Drug stores are cautiously expanding their consumer electronics selections. MP3 players, digital cameras and pre-paid mobile phones are finding a place beside the more traditional mix of handheld tape players and clock radios in the channel.
Alan Wolf, senior editor at Twice magazine, said one growth avenue for drug chains could be higher-priced merchandise. “The drug channel has limited itself to commodity, value-priced items, so there may be some opportunity to step up some of those price points,” he said. Most drug chains have kept the ceiling for consumer electronics at $50; Wolf thinks they could experiment with a $100 limit.
Since price points in consumer electronics have fallen so steeply, Wolf said, it’s a good time for retailers to look at merchandise they once considered out of their price spectrum, especially top-tier branded goods. Walgreens carries a Sony portable DVD player that retails for $109.99.
Pre-paid mobile phones have become a significant category in the channel. “Mobile is the fastest-growing CE category, and pre-paid products are a great way for drug stores to expand their assortment,” Wolf said.
Inexpensive digital cameras are another opportunity. “Digital cameras have a high household penetration, and smartphones aren’t making them obsolete,” said Chris Ely, manager of industry analysis for the Consumer Electronics Association. Ely said that as drug chains shift space in photo-processing departments, more play might be given to CE.