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Consumers’ cough-cold agenda influenced by retailers, suppliers

BY Michael Johnsen

WHAT IT MEANS AND WHY IT’S IMPORTANT Not even the threat of an H1N1 flu pandemic could shake today’s recession-minded employee from losing any hours for something like a cold or flu. And not even the Department of Health, which consistently advised sick people to stay home, could change that. Not this year.

(THE NEWS: New survey sheds light on cough-cold medicine purchases. For the full story, click here)

The first, and most important, takeaway from this survey is that more than half of cough-cold customers (54%) have no idea what medicine they’re going to buy until they’re at the shelf. That spells opportunity; and the retailer or supplier who cuts through the clutter is going to be the real winner here.

For example, McNeil Consumer’s Perfect Measure concept (single dosage unit for children) across several of its pediatric lines addresses a concern for many parents — “Now that I know I shouldn’t give a cough-or-cold medicine to my toddler, how much should I give to my four-year-old or older child?” And the “Perfect Measure” logo really stands out across those products.

Or at retail — CVS has created a pediatric destination center for mom (expanding some 16 linear feet in at least one location) that breaks kids cough-cold away from its inherent adult cough-cold adjacency. And it’s the first gondola facing the consumer as she approaches the pharmacy. And it’s not just kids cough-cold, it’s also analgesics like the acetaminophen or ibuprofen you can still give baby to help relieve a fever.

And Walgreens has certainly been looking to improve their shopability across all categories through its CCR merchandising program — a program that specifically cuts down on the number of choices presented in an effort to make each core category an easier and stress-free shopping experience.

For the remaining 46% of consumers who are making a planned purchase, perhaps because of a coupon, but certainly due to some consumer advertising, the brands they’re buying are in fact the top brands in the category. Vicks Nyquil is the leading branded liquid cold medicine ($89.7 million across food, drug mass without Walmart for 52 weeks ended Jan. 24 courtesy Information Resources Inc.), followed by Children’s Tylenol ($41.1 million) and Theraflu ($33 million). There isn’t as clean a direct correlation across cough medicines (which could include cough drops, cough syrup and cold tablets), but you get the idea. And perhaps that presents a different kind of opportunity — whether through couponing or just tried-and-true advertising, a lot of moms have made their purchasing decisions long before they touch the pharmacy door.

Some other interesting tidbits from the full survey:

  • More than 54% of employers took extra precautions this year because of H1N1. The No. 1 “extra precaution?” Hand sanitizer; and
  • 9-in-10 employees knew a co-worker who came into work sick this season. The leading reaction? “I feel at risk,” suggesting that 90% of workers were also looking to take such extra precautions this season as buying a personal hand sanitizer.

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Fred’s reports dim January sales, highlights key initiatives for 2010

BY Michael Johnsen

MEMPHIS, Tenn. Pharmacy was about the only sales highlight for Fred’s Inc. through its fiscal 2009, the Southern discounter reported Wednesday evening.

“January sales were below expectation, with the miss resulting mainly from multiple ice and snow storms blanketing the majority of our stores in the Southeast,” commented Bruce Efird, Fred’s CEO. “While December’s sales and traffic demonstrated that our customers were willing to stretch for the holidays at Fred’s, our January sales – outside of ongoing strong results in our pharmacy department – offer a fresh reminder that the consumer remains under considerable pressure.”

Fred’s Inc. posted a 1% drop in fiscal 2009 total sales, generating $1.8 billion for the 52 weeks ended Jan. 30, the chain announced Wednesday evening. Same-store sales were up 0.4%.

For the four weeks ended Jan. 30, total sales declined 1% to $125 million. Comparable store sales fell 2%.

The company’s performance underscores the importance of the implementing new sales- and profit-driving initiatives for 2010, Efird noted. Fred’s key initiatives include:

  • Fred’s Core Five Program, which highlights trip-driving differentiation from small-box competitors, in terms of both price and selection, in the areas of pharmacy, pet products, celebration, paper and chemical, and home products departments
  • Expanded marketing efforts in mailed circulars, in-store marketing, and direct mail advertising
  • Increased investment in its stores, remodeling and updating more than 200 in 2010 with a customer-friendly layout developed in Fred’s pilot program. This initiative includes upgraded fixtures, a cleaner look, improved adjacencies, relocating the pharmacy to the front in some stores, and signage upgrades inside and out
  • Increased advertising and additional in-store marketing to support Fred’s rollout of the new look that is specific to both urban and rural markets
  • The restructuring in January of its merchandising and marketing responsibilities, including the addition of two new divisional merchandise managers in the hard lines area. That increased the number of DMMs to five, adding expertise in three of the core “five program” areas — celebration, pet and home — and bringing new skills to product sourcing; and
  • The addition of new product lines, leading with Coca Cola, Purina pet products, and Energizer batteries, with additional new product introductions to be rolled out in the coming year.

Based on the sales shortfall Fred’s experienced in the fourth quarter 2009, management now expects earnings for the quarter to be in the range of 14 cents to 16 cents per diluted share. For the year 2009, the Company estimates earnings of 59 cents to 61 cents per diluted share, a 40% to 45% increase over 2008.

Looking ahead to 2010, management is optimistic that financial improvement will continue, with diluted earnings per share reaching the range of 68 cents to 75 cents for 2010.

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Spartan Stores reports rise in Q3 sales

BY Alaric DeArment

GRAND RAPIDS, Mich. Spartan Stores saw an increase in sales from $781.9 million to $786.9 million during the third quarter of fiscal year 2010, according to an earnings report released Wednesday.

The Grand Rapids, Mich.-based supermarket operator said the increase resulted from incremental sales from the acquisition of VG’s Food and Pharmacy stores and the opening of additional gas stations. Weak economic conditions, price deflation, competition and a shift toward private label sales offset the increase. Profits for the quarter were $26 million, down from $29.7 million in third quarter 2009.

“We are pleased with our ability to profitably work through this prolonged weak economic environment,” Spartan president Dennis Eidson said. “Michigan has experienced a slight loss in its population base and has also led the nation in unemployment for 45 consecutive months.”

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