The economic slowdown has hurt just about every retail sector as consumers cut back on spending amid spiraling gas and food prices. But for the most part, drug stores are faring pretty well in general merchandise and continue to report strong front-end sales.
In its most recent quarter, CVS reported a 4. 3 percent jump in front-end sales, an increase the company attributed in part to Easter falling in March instead of April and strong sales of some over-the-counter drugs. And as chief financial officer David Rickard noted, it was also a result of consumers not being price-conscious with low-ticket items.
“Consumers are making tough choices on big-ticket purchases, but they aren’t yet focused on Snickers bars,” Rickard said.
Walgreens reported similar results for its first quarter that were helped in part by lower-priced, private-label offerings. It reported a 4 percent increase in front-end sales for the quarter and said sales that had slowed during the holidays picked up in February.
“We rebounded with strong Valentine’s Day sales,” said Walgreens’ chief executive officer Jeff Rein during Walgreens’ first-quarter conference call. “We also showed that our core product categories, including our popular private-label business, insulate us from the full impact of a slowing economy.”
While CVS’ and Walgreens’ sales were strongest, other chains reported improved results as well. Rite Aid said its front-end sales jumped 1 percent during the first quarter, mainly on the strength of beauty and healthcare products.
Longs Drug reported a 1. 5 percent increase in front-end sales for its first quarter ended May 1 and attributed some of that improvement to competitive pricing that kept sales rolling along.
To drive purchases during the economic slowdown, Longs Drug cut prices on some of its general merchandise products by up to 50 percent.
REPORTERSNotebook
Supplier News — American Greetings has signed a deal with Kathy Davis Studios to exclusively distribute the artist’s designs across a range of products starting in 2009.
The Kathy Davis Collection will debut in spring 2009 in all American Greetings and Carlton Cards stores. “Her inspiring verse and beautiful art resonate with consumers who are looking for something original and to-date,” said American Greetings vice president of greeting cards Steve Laserson. “This partnership provides a valuable addition to our product offerings.”
Davis began her career in the greeting card business in 1990 and has since become an industry-leading writer, artist and designer whose work appears in cards, apparel, books and home decor.
“We always offer great value, and that’s been the case this year,” said Longs chief executive officer Warren Bryant. “And with gas prices as high as they are, people are looking to shop in one place to cut down on driving and making extra trips.” Longs Drug kept its momentum going in late May with price cuts on hundreds of general merchandise items, with some marked down as much as 50 percent.
General merchandise sales also are getting a boost from a few categories where sales are increasing despite a woeful economy.
Sales of pet food and accessories are expected to increase about 5 percent this year, according to the American Pet Product Manufacturer’s Association, and many retailers are dedicating more space to a category some consider recession-proof. Digital cameras are another growth area. According to NPD Group, digital camera sales in April 2008 doubled from April 2007 as falling prices motivated chains to broaden their selection of digital cameras priced under $100.
Febreze is releasing several new products this summer as it closes in on becoming the 23rd Procter & Gamble brand to generate $1 billion in annual sales.
The Febreze line of products, which now includes air fresheners and candles to complement its detergents and household cleaners, generated $800 million in sales last year and should approach $1 billion in 2008. To help the brand, P&G is planning its largest-ever marketing campaign for Febreze products this summer. The company is launching a new ad campaign and introducing new products, including a combined fabric/air freshener with a pump spray that delivers a finer mist.
Febreze also is licensing products outside of P&G. It’s rolling out a new line of Febreze Closet Renewable air fresheners through a deal with E-Z Do and Brandscape.
The greeting card industry always reflects trends
in pop culture and new technology, and that’s the
case this year as more cards utilize user-generated
content to attract younger consumers to the $7.5
billion business. Such industry leaders as Hallmark
and American Greetings are using the Internet to
create new card lines with consumer input and American Greetings campaign “Think You’re Funny? Prove It!” asked
visitors to its Web site to write captions for funny photos.
adding chip technology to cards so that buyers can add their own messages.
Card makers are jumping into the You Tube age by using their Web sites to attract new ideas from customers. American Greetings’ new campaign is called “Think You’re Funny? Prove It!” The contest, which closed in May, encouraged consumers to visit the American Greetings Web site, view three blank cards with funny photos and
write a funny caption for one.
The company said the campaign allows people to get a better idea of the work that goes into making a greeting card, and gives them a chance to participate and see their own creations in print. American Greetings noted that simply choosing the right photo for a card is difficult, and only 1 percent of the photos
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It’s a little early to be talking about Christmas, but not for PBC International, which debuted its first line of M&M singing Christmas tree ornaments. The ornaments arrived in stores in mid-June PBC International’s at a retail price of $12.99 M&M Christmas ornaments and are modeled after the Miss Green and Red licensed M&M characters. Miss Green sings “Rockin’ Around the Christmas Tree,” and Red sings “Holly Jolly Christmas.” The ornaments turn on when hands are clapped.
Hop-On has rolled out its Hop1800 cell phone in U.S. stores at a price of $10. The phone is prepaid and is being marketed as an “ anti-iPhone”—its sole function is making calls.
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