K&B GOES FOR TWO SCOOPS IN COSMETICS

Byline: Faye Brookman

NEW ORLEANS--K&B Inc. hopes the aftertaste of its ice cream will linger long enough to sweeten its cosmetics profits.
The 182-unit drugstore chain is moving cosmetics to the front of the store, the former home of ice cream and snacks, to spark beauty sales.
"We make our own ice cream, and it is very popular," K&B president James LeBlanc said during a recent tour of a new prototype store. "People used to be able to come in, grab some ice cream and go out. Now they are exposed to profitable categories, such as cosmetics, as they make their way through the store."
Cosmetics' gross margins are in the 30-percent range, while snacks and ice cream typically generate margins of less than 20 percent. Since K&B sells its ice cream for $1.29 to $1.39 for a half gallon, cosmetics also result in higher register rings.
The chain, which is based here and operates stores in six Southern states, is building all new stores with beauty departments up front and is remodeling its old stores to fit the new format. The old store design placed cosmetics in the rear, near the pharmacy.
The chain is revamping at a time when competitors have moved into its turf. Industry experts said K&B's market dominance in cities like its home town has been diminished by other drugstore chains, including Walgreen Co. of Deerfield, Ill., and Eckerd Drug Co., based in Clearwater, Fla.
Sources estimate K&B once controlled more than 50 percent of drugstore sales in New Orleans, but now has less than a 30 percent share, although the chain remains the market leader in the city.
K&B is the nation's 20th largest drugstore chain in store count and the 23rd largest in sales, which are estimated at $500 million a year.
By moving cosmetics, the store has made the department more visible. That has not only helped entice shoppers, but made it easier for employees--who are stationed at checkout and service counters up front--to assist customers and prevent pilferage.
Random cosmetics items are tagged with electronic surveillance devices to reduce theft, and LeBlanc said he hopes to be able to bring fragrances out from under glass as suppliers continue to offer anti-theft devices.
Although LeBlanc would not break out cosmetics' percentage of average store sales, he said it was one of the chain's top categories. An average K&B store rings up total sales of almost $3 million a year.
In the new layout, cosmetics is at the side of the store entrance. Soft pink lighting on the top of the peg wall differentiates the department from the rest of the store.
The first products a shopper encounters are mass and prestige fragrances in a locked glass case. The prestige choices on the recent visit included Christian Dior's Poison, Elizabeth Arden's Sunflowers, Nina Ricci's L'Air du Temps, Yves Saint Laurent's Opium and Chanel No. 5.
Periodically, prestige fragrances are marked with signs to signify savings of at least $10 less than department store competition.
Staff members at the nearby checkout area and service counter can assist customers. A cosmetician is in the department during the store's busiest hours.
Fragrances, especially gift sets and products on promotion, are also merchandised on special tower displays.
Next to the fragrance case is the beginning of the peg wall. The lines carried include L'Oréal, Max Factor, Almay, Revlon, Cabot's Clear Perfection, Coty and Physicians Formula.
Rather than put its budget-priced line on the wall, K&B allocates an end-aisle display to Pavion's Wet 'n' Wild. K&B still carries Procter & Gamble's Clarion, which the manufacturer has discontinued.
The chain devotes shelves in the department to new color stories to keep the selection fresh and exciting, according to LeBlanc.
Instead of using vendor fixtures alone, K&B integrates them into its own wall fixtures to create a unified look.
For skin and bath products, K&B uses a special wooden end-aisle fixture provided by Del Laboratories' Naturistics. Bath items, said LeBlanc, have not been especially strong for K&B.
Rounding out the beauty area are bath needs, sun products, skin care, nail care, hosiery and hair care.
By grouping all beauty needs together, K&B creates a mini-beauty store with a drugstore ambience. The old layout--with cosmetics near the pharmacy--did not allow K&B to take advantage of the synergy between cosmetics and skin and hair care.
As of Oct. 17, the cosmetics departments were 50 percent merchandised for Christmas, and wrapping paper and streamers decorated the beauty area. LeBlanc said the chain will be all set for Yule within two weeks.
He said he expects a good holiday season for many departments, including fragrances.
Remodelings were designed to make K&B stores more contemporary and "customer-friendly," according to LeBlanc. Besides moving cosmetics, the stores lowered pharmacy counters to encourage customer and pharmacist interaction.
K&B is preparing for point-of-sale scanning, a move LeBlanc admits should have been made several years ago to keep K&B competitive with encroaching competition in its prime operating markets. LeBlanc said he believed using scan data could help ignite turns and profits in cosmetics--traditionally one of the slowest-turning areas in a drugstore.
Cosmetics buyer Donna McManus agreed. "We're looking for productive lines, because with increased competition and better data available to management to analyze turns and profitability, we have an increased management focus on the profitability of the cosmetics category," McManus said.
McManus said she hoped the technology would enable her to delete slow-turning stockkeeping units to make room for brands such as Cabot, which distinguish K&B from competing drug and discount chains.
K&B has tinkered with its ideal size store over the years. For a while, the chain was constructing 20,000-square-foot units. Now its preferred size is in the 15,000-square-foot range, according to LeBlanc.
The chain has joined the handful of drugstore operators adding drive-through windows for pharmacy. At this point, cosmetics are not available at the window.
Other services include one-hour photo processing in some stores, a fax center, automated teller machines dispensing cash and 24-hour stores.
"Convenience is the top priority with shoppers today," LeBlanc explained, "and we want to make it easy for them to find what they want in our stores."

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