NEW YORK — The most magical word in the cosmetics business is “sell-through,” and that is what this supplement is about.
In a search for successful merchandising approaches, WWD has selected three mass market retailers — Walgreen Co., Target Stores and Revco — and examined the direction each is taking. All three are widely regarded as being among the best.
Walgreens is poised for a blitz of the Cleveland market, with plans for a grand opening on Nov. 4 of 15 stores. “This is our biggest entry into a new market, other than by acquisition, in our 92-year history,” chairman Charles R. Walgreen said last year when he announced the strategy.
Walgreens, the largest volume drugstore chain in the U.S., with sales for the year ended Aug. 31 of $9.2 billion, does a hefty 9 percent of its sales in cosmetics and toiletries.
One of the new Cleveland stores, the unit in Maple Heights, makes a major beauty statement. The category receives an estimated 10 percent of the total selling space of the store and is visible from most locations.
One challenge faced by drugstore chains is the growing threat from discounters that continue to gain market share. Target is one of the discounters on the move.
“Chains like Target have seen this [cosmetics] as a category they want to build, and they are going out and doing it,” said James McDougald, senior vice president of sales for Coty Inc., based in New York.
What the chain has done is devise a tightly honed mix of fast-moving stockkeeping units. Sophisticated ordering systems insure that top products are always in stock, especially brisk sellers like Revlon’s ColorStay.
Although industry experts estimated that beauty represents less than 3 percent of average store sales, they say the chain is looking to double that percentage over the next five years.
“Target has been upgrading its sections and improving the selection,” noted Robert Hiatt, president and chief executive of Maybelline Inc.
Another drugstore chain, Revco, approaches beauty with an iron discipline: Every aisle is marked, and everything is in its proper place.
“When a promotion is supposed to be out, you can go into any store and it is there. They have strong systems in place,” said Harry Hart, senior vice president of corporate trade development for Revlon.
Revco’s tight operating philosophy, coupled with its sharp new prototype, have earned the chain honors. And Revco, beauty suppliers added, has achieved its success in just two short years; it filed for Chapter 11 in 1992.
The chain previously operated tiny stores with pharmacies located in the front. Little attention was paid to beauty. Now the pharmacies are in the back and cosmetics has a prominent spot in a front corner.
The chain’s 12,000-square-foot store in Hudson, Ohio, is a perfect example of Revco’s new beauty clout.
When talking about cosmetics retailing, thoughts of Christmas are inevitable. So are holiday gift sets, featured in this issue on pages 14 to 18.