GM

Drug Store News, May 20, 1996

Greeting cards and social expressions led the way in 1995 among several key general merchandise categories--all important for helping drug chains gain margin as managed care took an increasingly large bite of pharmacy profits.

It was a softer year than 1994 overall in GM: Stationery edged up in drug chains, blank tapes were up a healthy couple of points, housewares and small appliances showed a small gain, and books and magazines and rainwear improved over the previous year.

On the other hand, photo was soft. batteries declined slightly and hosiery and light bulbs dimmed.

Softer sales didn't detract from the intangible benefits many of these categories provide in the drug chain setting: Browsing, repeat visits, personal expression potential, gifts and the exposure to cutting edge technology.

In greeting card and social expression products, alternative cards continued to grow as major card manufacturers caught trends ranging in subject from angels to coffee houses to encouragement for recovering substance abusers.

They also continued to refine their marketing tools for targeting age, ethnic, demographic and emerging social segments.

The category also expanded further this year with more ways for consumers to achieve social expression. The nesting, stay-at-home entertaining trend is expanding these and other related social expressions, giving rise to new home- and friendship-focused segments such as helium balloons and seasonal outdoor flags, and to collectibles, such as Hallmark's growing Christmas ornament line and limited-edition plush animals for recipients of all ages.

Shooting easy

In the photo category, single-use cameras and fast or one-hour labs were once again the shining stars of the year, proving that consumers want to take pictures as easily and conveniently as possible.

Those are consumer concerns tackled by the new Advanced Photo System, which entered the market at the end of April 1996. The entry followed a year when details of APS features and benefits were fed bite by bite to the trade and advanced amateur photographers.

These features range from drop-in and fool-proof film cassettes to how the new film can prompt correction of various photographer errors during film processing; how its index print replaces messy strips of negatives for reordering ease, and how its three creative aspects or frame and print sizes give the consumer more control over composition--not to mention the APS digital capabilities for futuristic applications from PCs to holograms.

But for the typical photography consumer, 1995 was business as usual and at a slightly slower consumption rate than the previous year.

Industry observers attributed this largely to a climate of economic uncertainty and its impact on travel and other celebrations providing photo opportunities. It's also due to increasing use of camcorders, an invasion against which still photography is fighting with greater portability, impulse ease and by promoting still photos as valued objects to give and display.

This year, along with APS adcampaign energy, the Olympics and the election are expected to cause the usual boost in picture taking that occurs when consumers are visually stimulated.

The drug channel--independents and chains combined--watched its market share fall in many categories, mainly losing out to mass merchants. But channel share can be deceptive. In stationery, although drug chains lost share in 1995, they gained dollar sales in this growing category, which is driven by increases in the number of school age children and the home office/home worker trend.

Value-added school products helped boost back-to-school and home office supplies in general, especially as commodity prices rose a year ago and encouraged more consumers to trade up.

Other segments showing growth in stationery included mail supplies, which many chains report is very bullish for this channel.

Batteries is another category growing in all channels as consumers buy ever more devices requiring batteries. But drug didn't get its share of this growth in 1995, and sales declined for the channel overall, although there were bright spots in two segments, hearing aid batteries and photo lithium batteries, with only a few chains reporting increases in round cell rechargeables.

In housewares and small appliances, the organizing and nesting trend is helping to boost housewares, while small appliances are especially strong in the wellness and safety segments.

Electric oral care is getting a surge of sales in the third generation oral care appliance, the power plaque segment. Two other growing wellness appliance segments are humidifiers and vaporizers, along with sales of accessory items.

Another kind of wellness concern is consumer preoccupation with safety. More drug chains are enjoying rising sales in this small appliance segment, which includes smoke alarms and gas and radon detectors.

Recording increased sales

Drug chains also shine in some other GM categories, such as blank video and audio tape, which showed a small but steady increase in 1995. Pre-recorded video was also reported by some chains to be up this year, especially in chains that are pursuing it as a traffic and convenience mix--while they search for ways to make it more profitable.