Byline: Faye Brookman

The critical issue facing chain drugstores today is how to transform their image in the minds of consumers from a store to a brand.
That was the word from Beth Kaplan, executive vice president of marketing for Rite Aid Corporation, in her keynote address at the Summit.
“I believe there is the need to brand stores,” she said. “Because of industry consolidation, we will be left with four chain drugstore companies — all with over $12 billion [in sales] and 4,000 stores. We all sell about the same ubiquitous merchandise. The challenge is how to differentiate one from the other.”
Kaplan, who addressed the audience from the unique vantage point of being experienced on both sides of the business — she was recently vice president and general manager for Procter & Gamble’s Cosmetics and Fragrance Division — thinks the store will become the “power brand” of the future.
She supported her theory with the fact that retailers have been transformed from merely a conduit between manufacturer and consumer to being the keeper of relevant shopper buying data.
“In the Nineties, we’ll come to the end of the era where manufacturers had all the data and the beginning of retailers owning the data,” she said.
This dynamic will lead to stores’ marketing directly to their customers, she explained.
“We need to establish an image and give a reason for consumers to shop our stores in preference to CVS or Walgreens,” she said.
Rite Aid has targeted cosmetics as a key area to differentiate its stores from the competition. Women account for 70 percent to 80 percent of Rite Aid’s customers, making beauty a logical focal point. Store design has been a major element in attracting more beauty sales, Kaplan said.
“Five to 10 years ago, Rite Aid was not the kind of place you wanted to go for cosmetics. You had to step over the plastic turkey platter and floorstands, and when you got there, you found limited assortments and [out-of-stock situations],” she told the audience. “Fast-forward to 1997 and our new stores — and we’re opening one a day — showcase beauty and cosmetics when you walk in the front door.”
The stores’ color palette has been updated to appeal to female shoppers. Beauty products have been integrated to make a more convenient shopping environment. A new bath and body department is in the works, she said.
To address out-of-stocks, Rite Aid has instituted an automatic replenishment system.
“We’ve done a good job, but we need to go farther,” she said. Kaplan said Rite Aid is working to improve the presentation of beauty products. “It might be OK to stack deodorant cans up like soldiers, but we need to do more in cosmetics,” she said.
Communicating with shoppers is another goal being addressed with a magazine called Beauty The Rite Way. One of the most dramatic steps Rite Aid has taken is to institute a money-back-guarantee marketing program, where customers can return color cosmetics they don’t like for refunds.
“The old promotions in a drugstore were to promote a $1.99 product and put in a floorstand. This [money-back campaign] is a strong brand image program that we are supporting in and outside of the store,” she said.
Kaplan said sales are up dramatically and there is an obvious correlation between the store’s spending and the sales increases.
She urged beauty manufacturers to keep product innovations coming, but also to improve information capabilities in fixtures.
“Most of the fixtures today are not helpful, and products are hard to find,” she said.
Also, she recommended that beauty companies seek ways to become more efficient because of the high costs of inventory associated with the beauty business. “We want to invest our cash in building stores and not unnecessary cosmetics inventory,” she said. “I believe less can be more in this business.”
Retailers and manufacturers must continue to forge unique partnerships as retailers attempt to differentiate themselves from the store down the street.
“There’s certainly a role for national consumer promotions, but many of us are looking for new and different ways to fit our strategy,” she said.
The advent of database marketing will offer retailers and manufacturers improved ways to reach the “best” customers.
“We’ll get away from mass marketing,” Kaplan predicted. “Foot traffic is not the only measure of success.”