Updated stock is key to category growth

Drug Store News, May 20, 2002

The general merchandise business in drug stores is changing. Yet, the three segments of the business that have traditionally driven the category remain very much the future of the business--namely, photo, greeting cards and seasonal.

If the rise of digital photography has somewhat displaced photoprocessing--the total number of rolls of film processed fell percent in 2001, according to the Photo Marketing Association--the answer for drug stores is not to exit the traditional photo business but to make room for the new peripherals and accessories, such as memory cards and memory sticks.

While digital photography continues to gain ground with digital camera sales growing 49 percent last year, many consumers don't understand that they still can process these images into hard copy prints. Beyond that, many more are beginning to understand that to even approach professional processing quality at home requires a printer investment many times the price paid for most digital cameras. That isn't likely to translate into more rolls of film being developed, but certainly it should show up in total dollars.

Technology has had a similar impact on the traditional greeting card business as well. But the reality is that for all of the interest electronic greetings have generated, particularly, among teens, 'tweens and 20-somethings, there are still several occasions in the span of a year that demand traditional paper greeting cards.

GM performance

                                  Total F/DM (*)         Drug stores
                                $          % change          $
                            Sales (**)  versus year ago  Sales (**)

Batteries                   $1,756.4         0.5%        $609.3
Photography supplies         1,746.0        -4.5          814.3
Kitchen storage                885.8         2.6           45.6
Tights/socks                   835.4        -6.1           56.2
Baby accessories               787.1         5.3           80.4
Light bulbs                    704.0        -1.1           98.1
Pantyhose/nylons               534.8        -9.4          184.9
Blank audio/video              412.3         5.2          159.8
Office products                375.5         1.4          132.5
Writing instruments            356.4        -1.5          139.7
Children's art supplies        292.1         3.5           95.9
Shoe polish/accessories        101.9        -4.9           33.7
Gloves                         100.4         0.6           33.0
Playing cards                   64.5        -0.4           25.1
Cleaning tools/mops/brooms        NA          NA           61.4
Lighters                          NA          NA           40.5
Water filters/devices             NA          NA           34.0

                             Drug stores          Drug chains only
                               % change        $            % change
                            versus year ago  sales       versus year ago

Batteries                        -0.2%       $514.5            1.4%
Photography supplies             -4.6         697.6           -2.9
Kitchen storage                  -6.1          38.1           -6.7
Tights/socks                      0.8          50.4            3.1
Baby accessories                  2.4          69.8            5.6
Light bulbs                       4.0          85.7            5.3
Pantyhose/nylons                 -5.5         159.4           -4.7
Blank audio/video                 4.4         141.7            6.3
Office products                  -1.4         110.4           -0.1
Writing instruments              -3.8         117.4           -1.7
Children's art supplies           0.7          79.5            2.5
Shoe polish/accessories          -2.2          29.5           -0.8
Gloves                            6.7          24.7            6.0
Playing cards                     1.4          20.9            3.8
Cleaning tools/mops/brooms       -1.4          54.5           -0.2
Lighters                         15.3          35.1           18.1
Water filters/devices             5.4          30.7            5.8

Source: information Resources Inc. for 52 weeks ended Dec. 30

(*)Total F/D/M excludes Wal-Mart

(**)Sales in millions