Inside This Issue - News
Late surge lifts chain drug holiday sales
January 3rd, 2011
by David Pinto
NEW YORK – A last-minute shopping surge turned a disappointing holiday selling season into an acceptable one for America’s chain drug retailers, as customers crowded into the nation’s chain drug stores during the three days before Christmas to buy many of the holiday items they had repeatedly deferred or postponed.
Prior to the final week before the holiday several factors that have, in recent years, combined to limit December sales in a chain drug setting — lackluster prescription drug sales, the absence of compelling holiday items, exceptionally poor weather in the western half of the nation and abnormally cold weather in the eastern third — kept shoppers away from drug chains and other mass retailers.
While several of those elements remained in play until after Christmas, the convenience of the neighborhood chain drug store, the additional shopping day (29 versus 28 a year earlier), the abundance of price points under $10, and the inevitable end of the shopping season gave new luster to the drug chains during the last few pre-Christmas shopping days, offsetting in part the fact of Christmas falling on a Saturday (not traditionally a favorable fall of the calendar for drug chains) and the continued hurdle of high unemployment, to make the season an acceptable one, if not one that called out unrestrained joy.
Finally, the chain drug industry’s by-now accepted ability to manage its holiday inventory insured an adequate sell-through, while guaranteeing clean stores in the holiday’s aftermath.
For the 29 days between November 26 and December 24 chain drug holiday sales advanced by 5.4%, while same-store sales increased by just 3.4%, according to research by Racher Press, publisher of Chain Drug Review. This compares to the more-robust year-earlier performance that saw total retail sales advance by 6.8%, same-store sales by 5.5%.
By contrast, there was the disastrous holiday selling season of 2008 for comparison, one that found drug store chains gaining just 3.9% in total volume, only 1.3% in comp-store sales.
As for what sold best, the usual suspects were on hand. Unlike the Christmas season of a year ago, the emphasis on family this year was less pronounced. This year, by contrast, there was a greater accent on personal giving — and even the now-fashionable practice in which consumers have indulged of late, buying gifts for themselves.
An added factor was the American consumer’s determination to enjoy this holiday season despite, or perhaps because of, the general malaise in which America finds itself. However, that Christmas-at-all-costs mentality helped other retailers, both mass and prestige, more than it helped the neighborhood drug store.
Electronics, clothing, housewares and pet supplies, those categories that helped anchor the season last year, were only moderately successful. Moreover, when they were purchased, they were usually purchased elsewhere. Trim-a-tree, by contrast, remained a chain drug anchor, as did greeting cards, a category consumers appear to have rediscovered after largely deserting it a year ago.
Gift cards, the new darlings of mass retailing, enjoyed their best year, as assortments became more compelling and the idea of giving them gained popularity. Gift sets, long a chain drug staple, remained reasonably robust. But basic beauty remained soft in a chain drug setting.
Weather, as always, was a factor, hurting sales in the West while helping business on the East Coast, where the severe snowstorms that plagued shopping and inhibited outdoor activity in general in 2009 during the week before Christmas were notable this year by their absence.
Then, too, the chain drug practice of extending store hours remained a benefit, especially when combined with the segment’s convenience and ease of shopping. Many chain drug stores did some of their best business in the waning hours of Christmas Eve.