Total Store Expo 2.0
ARLINGTON, Va. — It may be about six months until the doors open for the 2014 National Association of Chain Drug Stores Total Store Expo, but energy is already building, with more than 90% of the show-floor already sold out.
The mega show — which combines front-end, pharmacy and supply chain — will be held Aug. 23 to 26 at the Boston Convention Center.
The plan is to “take all that was good [from] the inaugural [TSE] and continue it in Boston,” said Jim Whitman, SVP of member programs and services at NACDS. “We will also try to do some tweaking to make it even better. But the traditional format will remain pretty much the same because the format worked.”
More than 5,000 people gathered for the first TSE last August, and according to an NACDS survey, 92% planned to return in 2014. So far, early registration bears that out.
Whitman encouraged attendees to check out NACDS’ revised website. Whitman said he expects the new website, which will be rolled out in the coming weeks, “will be faster and more on point.”
“We have a tremendous amount of resources on the website for you to start your work early in the process,” Whitman said. “… You will be able to access material, we believe, faster and more directly on point.”
NACDS also will leverage its NACDS.TV, which is a video resource for TSE, to increasingly build a communication vehicle as the 2014 event draws near.
Understanding point of diminishing return
As many retailers continue to expand the presence of store brand products because of the high retailer margin percent these products offer, it is important to pause and consider what is the optimal balance of national brands and store brand that will drive overall business results for the retailer.
Drug Store News has partnered with Competitive Promotion Report and IRI to create a series of exclusive reports. This edition focuses on “National Brands and Store Brand Optimization: Point of Diminishing Return.” While there is a role for both national brands and store brands, retailers will be well served to seek to understand the right balance between the two. Too much store brand on the retailer’s shelf may not provide the consumers with the range of options they desire. Retailers and manufacturers must work together using fact-based insights and analytics to identify the optimal mix of national brands and store brands that will maximize retailer margin dollars, category growth, market share and shopper satisfaction for the retailer.
This analysis looks at the major national brands and store brands in the drug channel for the cold/allergy/sinus liquid/powder category over the past two years. The following are just a few of the key findings from this analysis:
- Year-over-year market share for store brand has declined each month since March 2013.
Reckitt Benckiser and Procter & Gamble market share year-over-year has increased every month since November 2012.
− Reckitt Benckiser average market share change year-over-year was 1.25%.
− Procter & Gamble average market share change year-over-year was 1.67%.
- Reckitt Benckiser promotional spending (off-invoice and bill back allowances) was among the lowest of the national brands, thereby maximizing the effect of promotion spending relative to market share.
- Despite relatively high levels of spending on promotions year-over-year by store brand, it has not translated to proportionate increases in sales and market share, reaching a point of diminishing return.
- Despite a 65% increase in hospitalization rates for flu (influenza A and B) and a more active flu season during 2013 as compared to 2012, according to CDC data, unit volumes have declined for drug stores.
- The Tylenol brand provided retailers in this category with the highest retailer margin (39.76%), followed closely by Mucinex (37.32%), Benadryl (36.89%), Dimetapp (34.8%) and Vicks (30.81%).
The Vicks brand has the highest promotional spending and provides retailers with the lowest retailer margin percent of the five leading national brands.
− However, the Vicks brand generates the highest retailer margin dollars.
− Vicks, Mucinex and Benadryl have shown margin dollar growth year-over-year.
A flawed promotional strategy combined with an improperly balanced portfolio of national brands and store brands can result in a significant loss of retailer margin and stifle category growth and market share gains. There is a definite point of diminishing return where too many store-brand SKUs may actually hurt overall business performance.
The CPR National Brands and Store Brand Optimization analysis is a tool that can help manufacturers and retailers find answers to important business questions and help retailers drive overall business performance.
To view the charts, click here.
Credit Suisse: Safeway may be exploring strategic alternatives
NEW YORK — Credit Suisse on Tuesday speculated that Safeway may be considering either a sale or acquisition.
"The news around Safeway has been curiously slow in recent months, but the upcoming earnings report could shed some light on the company’s next step," suggested Credit Suisse research analyst Ed Kelly. "While the quarter could disappoint given industry trends, the absence of a debt tender, lack of any sign of a meaningful share repurchase, no detail on the fast approaching analyst meeting and management’s low visibility with investors generally suggests it may in fact be exploring strategic alternatives," he wrote. "Safeway received $4 billion in proceeds from its Canada sale in early November. Its stated use was for debt reduction and share repurchase, yet there has been no debt tender and volume on the stock suggests any repurchase activity has been minimal."
Kelly also noted that a shareholder meeting has been scheduled for early March, but that no detail on that meeting has been provided. "We may be thinking too hard on this one, but the lack of activity is certainly curious given the potential for strategic action," Kelly concluded.
Kelly speculated that an outright sale to Cerberus/Kroger would be the best-case scenario for investors. However, Safeway could be considering the acquisition of certain Cerberus assets. "Don’t laugh, but a Safeway acquisition of Cerberus assets could also make sense," Kelly suggested. "It would accomplish the same result as a sale of Safeway to Cerberus while providing a cleaner, more efficient exit strategy for the private equity firm. The upside to shareholders would be driven through the creation of large synergies, higher earnings power, and the benefit of Cerberus influence/alignment. While complicated and full of questions, we believe the stock would ultimately react well to this alternative."