CHANGING FACE OF THE MASS MARKET
Byline: Faye Brookman
BRIDGEWATER, N.J. — Five women feverishly pick through a bin of Added Extras’ glitter, Sarah Michaels’s Relaxing Body Lotion and Coty’s Lady Stetson fragrances.
Too bad they are at a going-out-of-business sale at a Bradlees store here and that prices are slashed 70 percent.
Bradlees Inc., based in Braintree, Mass., is one of a handful of merchants closing their doors after a brutal holiday season. Wards also shuttered all of its 250 doors, Ann & Hope of Cumberland, R.I., closed four of its six units and many dot-coms, such as Send.com, signed off after the holidays. In the past few years, other mass merchants including Caldor, Clover and Venture have also closed shop.
The demise of these major retailers is reshaping the world of mass retailing, including the base of power in the beauty business. Although at first blush, local drug chains could benefit from the closing of Bradlees, retail experts think nearby discounters will pick up the slack.
There is a Wal-Mart and a Target within five miles of the Bradlees that is closing here in a prime location across the strip from the Bridgewater Shopping Commons. At a time when drug chains could use the sales, it appears the biggest of the mass merchants are just getting stronger.
The skeletons of the stores left behind will further fuel growth of three thriving mass merchants — Kohl’s, Target and Wal-Mart. In total, Bradlees operated 105 stores in the Northeast — one in Maine, eight in New Hampshire, 35 in Massachusetts, 17 in Connecticut, 7 in New York, 7 in Pennsylvania and 30 in New Jersey.
“There are a couple of locations where a Target or Wal-Mart might fit in,” said Richard Brunelli, president of RJ Brunelli and Co., an Old Bridge, N.J.-based developer, of the evacuated Bradlees sites. “Also a variety of users such as Kohl’s or Stop & Shop might move in. The sites especially give Target or Wal-Mart a chance to further expand into New England. These stores will be absorbed quickly.”
Another regional mass power, Ames Department Stores Inc. of Rocky Hill, Conn., could gain some of the business via a shrewd move. Ames stepped up to the plate to announce that it would accept post-closing returns from Bradlees. However, the closest Ames to this particular Bradlees is more than one hour away. In New Jersey, experts also expect Safeway Inc. will expand the Genuardi’s food store concept it recently acquired. Genuardi’s was a Norristown, Pa.-based regional food chain.
Kohl’s has already shown it likes to take over strong locations in New Jersey — the chain snapped up several sites that once housed Caldor and Clover stores. As Kohl’s, Target and Wal-Mart scoop up the units, the mammoth retailers are sure to grab more beauty sales.
That means further hemorrhaging for drugstores, a channel already losing share to discount operators. “Unfortunately, drugstores are retrenching,” said Brunelli. Also, he said, the stores are too big for drug chains to acquire.
Two of the top four drug chains are strained. Rite Aid Corp. is in debt as new management seeks to cure ills from former executives. Eckerd is reorganizing its efforts under a new chief executive officer, Wayne Harris, who is seeking to revitalize existing stores rather than open new units. “The other two, CVS and Walgreens, are in a position to grow and could benefit from Bradlees closing,” said Brunelli.
However, drug chains continue to lose sales to discounters when it comes to beauty. In skin care, for example, mass merchants have taken over in a category traditionally dominated by drug. For the 52-week period ended Nov. 5, mass merchants had sales of $31 million, or 39 percent of total sales for food, drug and mass, out of $79 million. Discounters have even edged out drug in artificial nails — another bastion of drug chains. During the same 52-week period, discounters grabbed 49 percent of sales, versus drug’s 44 percent.
Although Bradlees had a minor presence in beauty, the importance of the category is underscored by the fact that cosmetics was one of the first categories picked over by shoppers at the closing sale. In fact, Bradlees touted cosmetics as a lure to bring shoppers into the sale. Bradlees merchandised cosmetics near health and beauty care in the center of the store. Local resident Lori Smith often purchased her mascara while at Bradlees. “It was convenient to buy a few items while I was here shopping for other things,” said the homemaker. She plans to shift to Target.
Nearby, Target operates one of its larger Greatland formats and inspection of the store reveals why the Minneapolis-based retailer is emerging as a formidable foe. In this store, beauty is located to the far left of the entrance — a highly visible spot. The first end-of-aisle display is dedicated to exclusive brand Sonia Kashuk. A young customer playing with the Kashuk brushes explained the line’s allure. “This brand reminds me of what I see at Macy’s, but for a better price,” the customer said. In addition to Kashuk, however, Target offers as many selections as a Walgreens located nearby. Target gets behind new launches in a big way, such as Revlon’s new Skinlights.
A few miles away, Wal-Mart offers an example of why it continues to gain power in beauty. The store, which is about two years old, is far less attractive than Target, but packs a punch with price. Skinlights skin care is priced at $9.97 at Wal-Mart versus Target’s $11.99 and Walgreens’ $13.95.
The other of the thriving troika — Kohl’s — has an entirely different tack in beauty. Rather than compete head-to-head on color cosmetics, Kohl’s skips traditional pegged cosmetics and offers only exclusive and brand name lines of bath and body products. In an area near accessories and loungewear, Kohl’s stocks Bodysource, Claire Burke, Neutrogena and The Healing Garden. The retailer does sell premier fragrances in a locked case, including Arden brands, Lancaster, Claiborne, Ralph Lauren and Estee Lauder.
Threats of a slowing economy could push more U.S. retailers to the wall going forward in 2001. “In a difficult market, it makes the weaker players weaker,” said Rosemary Sisson, a UBS Warburg fixed income analyst.
Rite Aid is a chain that often comes under fire from the financial and manufacturing communities. However, Rite Aid officials point to brighter news from third-quarter results. Rite Aid executives finger a narrow quarterly loss on strong sales as proof that the chain is making a comeback after an accounting scandal. Same-store sales for December rose 7.3 percent. “There’s not much that we do that is relevant to the old Rite Aid,” said chairman and ceo Bob Miller in a conference call last week. There has been a halt to new-store expansion as well as closure of existing stores. The company said it would shutter 75 more stores on top of 100 that have already closed.
Eckerd also is trying to put the focus back on existing stores. The company is remodeling many units to feature a new look with new merchandising twists such as merchandising hair care by brand rather than type, and new universal cosmetics fixtures.
Vincent Butta, former president of Advertising Display, a company in Lyndhurst, N.J., has joined Agence 21 as chief executive officer. Agence 21 is a Manhattan-based digital imaging business. At ADC, Butta was responsible for ushering in the use of universal fixtures by retailers such as CVS and Eckerd. Eckerd is currently rolling out its own fixtures, while CVS has just set up a new experiment of universal fixtures in a store in Pawtucket, R.I.