By  on March 11, 1994

NEW YORK -- Raley's, a West Coast supermarket chain, is exploring the possibility of featuring an expanded bath category, something traditionally shunned by supermarkets.

Late last year, the Sacramento, Calif.-based chain created extensive bath and body shops in two of its 63 units. If they succeed, the boutiques will be installed in other stores, according to Bill Roatch, cosmetics buyer for Raley's.

He noted that it will be up to the manager of each unit to decide whether to enlarge bath space, and that no timetable has been set for possible expansion.

"We're watching the category. We want to make sure bath and body is a long-lasting trend," said Roatch. "If it is, we may even explore private label."

Raley's executives hope their bath endeavor is successful for one simple reason: profit. The supermarket chain recently scrutinized its beauty mix and deleted items that weren't producing sufficient gross margins and turns.

The retailer cut higher-priced cosmetics lines to concentrate on value-oriented brands such as Cover Girl, as well as to give space to the more profitable bath category, Roatch noted.

While traditional cosmetics products yield gross margins in the 30 to 35 percent range, Raley's is expecting to generate margins closer to 50 percent with its bath venture, he added.

Roatch is aware, however, that some competing retailers have been disappointed with turns in the bath category.

"We know that can be one of the drawbacks," he said, adding that the store will keep close track of turns.

He claimed, however, that Raley's will benefit from offering great value compared with the higher-priced bath items sold by specialty stores such as The Body Shop.

Last October, Raley's edited out slow-moving mass market fragrances in a store in Woodland, Calif., allowing room to build the chain's first enlarged bath boutique.

"We have the technology to know what is selling and what isn't, and we found we could cut back in men's and women's fragrances," said Roatch. The space was used to build a 20-foot-long bath shop.

For the installation, one of the Woodland unit's managers visited local vegetable growers to purchase tomato lugs. The containers are now used to house the bath items. He also got wood from a dilapidated barn to use as decorative fixtures, creating a rustic bathhouse look.The other prototype is in a new Raley's in Elk Grove, Calif., which was opened last November. The bath department is 24 feet long, located within the cosmetics department.

Wooden baskets and shelves are affixed to wooden slats, creating fixtures to house the assortment, while decorative vines have been used to give the department an upscale appearance. Several vendors who have seen both Raley presentations say they surpass the look of most drugstore bath departments.

The product selection at both prototypes also rivals that of drugstores. The mix includes LaLoren's Sarah Michaels line, Elizabeth Arden's Spa line, Yardley Bath Shoppe, Naturistics, Pears Personal Pleasures, a regional brand called One-On-One and San Francisco Soap Company. Raley's is even stocking Tisserand, an upscale aromatherapy line sold mainly in specialty stores.

"I think we are seeing that supermarkets can sell bath items," said Mark Kaplan, president of LaLoren in Stoughton, Mass.

All Raley's stores sell basic bath products such as Calgon and Vaseline Intensive Care in the toiletries area of the store. According to Roatch, it is up to managers to decide whether to add more upscale lines and to expand the space.

"We give our managers a lot of autonomy," he said. "Many stores have added Sarah Michaels already and some are looking at the boutiques."

Supermarkets have been slower to add cosmetics and bath items than drugstores and discount chains, since most have had trouble creating a beauty presentation in the center of a grocery store -- especially when aromas from bakeries and meat departments waft into the beauty area.

Cosmetics turns, typically four times or less per year, are also drastically lower than traditional food items and many supermarket retailers aren't willing to wait to build the business.

It is no surprise, however, that Raley's would be a pioneer. The chain was originally a separate drugstore operation that grew into a grocery business. While most combination food/drugstore retailers now integrate non-food items into the center of the store, Raley's maintains a separate drugstore space in its units.

"We want you to think you are in a freestanding drugstore," said Roatch.

The separation between food and drug is expected to help Raley's build its cosmetics and bath business, according to manufacturers.While Raley's may have potential, many supermarket operators continue to delay making a commitment to the bath category. For the year ended mid-October 1993, supermarket bath volume dropped a percentage point over the comparable period in 1992, to $115 million.

Concluded Kaplan, "Many retailers are still in an experimental phase with bath and body. They are trying to determine just the right mix of products, price points and lines."

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