RITE AID’S NEW BEAUTY MIX IS BACKED BY GUARANTEE

Byline: Faye Brookman

NEW YORK — Rite Aid Corp. is putting its money where its mouth is.
After three years of upgrading its beauty department’s appearance and merchandise selection, the chain is promising that customers will like what they buy — or they’ll get their money back.
The guarantee is being supported via in-store signs, as well as a national print and television advertising campaign.
Most chains will give shoppers their money back if they bring a product back that they don’t like, but Rite Aid, based in Camp Hill, Pa., is one of only a few to market the service.
Medic Discount Drug in the Cleveland market also has a guarantee, and a few other chains have experimented with money-back promises.
The guarantee is one of the steps that Beth Kaplan, executive vice president of marketing at Rite Aid, is taking to make the chain’s shopping experience “superior to the competition.”
Kaplan said that since most chains carry many of the same beauty items, each has to go the extra mile to promise a satisfactory shopping experience.
She added that cosmetics is a crucial category for Rite Aid. “We went through a strategy-planning portfolio and did an assessment of all front-end categories as far as size, profitability and how developed they were relative to total store development,” she said.
From there, Rite Aid identified several categories with upside growth potential — cosmetics was one of them.
“Customers do not view Rite Aid as a destination for cosmetics,” said Kaplan. “So we needed a way to communicate the quality of our product.” Kaplan expects the return rate to be low. “And it is worth it for manufacturers who will be opening up new avenues of consumer use, especially teenagers,” Kaplan said.
“The guarantee also comes at a time when color cosmetics is fun again. There are so many colors, and women want to experiment. We want to take fear out of trying new colors,” said Kaplan.
The resurgence of color is a trend Kaplan thinks is here to stay. “What ignited it is a shift in fashion, with brighter colors being used on runways,” said Kaplan.
She said that set the stage for manufacturers to increase their promotional color activity. “Manufacturers saw the potential, and we’re seeing some very aggressive color statements.”
She admitted the fashion industry could cycle back to grunge and little makeup. “But the apparel business wasn’t happy with that either because it wasn’t good for sales. The key will be to keep developing fresh and innovative colors.”
A testament to the power of color, she said, is the fact even more mature women are being adventurous. “Look at the fact that 30-and-35-year-old women are willing to try blue nail polish,” Kaplan said.
The edgy colors were initiated by the small manufacturers, but the major players have been quick to join the fray, according to Kaplan. “And that’s good for the business, because I’ve always believed that color is the way to build excitement in cosmetics,” she added.
Drugstores, she added, are the perfect locale for women to investigate new looks. “The price points are reasonable enough that it isn’t a huge investment for that bottle of blue nail polish,” she said.
While color is alive at Rite Aid, Kaplan expressed concern over mass market fragrances. “The problem is that the business is highly fragmented and consumers are using less fragrance. These facts are coupled with the fact that there haven’t been any dynamic launches since vanilla,” she said.
All of these issues make for a difficult climate in which to launch a new scent, Kaplan said.
While Rite Aid would never exit mass fragrances, Kaplan said, it doesn’t make sense from a financial standpoint to view it as an area for growth. In fact, fragrances were recently downsized by four feet throughout the chain.
The prestige scents are faring a little better, she said, but growth is stymied by the need to keep the expensive products under glass.
Rite Aid, however, is experimenting in some stores with an open-sell format. The scents have been tagged with an anti-theft device by the supplier. “Early results are promising,” she said.
Going forward, Kaplan believes the entire industry must grapple with three key issues:
First is the assortment quagmire. Kaplan said that most stores have too much inventory in cosmetics based on the departments’ yearly inventory turns. “Smart retailers will take a look at how to use their space more efficiently,” she predicted.
Instead of cramming tons of products into one foot of space, Kaplan believes real estate can be better used for literature or testers.
Second, she believes the industry needs to find a uniform way to handle changes in planograms. Currently, most chains go through expensive resets every year that she doesn’t believe net enough results to warrant the costs. “There has to be a more effective way to do this,” she said. “People are talking about it, but no one is doing anything.”
The final challenge, she continued, is the need for manufacturers to maintain their pace of innovative launches. Transfer-proof formulas, she cited, have been good for sales. “But what’s going to be the next hot item? If we don’t see innovation, cosmetics sales could flatten out again.”
Rite Aid continues to polish off its presentation in beauty. The chain first enlarged the department and added designer fragrances in 1993.
A new prototype, launched in Perry Hall, Md., last year, is being rolled out to 200 additional stores. Kaplan said the chain is experimenting with new designs and layout shop concepts.
According to Kaplan, changes are more design oriented than merchandise related. “We’ve discontinued some small lines such as Aziza, and we haven’t introduced any major new lines,” she said. “We did add a larger nail care area because of growth.”
Another wrinkle is a magazine the chain is putting into stores called Beauty the Rite Way, which will offer makeup tips. Although Rite Aid has enhanced its beauty presentation, Kaplan said cosmeticians are not in future plans.
“We won’t put cosmeticians in, but we are focusing on training and building the capabilities of store personnel to answer questions, but not perform makeovers,” she said. Some chains do a good job in service, she noted, but on the whole, she believes it is difficult to accomplish in a mass market setting.
Kaplan urges suppliers looking to do more business with Rite Aid to bring the chain proprietary marketing and logistics initiatives. “Be willing to try to do something different,” she said. “With all of the industry consolidation, it is going to get more competitive. We can’t all be doing the same things,” she said. “What we really want is something that has legs. Manufacturers need to come to us with a well-thought-out game plan.”

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