NEW YORK — Although the major issues on the minds of drugstore retailers will be how to deal with discount drug cards, electronic prescribing and other pharmacy issues, there also will be talk of how to boost front-end sales at the National Association of Chain Drug Stores meeting.
The gathering of the elite of chain drugstore retailing takes place at The Breakers Hotel in Palm Beach, Fla., April 26-30. The annual meeting brings together the top retailers and manufacturers of the drugstore business in informal cabana meetings, as well as social functions. More than 2,200 business leaders are expected to attend, roughly the same number as the past few years. Although there has been consolidation of the number of drug chains, the meeting is now attended by more supermarket and mass market retail chains, keeping the attendance numbers stable.
As gross margins continue to be battered at the pharmacy counter, many retailers expect to excavate for new ways to mine profits from the front end of the store. That includes cosmetics and health and beauty care — the number two producing category behind pharmacy in most drug chains.
"We can’t overlook the contribution of nonpharmacy categories," said Craig Fuller, the president of NACDS. Added Mark Griffin, the current chairman of the association and head of Lewis Drugs: "We have to do all we can to maximize our profits at the front end of our stores." Griffin said he’d be interested in hearing about new products that could drive shoppers into drugstores. A few items interesting retailers include the new Schick Razor, which doesn’t require shaving lotions, and the Olay vitamins.
During one-on-one meetings between beauty suppliers and retailers, retailers said they expect to ask for even more new product innovations. "We are seeing customers start to come into stores looking for what’s new," said Kathy Steirly, vice president of beauty for Eckerd Drug Stores. Drugstores pride themselves in beating other retail channels to the punch when it comes to product debuts.
Customers have been taking over in the "merchandising seat" at many drug chains. Retailers are trying to listen to what shoppers want and react with improved store selection and design. Walgreen’s has what it calls "peer" stores, where it is grouping stores with similar demographics for sales comparisons. Stores with high ethnic traffic, for example, are getting larger ethnic departments.CVS has been moving cosmetics closer to the front door as part of its Beauty At the Door program. Feedback from its Extra Care card showed that move to be beneficial for beauty, which is proving to be a major category for CVS cardholders. The chain has reacted to consumer demand for new items with the creation of a Beauty News department with a magazine and new items.
Although not a drugstore chain, Ulta is also reacting to shopper needs. The company has relocated yoga and wellness merchandise to its own home space near professional beauty, according to company president Lyn Kirby. Some mass brands are getting additional space and Ulta’s fragrance department is registering big gains from fragrances such as the new Celine Dion, said Kirby.
Finding ways to differentiate one retailer’s beauty area from another will be paramount at NACDS. Retailers also hope to discuss how to get marketers to help "push" products through their stores. Some retailers, especially regional powers, lament a lack of emphasis on marketing products through drugstores. Many manufacturers are concentrating efforts on discounters like Wal-Mart. "We have supported companies for years and then they put their big push into other chains," said one buyer.
Still, the beauty business is relatively healthy at drug chains. According to statistics through the end of February from Information Resources Inc., beauty sales increased 4 percent to $1.7 billion and the number of units increased 3 percent to 773 million beauty items moving through drug chain cash registers. And, while supermarkets saw a drop-off in sales of many health and beauty care categories, drug chains managed to register gains in all but three of 23 categories tracked by IRI.
Retailers and manufacturers also will hear about issues outside of retailing during general sessions. Robert Woodward, the assistant managing editor of the Washington Post, will kick off the sessions with his unique perspective on current events. Ram Charan, president of Charan Associates, will discuss "Getting Things Done," while Marcus Buckingham of the Gallop Organization will talk about how breaking the rules can be a competitive advantage. Dr. Judith Reichman will be the guest speaker at a luncheon for spouses. Incoming NACDS chairman Mary Sammons will offer her remarks on Tuesday. Sammons is the highest-ranking female chain-drugstore executive and the first woman to head NACDS. She’ll be followed by Ben Carson, director of Pediatric Neurosurgery at Johns Hopkins Hospital.NACDS adopted a new schedule last year, which includes an all-inclusive party for Saturday night featuring a Broadway theme. Sports Day, as with last year, has been moved from Tuesday to Wednesday, April 30th. The meeting will conclude with a clambake on that evening from 6 p.m. to 8 p.m.
The Annual Meeting remains one of the most crucial in chain drugstore retailing because of the unique merger of top management. Although not traditionally a hotbed of new product innovation, retailers packing their bags for Palm Beach said they expect to hear about many new product plans. "It is the type of economy that dictates new products and innovation," concluded Griffin.
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