RICKY’S AUGMENTS ITS ACCESSORIES TO GAIN EDGE IN CROWDED MARKET

Byline: BARBARA WHITE-SAX

NEW YORK — The flood of competitors is causing Ricky’s bath business to go dry.
So instead of enlarging its selection of bath gels and soaps, Ricky Kenig, the owner of the eight-store drug chain based here, has decided that the future is in bath accessories.
“Bath isn’t what it used to be,” Kenig said. “It was once such a profitable category for us. But once the big drug chains got into the business, they ruined it. The low-price manufacturers knocked off all the hot items, and now the market is saturated with so much product, the good stuff gets buried under all of the junk that’s out there.”
Ricky’s is still devoting about 10 feet to bath with a mixture of higher-priced lines, such as Perlier and Bertz Bees, and proven basics, including Vitabath and Fa.
But Kenig says that imported bath accessories — such as brushes, loofahs and sponges — are the items that are driving the business.
He sees bath implements as a way of differentiating Ricky’s from the competition, which is growing daily. Chain drug giants such as CVS from Woonsocket, R.I., and Rite Aid Corp. of Camp Hill, Pa., will soon encroach on his territory. Both firms plan to open stores in New York.
“You really can’t get hurt with dry goods,” he said, referring to accessories. “Duane Reade is not carrying the exact same item at a lower price, and the segment is not brand-name driven, so I don’t have to worry about pricing.” Kenig equates the bath accessories category to his hair care section, where with a little innovation and experimentation with merchandise, the chain has turned its high-end hair brush section into a powerhouse department.
The 125-stockkeeping-unit section of hair brushes is merchandised in baskets against a 17-foot wall of the store. That department generates about half of the chain’s hair care sales, he said.
“A lot of these brushes were closeouts,” Kenig noted. “But the quality is really high, and our customers are willing to pay more for products that are high performance. It’s not unusual for a customer to come in and buy five hairbrushes. I can’t believe it myself, but they really react to the merchandising.”
Although Kenig said his customer is willing to pay more for items at Ricky’s, he is not blind to stiff competition from lower-end retailers in the Manhattan market.
In the last year, major chain drugstores known for rock-bottom prices have seen Manhattan as equally fertile ground as the suburbs where they have traditionally made their homes.
Genovese, the Long Island-based chain, set up camp here last year, while Rite Aid is set to move here in the near future. Since part of Rite Aid’s strategy is to upgrade and augment its health and beauty aids departments, the firm may even become a bigger source of bath competition for Ricky’s.
Woolworth, too, has been paying more attention to the New York area. Since the company sold its suburban Rx Place stores to S.E. Nichols, operators of the Pharmhouse chain, Woolworth is turning its full attention to its New York Drug Mart concept stores, many of which feature substantial bath and body sections.
Perhaps Ricky’s biggest competitors are the bath specialty shops and the upscale independents, which abound in his neck of the woods. H20 Plus, Bath & Body Works, Body Shop and Nature’s Elements are just a few purveyors of bath products located in the city. And with The Gap, Banana Republic and Hallmark all getting into the tub, New Yorkers can shop for shower gels on nearly every street corner.
That’s why Kenig searches for niche items that will set his chain apart from lower-price operators such as Duane Reade and Rx Place, traditional drug chains such as Genovese, and the upscale bath boutiques.
Offbeat, niche items, often imported from abroad, also give Ricky’s stores an identity that distinguishes them from discount cosmetics chains, such as Cosmetics Plus, that tend to have a more mainstream mix, Kenig said.
“Because of our size and our market, we really have to stay about six months ahead of the market trends,” Kenig said. “By the time the big drug chains get to a trend, we’re out of the business. Larger chains don’t experiment with anything, and by the time a trend is proven, it’s already dead.”
In addition to bath accessories, soaps are currently hot items. Ricky’s prices its specialty soaps between $2 and $6. Kenig said the real magic number is $3.99; the chain generates the highest volume of specialty soaps at this price point.
Kenig added that his customer is not interested in lower-priced goods, saying, “We stocked some beautiful soaps priced at 99 cents, and I couldn’t give them away. People wanted the higher-priced goods.”
The best-selling specialty soap at the chain is one the firm’s unique touches: Sales associates hack off bars of soap from a giant soap block.
“We display the big bar on glass and cut it for the customer right there,” he said. “We cut [the bar] with jagged edges so that it looks authentic. The bars look great stacked for a decorative effect, and the customers really react to the earthy, natural flavors.” Ricky’s house soap is available in combination flavors such as vanilla/almond/oatmeal. Each custom-cut bar is $3.99.
To continually give consumers a reason to shop the store thoroughly, Kenig moves the department or redesigns the section every three to four weeks.
Skin care, often merchandised in a 12-foot section adjacent to the bath set, continues to be strong at the chain. Neutrogena has a loyal following at Ricky’s, and specialty brands such as Nature’s Gate and Alba are also popular.
But the biggest body care seller is a well-known mainstream brand.
“Lubriderm still outsells any other brand,” Kenig noted. “We don’t make any money on it because it’s so competitive. But no one else makes any money on it, either.”
To offset no-margin items, Kenig is willing to bring in untried specialty products on consignment, an arrangement he says a small chain is best equipped to manage.
One of the newest lines the chain is carrying under this arrangement is Nubia Skin Care, a brand targeted at African-Americans. Although Kenig says the stores have had a number of telephone inquiries about the line, the jury is still out on how that brand will fare long-term.
An eye to niche items is evident in the chain’s sun care mix, as well. The store does best with an imported line called Shea Butter, which manufactures carrot and aloe-based products.
The chain also does well with No Ad, a generic line that Kenig says combines high quality and value pricing. The product also carries a healthy margin, something that’s unusual in the section.
“There’s so much competition that we can’t make the margins we used to make,” Kenig said of the sun category.
Bain de Soleil’s orange Gelee SPF 4 has the chain’s strongest sales in the sun department. Higher SPF products sell in such lines as Panama Jack and Banana Boat.
As Manhattan continues to resemble the suburbs more closely, with Kmart, Rite Aid and Bradlees closing in, Kenig concluded his small chain and others like it will continue to thrive only if they can offer the unique.