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Walgreens Scent Sales Rise

FRANKLIN PARK, N.J. — While many drugstores’ fragrance sales declined during the holiday season in 2002, the Walgreens here exceeded expectations. <br><br>"We did especially well with a two-for-one on Liz Claiborne fragrances," a store...

FRANKLIN PARK, N.J. — While many drugstores’ fragrance sales declined during the holiday season in 2002, the Walgreens here exceeded expectations.

This story first appeared in the January 3, 2003 issue of WWD.  Subscribe Today.

“We did especially well with a two-for-one on Liz Claiborne fragrances,” a store associate said.

The store, which opened the day after Thanksgiving, also had a healthy sell-through of spa items, seasonal color promotions and nail care, according to the store associate. This new store is typical of 3,910 units operated by Walgreens, based in Deerfield, Ill. Average stores churn out sales of $7.2 million per year in 14,500 square feet of space.

A company spokeswoman commented that chainwide fragrance sales were up this holiday season.

In beauty, it is the presence of cosmeticians as well as in-stock positions on key beauty brands that drive its success. Walgreens is the first to market with new items, especially many hot “as-seen-on-TV” products. A prime example is Sweet Spa, an instant manicure that Walgreens launched and helped turn into a retail success story.

Many chains abandoned the cosmetician philosophy 20 years ago. And, although Eckerd has reintroduced beauty consultants in its stores, most chains are strictly self-service. Walgreens, however, has stayed true to cosmeticians, with almost all stores featuring service at least during prime shopping hours.

A recent visit to this new store here proved the theory. Although it was only 8:30 a.m., an associate approached a shopper eyeing fragrances. After asking if the customer needed help, the associate said where she could be found if the customer had a question and quickly went to work tidying shelves.

According to a chain spokeswoman, Walgreens believes the use of cosmeticians helps build shopper loyalty with younger consumers who aren’t necessarily visiting Walgreens for prescriptions.

Like most Walgreens units, the store here has a counter where the cosmetician can be stationed during busy hours. The shelves in front of the service area are reserved for key items such as Walgreens private label bath products, called Secret Paradise, as well as Coty’s The Healing Garden. On the other side of the service area are alternative designer scents from Fragrance Impressions, as well as open-stock fragrances from Elizabeth Arden.

Cute, promotional items such as birthstone bears are also housed on the counter and virtually sold out at Christmas.

Behind the counter are hundreds of prestige scents. Since they are locked away, Walgreens puts a sample item up on top of the glass display so shoppers can see the bottle. Fragrance prices are 10 to 20 percent below department stores.

The store here features a fairly new decor for beauty, highlighted by gray granite-like surfaces. This replaces a peach theme first introduced in the early Nineties. Walgreens, for now, is committed to supplier fixtures rather than creating its own.

The entrance to the beauty department features a 20-foot linear nail care department featuring everything from Broadway Nails to Sally Hansen. There are also nail colors from Sinful. Walgreens makes a very powerful statement in nails and has reaped the benefits with nail care sales up 20 percent, according to supplier estimates.

Beyond nail care, Walgreens merchandises mass brands. Revlon is first, followed by L’Oréal and Maybelline. In between the leading brands, Walgreens recently added 2 feet of Prestige Cosmetics. Next are Almay, Physicians Formula, Neutrogena, Bonne Bell, NYC, Jane and Caboodles. The Color Workshop has its own fixture for its collection of cosmetic kits.

Across from the pegged area are promotional display tables, including the Be Unforgettable Fragrance from Revlon, LipFinity and the new Chicago color promotion from Max Factor. Walgreens sprinkles in hot items such as the Conair Hot Foamer and the Conair home manicure set. Also, there are two displays of holiday gift sets priced at 50 percent off.

Two years ago, Walgreens enacted new pricing in cosmetics to make it more competitive, especially with discounters such as Wal-Mart. Now its advertising touts an everyday-low-price strategy. A few examples include a buy-one-get-one-free deal on Nutra Nail priced at $4.59, L’Oréal mascaras for $3.99 and a buy-one-get-one-free deal on Maybelline foundation priced at $7.99.

Walgreens believes in the old-fashioned concept of building a seasonal presence. In fact, on New Year’s Day, the store was already set for Valentine’s Day with heart-shaped cosmetics collections such as a nail file, nail polish and nail decoration kit.

Beauty products are estimated to account for almost 10 percent of Walgreens’ average store volume, or more than $700,000 per door — 4 percentage points higher than average drugstores. The chain continuously displays strong fiscal growth. Walgreens’ sales for the fiscal year ended Aug. 31 increased 16.5 percent over the prior year to $28.7 billion. The chain’s net earnings jumped 15.1 percent over fiscal 2001 to $1.02 billion. Its impressive financial results often earn it the moniker of the “Wal-Mart of drugstore retailing.”

The store here was one of 500 opened in 2002 and represents management’s philosophy of selecting freestanding locations on busy roads where there is enough room for drive-through pharmacy windows. Walgreens isn’t afraid of competition — there’s a CVS less than 1 mile away and an independently owned store across the street. The chain has worked hard to tailor the merchandise selection in each store to the local demographics.

In 1990, the Garden State only had 20 Walgreens, today there are 65.