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Power Drug highlights beauty of grocery shopping

BY Michael Johnsen

There’s something cooking in the aisles of Supervalu’s Power Drug format. Executive vice president of merchandising and marketing Duncan Mac Naughton and his team have hit on a recipe for converting grocery shoppers to food-drug customers, and regional tastes notwithstanding, it is a formula that can be modified to fit the many banners Supervalu operates—in any one of its 900-plus pharmacies. Because, like salt and pepper, health and beauty sells everywhere; clearly, Supervalu is aiming for a bigger piece of that business.

“How do you get from the dairy cases and produce into a whole other mindset of drug store beauty care in a matter of footsteps?” Mac Naughton asked. The answer: Create a store-within-a-store shopping experience, a health and beauty oasis that, with the right pharmacists and other healthcare professionals, can make a meaningful connection between pharmacy and the rest of the store.

Enter Supervalu’s Premium Fresh & Healthy strategy, a relatively new concept for Supervalu that focuses heavily on health and wellness, tying together pharmacy, health and beauty, natural and organic. “The healthy piece is our health and beauty care-pharmacy tie-in,” Mac Naughton told Drug Store News.

From a merchandising perspective, that has meant rethinking what businesses Supervalu wants to be in. “First, we need to de-select certain categories, to stand as a superior health and beauty care provider,” Mac Naughton continued. “We’re going to have to take some categories out to make a stronger statement in categories that are important to our [drug store] customer.”

That may mean things like less automotive but more hair care or cough-cold. “The key that we’re really trying to strive for is when we get either the food shopper or the pharmacy destination customer on that side of the store, how then can we merchandise that space and make the product more approachable?” he said.

As it relates to that question, the Power Drug format represents Supervalu’s most current thinking, bringing together cutting-edge “way-finding” technology, a lifestyle-oriented graphics package, softer lighting, lower-rise fixtures and other elements that elevate the total shopping experience. The concept is clear: When Supervalu customers cross the aisle they are stepping into a drug store.

Company executives expect Power Drug to dramatically lift its performance in core HBA categories across all of its banners. “We talked to consumer focus groups about the color palette, the shopping environment, etc.,” said Rich Juliano, group vice president of center-store merchandising. “They said, ‘If I’m buying cosmetics, I don’t want to feel like I’m shopping for canned corn.’”

According to Juliano and Mac Naughton, such big beauty companies as L’Oréal are starting to think of Supervalu as more than just a sleepy grocery chain and are including the chain in its more important launches. In select stores, Supervalu will look to make a more pronounced presence in beauty care, with backlit fixtures and a more upscale look.

“We were pretty prototypical of a lot of supermarkets, where the set catered to the young, almost teenage, mix,” Juliano explained. The new thinking targets a more sophisticated shopper to be sure. If the old-look beauty department offered a diversion for young girls while mom did the grocery shopping, the new Power Drug beauty concept is built for mom. “If you take a L’Oréal or a Revlon, we weren’t even on their radar screen as a retailer,” Juliano noted, “because we had maybe 2 feet of L’Oréal eyeliner, and that’s it. Now we operate 900 pharmacies, and we’re a little bigger gorilla in the room. They know…that we’re serious about the cosmetic business. And you’ll see the beginning of that in Cub.”

Another important learning from the recent consumer research revolved around the issue of price, Juliano explained. While traditionally Supervalu stores may have been a bit higher in price for HBAs than some of its drug store and big-box competitors, for many of its customers, price is not the most critical factor in determining where they want to shop for health and beauty.

“Price is one of the decision points, but price was mentioned just one time out of 60,” Juliano said, referring to a recent panel of 60 Cub Foods shoppers.

Much more important to health and beauty customers are such things as product selection—particularly, in such SKU-intensive categories as hair care. “‘We don’t shop Cub because I use No. 23 L’Oréal ash blonde, and Cub only carries the top six [colors],’” Juliano recalls as a common response from the research.

As a result of the findings, out came the automotive, hardware and other de-emphasized categories in favor of more health and beauty—some 2,300 more SKUs to be precise.

It’s a matter of focus, Mac Naughton determined, a focus on what matters to the customer. “It really is right-sizing the store and also prioritizing,” he said. “As we try to build our core brand competencies, we look at what are the No. 1 and 2 brands and our own brand presence. That [affords] us that opportunity to shrink section sizes, be in-stock and still deliver against our customer preference.”

And there’s a lot of synergy to be had between health, beauty and food. Heart health, for example, can take a customer from the pharmacy counter to the supplement aisle and, with the right programs in place, even out into the rest of the supermarket in search of heart-healthy meal planning solutions.

“Helping the customer navigate their disease state is a huge opportunity for us,” Mac Naughton said. “We have a task force working on that exact area; how do we actually create way-finding to allow the Supervalu banner, whether it be Jewel-Osco or Albertsons-Sav-on, to really be the customer advocate, the authenticator of what is healthy and what is not?”

It’s a chance to solidify credibility with that health-conscious consumer, who’s been conditioned by the evening news to challenge any company’s product claims as pure marketing speech. “How do we use either labels, price tag colors or subtle messaging to the customer as they shop the stores” to identify appropriate items for people with diabetes or heart-friendly foods.

Supervalu already has some of those programs up and running. A store in Lutherville, Md., just outside Baltimore, operating under the Shoppers Food & Pharmacy banner, will be hosting a walk-through for persons with diabetes with a registered dietician in October.

It may not look exactly the same wherever you go throughout the Supervalu universe. To be sure, Power Drug will have a slightly different look and feel depending on the banner, but the basic recipe—health and beauty—like salt and pepper, plays to all tastes, regional differences aside.

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Fred’s reports both monthly and quarterly record sales

BY Allison Cerra

MEMPHIS, Tenn. Fred’s Inc. reported record sales for the five-week and eight-month periods which ended Oct. 6, 2007.

The company said Friday that its total sales for the month increased 2 percent to $161.4 million compared to the same period last year. Total sales for the year-to-date period increased 5 percent to $1.157 billion.

Same store sales for the month rose 1 percent on top of a 5 percent increase in September last year. On a comparable store basis, sales increased 1.3 percent through the first eight months of fiscal 2007 compared with a 2.7 percent gain in the year-earlier period. Same-store sales are a key predictor of how well the company performs in stores that have been open for several years, and how well the newly open stores will do in the future.

“September sales came in at the low end of our forecasted range of a 1 percent to 3 percent increase, affected by unusually warm weather across our markets and the disruption caused by the updating of 98 stores under our refresher program,” said Fred’s Stores chief executive officer Michael J. Hayes. “We look forward to finishing our refresher program in October with the last 60 stores and to a better economic environment for our customers going forward, as the benefits of the minimum wage increase and the focus of Federal Reserve Board on the credit crunch take hold.”

Fred’s opened four stores at the end of September, bringing total store openings to 22 for the year-to-date period. These new store openings have been balanced by the company’s decision to close underperforming stores. In the remaining months, Fred’s Stores said that it plans to open 14 additional stores, with no further planned closings, which will result in a net increase in stores of 2 percent for the year.

Fred’s Inc. operates 702 discount general merchandise stores, including 24 franchised stores in the southeastern United States.

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Target to open another 61 stores nationwide

BY Allison Cerra

MINNEAPOLIS Target announced that it will be opening an additional 61 Target stores, the company said Friday.

The stores, which will all open Oct. 14, will open in 22 different states. The majority of the stores are making their debut in Arizona, California, Ohio and Texas.

In addition to offering the latest in trend-right merchandise, Target also brings a 44-year tradition of community involvement. The retail chain commits itself to local communities donating more than $3 million each week to area nonprofit organizations, becoming involved in local volunteerism efforts through Target Volunteers, and orchestrating other special projects that help meet area social service, arts and education needs.

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