Retailers remain bullish on TV marketing

Drug Store News, Jan 17, 1994 by Allene Symons

When infomercials and TV-marketing segments hit the airwaves with just the right product, presentation and price point, sales increase, chain buyers report.

While the '90s are more frugal than the '80s and there are more infomercials battling for sales, still there is opportunity.

Says Andy Striefel, vice president of merchandising for PayLess Drug Stores: "We are supporting a lot of infomercial items, but the rate of sale in no way compares to the first infomercial products."

TV-promoted products weren't as strong at Lewis Drug in 1993 as in recent years, reports general merchandise manager Douglas Gravning. But, "it was very, very strong in exercise and food dehydrators--we sold thousands of them last year."

According to buyers at seven large chains surveyed by Drug Store News, the infomercial category is robust and varied, ranging from beauty items and OTC and exercise products to personal care, gift, automotive and cookware products.

[CHART OMITTED]

An immediate impact

When an infomercial runs, it can have a striking retail impact. One buyer reports, for example, that Interplak was his No. 1 oral care appliance a year ago--until Braun Oral B appeared on infomercials. Sales at the chain quickly shifted to 60 percent/40 percent in favor of Braun.

Lower prices also fuel retail sales. Lewis' Gravning says when an infomercial product reaches retail--usually after an average of two to three months from its first TV appearance--the consumer sees a 40- to 50-percent savings over the television price and recognizes a good deal. Topsy Tail, for example, was offered for $9.95 on television, but sold for $2.95 at retail. But, buyers warn, the danger is that the retail price will keep dropping. "Now you see [Topsy Tail] selling for 50 to 75 cents," says Harco Drug buyer Gene Bailey.

Sometimes a product is too high-priced for drug chains. Thrifty's Gary Rocheleau, senior vice president of sales and merchandising, notes that many infomercials offer high-priced products that don't fit Thrifty's mix.

The buyer for one regional chain cites one example: An all-purpose cleaner is being advertised on television for $19.95 for a 16.5-ounce tube. After the exclusive TV offer ends, the product will be offered to retail for between $5 and $7.50. "So if I buy it for $7.50, I have to mark it up to $14.99 to make a good margin," the buyer says. "But the retail price tag is too high for the consumer, so I have to knock it down to $9.99 for it to sell."

Who handles the buying and how the TV-promoted product is displayed and positioned differ from chain to chain.

At one major chain, TV-promoted products are ordered by one buyer regardless of category. At another, buying is done by individual buyers, a change of philosophy from the past when a single buyer was in charge of the entire infomercial category and usually ordered every item that came out.

Endcap or in-line?

Chains also adopt different display and positioning strategies. Chip Carter, president of manufacturers rep group Pacific Sales in Los Alamitos, Calif., which represents Direct to Retail, reports that many of his accounts use a combined TV-marketed-type product display and, where warranted, a secondary display in individual category sections.

I got it at Gary's devotes a special endcap to the merchandise, which will usually contain the four or five hottest items. Signage flags the merchandise "As seen on TV."

That's different from another chain, whose buyer explains: "We seldom use endcaps, and when we do, it depends on the season and what the product is going up against." Most of these products are merchandised within the category or on adjacencies, he adds.

But it isn't just an endcap or category decision these days. Planograms add another decision. Alex Chaffetz, product manager for Regal Advantage, says, "We want to be in planograms. We are not interested in quick ins and outs. That impression of the business has changed." Infomercial products "are becoming even more difficult to merchandise because of planograms," notes the buyer at a regional chain.

At one major chain, the director of merchandising explains his solution: "We merchandise these items as a category unto itself." They are displayed on a four-foot endcap and side wing with an "As Seen on TV" banner. Some items, because of continued support, get planogrammed into a permanent section and then become part of that set and are no longer treated as infomercial merchandise.

There is no price statement on the endcap, the display doesn't offer a mass presentation, and items don't relate to one another, he says. "This violates every merchandising standard that we set for the rest of the store. The items sell. It's a viable category. But it defies all logic."

Many chains bolster TV product with circular ads or an infomercial tag, but as one merchandising director of a major chain reports, this is not key to selling the category.

As I got it at Gary's director of marketing and public relations Raymond Hoy says: "We sell the category when we advertise. We don't look to create traffic with the items. They are really used as in-and-out promotions."