Improve your grades in back-to-school sales

Drug Store News, July 8, 1996 by Steven L. Jacober

School bells will soon be ringing and with their clarion call comes the sound of back-to-school sales ringing up at retail stores across the country. Will drug chains receive their fair share of this growing market?

While much emphasis has been placed on the graying of America, retailers are reminded not to forget the baby boomlet bubble that is projecting the population of school-aged children to increase 1 percent per year, rising from 47.1 million in 1991 to 54.2 million by 2003. Can you hear the sound of opportunity knocking?

In terms of event size, the back-to-school frenzy is second only to Christmas in all of retailing. Unfortunately, though, many retailers capitalize on this seasonal success story at the expense of promoting the category year-round, thus jeopardizing profitability 365 days a year.

Research conducted in conjunction with A.C. Nielsen supports the contention that there is life for promotions outside of back-to-school. In fact, when drug stores promote the category year-round, share of promoted sales increases by as much as 32 percent. Now would be a great time for drug retailers to do some additional homework on the category. Taking advantage of this booming opportunity will help you capitalize on some of the highest gross margin percentages and GMROIIs in retailing today.

Coupled with the anticipated rise in demand for school products over the next several years is the impact that corporate right sizing will have on the market for home office products. The number of U.S. home offices reached an estimated 44.7 million in 1994, representing about 46 percent of total U.S. households.

Citing research conducted with A.C. Nielsen, SHOPA data indicate that during the fourth quarter of last year, the drug channel held an estimated 28 percent share of the market for school and home office supplies. While that figure represents a slight decrease from the same period a year earlier, dollar sales actually increased.

One explanation for this is the overall growth of the category. But, more important, the failure of drug chains to concentrate more fully on this phenomenon has provided mass merchants with a larger piece of this profitable pie. This is an unfortunate, yet reversible, set of circumstances for drug chains to find themselves in--particularly when you consider that, because of their convenient locations and the tendency of the American consumer to impulse buy, drug chains should be capturing more than their fair shares.

In today's competitive environment, missed opportunities are extremely costly mistakes. A new examination of and refocus on the profit of school and home office supplies will guarantee drug chains a tremendous bottom-line success.

This class is now dismissed. It's time to graduate to a higher level of activity on the retail floor.