DRUG CHAINS: COTY HEADS UP SOLID YULE
Byline: FAYE BROOKMAN
NEW YORK — A check of 10 major drug chains this week found glad tidings: The shelves have been emptied of fragrances, especially Christmas gift sets.
While the majority of buyers were on vacation and unreachable, salespeople and cosmeticians at the various outlets confirmed that this Yuletide season, in particular Christmas Eve — which fell on a Saturday — was a strong one.
Although many mass market retailers, especially apparel merchants like Wal-Mart and Kmart, had overall sluggish sales and were hurt by unseasonably warm weather, drug chains had cleaner sell-throughs.
A buyer at one major West Coast chain, who spoke on condition of anonymity, said, “When all the smoke clears, we’re looking at an 8 percent increase.” She noted the gains were particularly welcome after a mediocre holiday season in 1993.
As with last year, when it emerged as the only clear winner in the fragrance category, Coty’s Vanilla Fields sold out at the stores checked. Its sister brand, Vanilla Musk, was also popular, although a few pieces remained.
Longing appeared to sell better in stores with beauty advisers who could steer customers to the scent from Coty, launched this fall simultaneously with Vanilla Musk.
“I sold out of every piece of [Longing],” said a cosmetician at a Thrifty store in Los Angeles.
Revlon’s Fire & Ice had a decent sell-through overall, cosmeticians said. They reported that it sold very well right after Thanksgiving, but fell off a little as Christmas neared.
Prince Matchabelli’s Aviance and Wind Song sold well, the sources noted. They attributed that to a heavy schedule of television, along with new packaging.
In addition, beauty advisers said, classic mass scents such as Jovan Musk, Renaissance Cosmetic’s Chantilly and Mem’s Heaven Scent made comebacks this year.
The downside to the holiday season appears to reside in the bath category. Bath and body gift sets made up a great deal of the inventory that remained on the shelves this week.
A cosmetician at a Walgreen Co. store said department stores had become very aggressive in the bath category this year, making it hard for drugstores to compete.
For example, the cosmetician said, a Saks Fifth Ave. store near the Walgreen’s had an array of bath items, including bath gels in elegant glass bottles and an aromatherapy collection, with all items priced under $25.
What didn’t sell before Christmas is now moving out of most chain drug and discount stores via half-price Christmas sales.
CVS and Revco advertised 50-percent-off sales this week. CVS even started the sale on Christmas Day in some of its stores that are open 24 hours.
Rite Aid Corp., based in Camp Hill, Pa., got what it wanted for Christmas: an entry point into the lucrative Detroit drugstore market.
Rite Aid did so by completing an agreement on Tuesday to purchase Perry Drug Stores, a 224-store chain based in Pontiac, Mich. Rite Aid has offered $132 million in cash, or $11 a share.
The acquisition will nearly triple the number of Rite Aid’s Michigan units from 124 to 348, and will mark the chain’s first units in Detroit proper.
This latest purchase caps a busy year for the company on the acquisition front. The chain snapped up LaVerdiere’s Super Drug Stores of Waterville, Maine, earlier this year, and in October it purchased about 20 sites in New York City from the Red Apple Group.
The purchase of Perry is expected to greatly strengthen Rite Aid’s beauty presence. The Perry chain was founded in 1957 by current chairman Jack Robinson, a pharmacist who placed a great emphasis on categories such as cosmetics.
Although over the years Perry dabbled in everything from auto parts to birdseed, beauty remained a core department. The Perry stores devote sizable footage to cosmetics, often as much as 8 to 10 percent of total selling space. The department is usually directly off a store’s front entrance.
Rite Aid executives admit they have prospered in the beauty arena by learning from the various chains they have acquired. For example, the company first discovered how successful the stocking of prestige scents can be after it purchased Wellby Drug Stores in May 1993.
In selected stores this year, Rite Aid has increased the linear footage devoted to beauty from the previous standard of 52 feet to more than 80 feet as a way to appeal to more women.
Traditionally, Rite Aid had focused only on the prescription business, which accounts for more than half of the chain’s yearly sales.
Rite Aid’s purchase of Perry comes at a particularly opportune moment. Although Perry posted record revenues of $737 million in the fiscal year that ended Oct. 31, the chain has lost some market share over the years to competitors such as Arbor Drugs of Troy, Mich.
And Rite Aid picks up the Perry stores just as another competitor, F&M Distributors of Warren, Mich., has entered Chapter 11.
“It is the perfect time for Rite Aid to slip into the market,” said one industry observer.
The deal is also just another move in the continued consolidation of the chain drug industry. Other major mergers in 1994 included Thrifty with PayLess and HSI with Revco.
People who fall into the so-called Generation X range — from 18 to 29 years of age — are expected to increase their earnings, secure better jobs and prosper in 1995.
That’s according to the results of The Timberline Online Poll released by the Mem Co., manufacturer of the Timberline men’s fragrance. More than 80 percent of those polled indicated they are “very optimistic” that their lives will improve in 1995.
The significance of the findings, Mem said, is that retailers will be presented with new marketing opportunities and greater sales potential with Generation X, a group that many in the industry consider an untapped resource.
Based on the success of its first Manhattan store, a unit that opened on East 68th Street in 1993, Genovese Drug Store, based in Melville, N.Y., will open a second store in an old Bolton’s on Eighth Street between University Place and Fifth Avenue. The new unit will open by March.
Now that many department stores have exited the salon business, drugstores are getting into it. American Drug Stores, based in Oak Brook, Ill., has installed a 1,200-square-foot beauty salon in its Holiday Village Osco store in Missoula, Mont.
The salon is operated by American Stores and offers all hair and nail care services. Customers can either make appointments or get walk-in service. The store also has an expanded cosmetics department to augment the beauty salon business.