SKILLMAN, N.J. — At first blush, New Jersey may appear saturated with stores. However, many mass marketers are mining growth by filling in markets overlooked by expansion in the past two decades.
This story first appeared in the January 16, 2004 issue of WWD. Subscribe Today.
A perfect case in point is a three-week-old CVS in the burgeoning town in Mercer County. There’s an older CVS about eight miles away in downtown Princeton, but this store is a welcome sight to the 10,000 residents of Montgomery Township.
Until the CVS debut, the market was only served by an aged Eckerd Drug, which has been overlooked as J.C. Penney seeks a buyer for the drug chain. Some local consumers were frustrated by the lack of service and inventory at the Eckerd and are switching allegiance to CVS. “CVS is clean and well stocked,” said Lori Konkowski, a local resident.
Similar “backfilling” of markets is occurring throughout New Jersey and other bedroom communities in the New York metropolitan area. Walgreens, for example, is adding new stores in New Jersey, including moving from an aging store in Raritan to a sparkling new facility a mile away from the old store, which will be closed. Kohl’s is building in new lifestyle shopping centers and Target is even using New Jersey as a test for its new prototype (see related story, opposite page).
New Jersey is a growth market for both Walgreens and CVS as the chains look to boost growth via new doors. Both chains have cranked up store productivity to the maximum and need new stores to expand sales.
Although CVS is experimenting with splashy new designs such as a new store in Poughkeepsie, N.Y., which has an upscale skin care center, its true growth vehicle is the type of store opened here.
During 2002, CVS retrenched and relocated or remodeled existing stores to pump up productivity. In 2003, CVS shifted to boosting store count with a goal of adding about 170 new stores. Other than New Jersey, CVS has been keeping construction workers busy in Florida, Chicago, Texas, Phoenix and Las Vegas.
What has lured local shoppers to this CVS in just a few short weeks is a clean environment with inventory depth. The store features many of the new designs first unveiled in its Ridgefield, Conn., unit two years ago, such as the Beauty at the Door concept, which places cosmetics in a prominent position, and a soft blue beauty dècor package.
Cosmetics here are at the front entrance. Signs are now enhanced with fake wood to appear more upscale. The chain wants to show customers right away that it has the latest in mass beauty. A new foundation from L’Oréal, for example, is near the entrance and features full-size testers of every shade — an almost unheard of feature in a mass store since retailers fear theft of testers.
Signs on two fixtures in the department encourage shoppers to “Try Something New.” And, the sign also promises money back if shoppers are not satisfied. This is an update of a similar new item display CVS has experimented with at other stores, which replaced a youth area called Grl Lab.
On one side of the new item area is a 3-foot section of Prestige Cosmetics. The cosmetics wall features 12 feet of L’Oréal, 12 feet of Revlon, 8 feet of Cover Girl, 2 feet of Max Factor and 4 feet of Neutrogena. Wall space is also allocated to Bonne Bell, Sally Hansen and nail care. Budget-minded shoppers find items from Wet ’n Wild on one end. There is also a display of Milani for women of color. CVS has been among the most aggressive chains to add shades for women of diverse backgrounds.
Fragrances are merchandised both in a locked cabinet near the front of the store and on displays. Dana has a special offer of a free spray cologne with the purchase of a $12.95 eau de toilette of scents such as California. Other items featured include new King of Shaves products aimed at young men and an interesting moisturizer featuring hemp.
Although Finland’s skin-care giant Lumene is going into 2,400 CVS stores, it is only featured here in one display of body products. CVS’ house label Essence of Beauty is also limited. An aromatherapy line called Botanicals is prominent.
Surprisingly, CVS has not tried its upscale skin care in this store, despite the town being rated as one of the wealthiest in New Jersey.
That’s not stopping shoppers, however, from snapping up items. A college student traveled from Princeton University for Olay wipes while two teen girls scoured the shelves looking at mascaras. Both were extremely well versed on the newest products available on the market.
Advertising features a buy-one-get-one-free deal on any lipstick as well as a buy-one-get-one-free deal on L’Oréal Vive shampoo.
Skin care is next to beauty and there are many interesting new displays such as a gravity feed razor dispenser in shaving. CVS’ chairman, president and chief executive officer Tom Ryan said in a release about November sales that the chain is seeing “meaningful” results from its new store growth. CVS currently operates more than 4,167 stores. And, it looks like expansion will continue to roll in markets such as New Jersey and the suburbs of New York.
Isaac Cohen, chief executive officer of Dana Classic Fragrances, has signed a letter of intent to purchase Cosmar from an investor group. Cohen just recently completed the purchase of the fragrances previously owned by the investors. With the addition of Cosmar, he will own all of the properties that were operated under New Dana Perfumes Corporation including Cosmar, Pro 10, Press & Go, Frills and Nat Robbins. “We see potential with all new products for Cosmar and we are encouraged with early results of Frills,” said Cohen.
In the U.S., Stuff by Hilary Duff is exclusive to Target. But in Canada, the retailer with the goods is the Hudson’s Bay Co.’s mass division called Zellers. Home furnishings, cosmetics and other licensed merchandise will reach the 300-plus Zellers stores in spring 2004. Target has already started putting in Stuff by Hilary Duff cosmetics on the end of aisle wing displays.