NEW YORK -- For the second year in a row, dreams of double-digit Christmas gains by mass market retailers were dashed by aggressive discounting at department stores as well as new competition from apparel off-pricers.
NEW YORK -- For the second year in a row, dreams of double-digit Christmas gains by mass market retailers were dashed by aggressive discounting at department stores as well as new competition from apparel off-pricers.Drug and discount store buyers are calling Christmas 1993 a good, but not great, season. When the results are finally tallied, estimates are that sales will be up by 6 to 8 percent from Thanksgiving through December.For Christmas 1992, sales rang up an 8 percent gain.As they did a year ago, several retailers originally anticipated 10 percent Yule sales gains. Their hopes had been buoyed by a relatively early shopping spurt that erupted before Thanksgiving.One reason for the lower-than-expected volume was aggressive pricing on cosmetics and fragrances at department stores, as well as an upturn in consumer demand for high-priced items such as computers and appliances."It was slow in general for the whole category, including gift sets," said Mary Hoepfner, buyer for Perry Drug Stores in Pontiac, Mich. "People were in the market for big-ticket items."Indeed, a spurt of consumer optimism sent many shoppers to department stores where they could score good deals on expensive merchandise. Sales of toys, computers and electronics were strong; apparel volume still lagged, according to retailers.Other mass market sources pointed out that department stores were offering values such as the Estee Lauder collection of five fragrance miniatures for $25."I saw fragrances such as White Diamonds at prices retailers swore they'd never go as low as," said one chain drug executive. "Department stores had a good year, but I wonder if they'll be able to pay the rent."Another reason customers were drawn to department stores, buyers said, was the lack of new scents at the mass level."There wasn't anything really new except Vanilla Fields," said one chain drugstore buyer.In fact, without Coty's Vanilla Fields and prestige scents, the mass market picture would have been really bleak, buyers said."Vanilla Fields was the surprise success of the season," said Eugene Applebaum, chairman and chief executive officer of Arbor Drugs, based in Troy, Mich. He termed 1993 a "strong holiday season" for his chain of 143 units.Arbor has point-of-sale scanners in place in all stores and had used the data to more accurately gauge Christmas, meaning the chain experienced a healthy sell-through, according to Applebaum. "We have the history to be able to project by store what will sell and have the stock on hand."With or without scanners, there were those who did find themselves low on a few hot items. Vanilla Fields, in fact, was such a hit that many stores ran out of stock."We did get some of our reorders, but some stores were out of it," said a buyer. "Coty just wasn't prepared for how big it would be."Industry experts estimate that its Christmas success will help make Vanilla Fields a $35 million brand in its first full year of distribution.Buyers said several older Coty brands lost some of their sparkle. While Stetson Sierra sold well, Lady Stetson and Exclamation slowed, say chain retailers.Lady Stetson and Exclamation were among the top sellers at Target Stores, but the number one fragrance was Procter & Gamble's Navy. In men's, Coty's Stetson finished first, followed by Brut and Old Spice.The Target source said men's fragrances were especially strong for the discount store chain, but women's business was "flat."Revlon fragrances staged a comeback, especially upper-end scents such as Guess, buyers said.Efforts to promote prestige fragrances paid off, according to buyers. In their ads, chains such as Kmart Corp., Genovese Drug Stores and Drug Emporium ran the names and prices of upscale scents. In the past, retailers said, they carried "designer fragrances," but named no names.Kmart noticed immediate reaction from its ads, which touted Elizabeth Arden's Red Door, White Shoulders, Ralph Lauren's Polo, Lagerfeld and Elizabeth Taylor's Passion for Men and Women.Buyer Mary Prince said the ad was "very successful" and the results have encouraged her to plan more advertising of prestige items in 1994.Arbor Drug has built its upscale fragrance program over the past few years."We make a major commitment to it on a year-round, permanent display basis," said Applebaum. "Of course, it did hit its crescendo in the week before Christmas."Arbor's top prestige women's items were Calvin Klein's Obsession, Giorgio Red, Liz Claiborne, Christian Dior's Dune and Elizabeth Arden's Red Door. For men, the top performers were Calvin Klein's Eternity and Obsession, Drakkar Noir, Davidoff Cool Water and Giorgio Red for Men.Rite Aid Corp. instituted a prestige fragrance program during 1993. The drug chain, based in Camp Hill, Pa., selected stores in upscale markets or areas without heavy department store competition and offered fragrances such as Christian Dior's Dune and Bijan.Rite Aid executives said they thought the foray into prestige helped push up overall cosmetics sales.In fact, most of the chains reporting higher-than-average sales had not carried prestige scents before, so they benefited from the incremental volume.Another chain store executive agreed that prestige helped save Christmas for mass marketers, adding, "We really could have used more Beautiful and Obsession. They were the only brands that were hard to get."But drugstores were hurt by competitors at their own game this Christmas. Chains that had carried diverted scents for the last several years found new competitors in the form of discounters and off-pricers who also added scents."We lost business to the Marshalls and TJ Maxx stores of the world," lamented Paul Kessler, president of Tick Tock Drugs, based in East Northport, N.Y. Kessler said he had bought fragrances aggressively this year. "And many of them are still sitting in the stores.""Consumption isn't up," added another executive, "so with more doors selling prestige, it's just more ways to cut the pie."
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