F&M’s New Approach: Variety Builds Volume

CHICAGO -- F&M Distributors has the competitive pricing strategy to be expected from a deep-discount drug chain.<BR><BR>But the Warren, Mich.-based company also claims to beat its competitors by employing a wide assortment of mass market...

CHICAGO — F&M Distributors has the competitive pricing strategy to be expected from a deep-discount drug chain.

But the Warren, Mich.-based company also claims to beat its competitors by employing a wide assortment of mass market merchandise, from color cosmetics to bath and body products.

The chain also tries to differentiate itself in the beauty arena by borrowing such ideas from department stores as a special-order service for customers and events such as in-store “Beauty Days.”

According to Pat Gardocki, merchandise director, F&M’s competition is drawn equally from other deep discounters, such as PharMor and Drug Emporium, and mass merchants such as Wal-Mart and Kmart.

The store’s target customer is the woman who supplies the home, she said. The chain therefore carries domestic staples as well as the usual drugstore products. The layout of the stores, which average 36,000 square feet, is more reminiscent of a supermarket than a local drugstore.

Merchandise, from pretzels to Plenitude from L’Oreal, is shelved along long aisles, with rows of checkout counters at the front of the store. Floor space is punctuated by platforms bearing teetering piles of, say, Calgon or humidifiers on special offer.

As in many discount stores, aisles are peppered with handwritten signs proclaiming “Savings of up to 46 percent,” but F&M doesn’t make any lowest-price-anywhere claims.

“We say people who shop in the store on an every-day basis will save money,” Gardocki said. “We operate as a category killer of health and beauty, cosmetics and house supplies.”

F&M, which has 120 stores in Detroit, Chicago, Baltimore and Washington, D.C., mainly in suburban strip malls and plazas, had sales of $535 million through the first nine months of 1993. Bath and body accounts for about 3 percent, or $16 million, with makeup, fragrance and skin care making up another 12 percent of business, or $64 million, Gardocki said.

In bath and body, the merchandise ranges from budget lines, such as Calgon and Vaseline Intensive Care, up to pricier collections like Cosmil and Vitabath. The stores are known for carrying the full range of different sizes, Gardocki said, noting as an example a 32-ounce Vitabath, which retails for around $30.

However, F&M is somewhat limited in what it can stock because of its display capabilities, noted Gardocki. For example, an attempt to sell the department-store brand Perlier didn’t really work because of the need for a special presentation, not possible with F&M’s long supermarket-style shelves.

Best-selling brands in the body and bath category are Vitabath, Neutrogena Rainbath and the new Yardley bath range. The chain also does well with Body Shop-style, environmentally conscious brands, such as Freeman and Bodycology. F&M is putting a new emphasis on the presentation of Naturistics, Gardocki said.

The company has also recently expanded its range of bath accessories, including adding a new loofah line by Spa.

While the chain’s primary emphasis is mass market brands, it also carries a wide selection of prestige fragrances and related body products. The Elizabeth Arden Spa range of body gels, lotions and soaps did well in F&M’s high-volume stores, Gardocki noted.

F&M also occasionally has prestige skin care lines such as Clinique and Lancome, which are supplied by secondary sources, Gardocki said. “We do a ton of business in Clinique when we can get it,” she said.

F&M discounts the prestige brands 10 to 60 percent, Gardocki said, and displays the merchandise behind a glass counter for security reasons.

The chain steers clear of department store color cosmetics lines, however, because supplies are too intermittent, she said.

On a recent visit to a Chicago F&M, the 3.3-ounce size of Calvin Klein’s Eternity was $39, compared with $52 at Marshall Field’s. A Clinique set of three miniature soaps was priced at about $11.25, compared with $12.50 at Field’s.

F&M has become so well known for its selection of designer fragrances that customers will come in clutching magazine ads after a new perfume launch. “We’ve trained our customers fairly well,” quipped Gardocki.

It generally takes F&M about a month to get a fragrance in stock after a department-store launch, she said.

The number one seller in women’s fragrance is Giorgio’s Red: “We always have it in stock and promote it heavily,” Gardocki said. The chain also did very well with Klein’s Obsession and Eternity during the holiday season, she noted.

The stores also carry all the major mass market fragrance brands, such as Coty and Prince Matchabelli.

In skin care, the best-selling mass market lines are Neutrogena and Plenitude, Gardocki said.

The top brands in makeup are Cover Girl and Revlon. Gardocki claims F&M’s Revlon selection is the broadest of any mass market store. The chain will even specially order hard-to-get items or discontinued lines for customers.

The stores also carry some ethnic lines, depending on the demographics of the location. Maybelline’s Shades of You and Revlon’s Color Style are in all stores, Gardocki said. It’s an area she would like to develop further.

“It’s not just color cosmetics, but skin care and hair care products,” she said. “We’re missing a piece of the whole pie.”

Another area for future development is a line of F&M customized gifts with purchase, Gardocki said.

In a bow toward department-store-style service, every store also has a cosmetics supervisor on duty at all times, Gardocki said. While their experience levels vary, some are licensed cosmeticians, she added.

Many stores also hold regular special events, for example makeup demonstrations or personal appearances by celebrities such as Miss America and supermodel Niki Taylor.

“We’re striving to be the expert at the mass level in terms of the customer,” Gardocki said.