A last-minute shopping surge turned a disappointing 2010 holiday selling season into an acceptable one for America's chain drug retailers.

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2010 holiday sales: Late boost for drug chains

December 28th, 2010

NEW YORK – A last-minute shopping surge turned a disappointing 2010 holiday selling season into an acceptable one for America's chain drug retailers.

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.

For the 29 days between Nov. 26 and Dec. 24, chain drug sales advanced 5.4%, while same-store sales increased 3.4%, according to research by Racher Press, the publisher of Chain Drug Review.

That compares with last year's more robust performance, when total sales rose 6.8% and same-store sales were up 5.5%. By contrast, there was the disastrous holiday sales season in 2008, when drug store chains gained just 3.9% in total sales and only 1.3% in comparable-store sales.

Prior to the final week before the holiday, several factors that in recent years have limited December sales — lackluster prescription drug sales, the absence of compelling holiday items, poor weather in the western half of the nation and abnormally cold weather in the eastern third of the country — kept shoppers away from drug chains and other mass retailers.

Though some of those elements remained until after Christmas, the convenience of the neighborhood chain drug store, the additional shopping day (29 days this year versus 28 in 2009), the abundance of price points under $10, and the inevitable end of the shopping season gave new luster to the chain drug outlets as a retail venue during the last few pre-Christmas shopping days. Those factors also offset in part the fact that Christmas fell on a Saturday and continued consumer concern about unemployment and job stability.

The chain drug sector's by-now accepted ability to manage its holiday inventory also ensured an adequate sell-through and guaranteed clean stores in the aftermath of the holidays.

As for what sold best, the usual suspects were on hand. Unlike the 2009 Christmas season, the emphasis on family was less pronounced in the 2010 holiday sales season. This year there was a greater accent on personal giving — and even on 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 — categories that helped anchor retail sales in last year's holiday season — were only moderately successful. Moreover, when they were purchased, they were usually purchased elsewhere. Trim-a-tree 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.

As alwatsm, weather 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.