the day, said Michael Polzin, a Walgreens spokesman. "With more shoppers hitting the stores at 6 a.m. and 7 a.m., we thought we could tap into some of that."

For the second year in a row, the chain is bolstering its front end with Enesco Group's exclusive line of "It's a Wonderful Life" merchandise ranging from $19.99 villages to $5 tree ornaments.

Walgreens also is offering promotional merchandise tied to the TV show "Santa Claus is Coming to Town."

"Generally speaking, we were optimistic heading into the season, and we remain optimistic after seeing the first weekend's results, Polzin said.

Also banking on exclusive merchandise is Rite Aid, which once again has partnered with Universal Studios to offer "The Cat in the Hat" merchandise. Products include an 8-foot-tall outdoor inflatable Cat in the Hat, a stuffed Cat in the Hat that recites quotes from the movie and a holiday music CD.

"All of Rite Aid's holiday signage features characters from the movie and ... points out specials on our shelves," said John Learish, senior vice president of marketing. "The Cat in the Hat is a key part of our overall vast and unique holiday offerings."

Meanwhile, Eckerd is offering a Disney-themed promotion whereby customers will have a chance to win a free cruise for a family of four. Also, with each purchase of Disney products totaling. $10 or more, customers receive a free Mickey Mouse snow globe.

Toys are tops

This holiday season should be especially interesting for CVS as this marks the first holiday season for its partnership with toy retailer K * B Toys. The agreement was announced on Halloween last year, but did not impact last year's holiday assortment.

At the top of the year, K * B Toys began providing tailor-made merchandise to CVS stores. The toy retailer, wearing the hat of supplier, beefed up CVS' assortment for spring, summer and now the holidays with seasonal toys and exclusive products.

While CVS' partnership with K * B Toys may give the drug chain a unique hand in the toy segment, that hasn't deterred the chain's rivals.

With advertising circulars that easily could pass as those from big-box retailers, many drug chains are promoting toys heavily at competitive prices.

Eckerd, for example, in a December ad circular is promoting bikes for boys and girls for $29.99, action figures for $8.99, dolls and doll sets for $10 and electronic games for $15.99.

Kinney Drugs is advertising on the cover of its ad circular an Intellivision Video Game System for $16.88 and a porcelain doll for $8.88.

Meanwhile, Longs Drug Stores put together a 12-page circular titled "Toy Time!" It promotes toys ranging from Care Bears to Barbie dolls to board games.

While drug store chains may have a tough time competing against big-box retailers like WalMart when it comes to toys, Michael Niemira, a Bank of Tokyo-Mitsubishi analyst, said drug chains have an advantage.

"The edge that drug stores have is that they are more neighborhood oriented and easier, to get in and out of," he said." [They] are responding much better than some other segments of the industry."