NEW YORK — This holiday season, retailers figure if they can’t beat Wal-Mart, they’ll join the giant. Retailers from every mass-market channel are slashing prices and offering value to keep up with the nation’s largest discount chain.
Speaking this week during National Association of Chain Drug Stores’ meetings in New York, NACDS chairman and Rite Aid president Mary Sammons commented, “We are well-positioned for the holiday season with good values.” She added that drugstore chains have eliminated any notions that the channel is high priced. Top drug chain executives would not name Wal-Mart specifically, but most said they had chopped prices to meet competition head on this year.
While stores lured consumers with rock bottom prices on portable DVD players and digital cameras, beauty buyers duplicated that strategy with markdowns on blockbuster beauty kits and fragrance gift sets.
Taking their cue from Wal-Mart, other retailers learned how to put pressure on vendors for keen prices, while also finding ways to streamline operating costs to offset the crunch of lower retail rings.
Chain stores, including Kmart, Walgreens, CVS, Meijers, Wegmans and Target, priced beauty products to grab consumers’ attention. “We’ve gotten as efficient as Wal-Mart,” explained a buyer for a major mass-market chain. “If they can do it, why can’t we?”
The bold pricing statement is expected to push Christmas sales about 4 percent over last year for the mass beauty category, merchants said. Although that’s a small increase, without the pricing incentive buyers said sales would be flat. And, since the lower prices were created via imports or deals with suppliers, they are not expected to sap profits. Plus, the aggressive pricing has enticed more traffic.
Several buyers asserted that this was their best post-Thanksgiving weekend in years. The National Retail Federation expects $220 billion will be spent on holiday purchases this year — mass merchants are vying to be the place for the bulk of sales.
The decision to emulate Wal-Mart comes at a precarious time, however, as even Wal-Mart revised its sales projections downward in light of the high price of gasoline cutting into shopping visits. However, if the corner drugstore is priced the same as Wal-Mart, it could become the more economical stop. Some top merchants in the country also think Wal-Mart is putting less of an emphasis on the beauty category, clearing the way for other discounters, drugstore competitors and even grocery chains.
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