Lewis hones broad product strategy
How does Lewis Drug thrive in a crowded and super-competitive marketplace? The company’s success formula is no big secret, said Bob Meyer, SVP of merchandise and marketing, but that doesn’t mean it’s easy to replicate. “[We try] to find niches in the marketplace where we feel we can do better than our competition,” Meyer explained.
Longevity and deep roots within the communities Lewis serves also help cement long-term customer loyalty. “Consumers look at Lewis as a convenient and reliable retailer that’s been there now for 75 years,” Meyer said.
To that end, Lewis’ top merchant said, “We try to portray in our marketing, ‘We live in the same community you do, so we experience the same challenges you do. And we’re going to react to what your needs are. If you tell us you want something, we’re going to try to fill that need for you.’ That’s part of the reason we’re successful. We can react to things very quickly, compared to some of our competition. … That’s a big advantage for us.”
To help it get an even better read on customer preferences and behavior, Lewis will soon introduce a new mobile app designed to make shopping easier and more convenient. “That’s going to help us track even more information on consumer shopping patterns,” Meyer said. The new app will give participating customers access to exclusive promotions and product giveaways. Meyer added, “We’ll be able to monitor everything they purchase, and when.”
‘Our offerings are wide’
Meyer, who joined Lewis in 1977, has been a key architect of the company’s two-pronged approach to retailing, encompassing both large-scale stores serving a broad range of needs in its more urban and suburban locations, and a network of much smaller and more traditionally merchandised drug stores serving smaller towns and rural areas.
“People look at Lewis as a big convenience stop because of our multiple locations and convenient locations in a lot of different markets, so we sell a lot of everyday consumable items,” Meyer added.
“In the larger-format stores, our offerings are wide,” agreed Scott Cross, EVP and CFO. “We’ve attempted to do some of those things in the rural communities, but where we’re most successful in those communities is just being a complete healthcare store for them. The focus there is prescriptions, OTC medications, vitamins and health aids. … We’re really first and foremost a healthcare store for those communities.”
One of Lewis’ most distinguishing characteristics in its larger stores is a massive seasonal selection of lawn and garden plants and supplies. “That’s one of our largest categories, volume-wise, next to pharmacy … in our larger store markets,” Meyer said.
Lewis Drug president and CEO Mark Griffin added, “Our garden centers are bigger than Walmart’s. It’s our second-biggest division outside of pharmacy.” Lewis’ lawn and garden departments, which extend into the parking lots of its larger stores during the three-month selling season, drive high margins and fast turns.
Also gaining traction is a rapidly expanding pet supply department, “especially in the larger-format stores,” said Meyer, where Lewis has added more high-end brands “to become that complete pet stop.” The bet is paying off. “We’ve seen tremendous growth in that area in the last 18 months,” Meyer added. “Our volume has more than doubled. And we expect double-digit increases over the next few months, because we feel that there’s a real niche.”
A more efficient shopping space
In spite of expanding front-end categories and its broad-based approach to merchandising, Lewis’ merchants are finding they can condense the product mix in larger stores and reduce the store footprint from as much as 50,000 ft. — the current size of its largest units in the Sioux Falls market — to a new retail format half that size. Reducing the square footage in newer Lewis Drug stores will allow for a far more efficient use of space, lower operating costs, better turns and easier access and shopping for customers, executives said. The first two of these new, smaller stores are now under construction in Sioux Falls.
“We think 25,000 sq. ft. could be our sweet spot,” Cross said. “We think we’re going to be able to maintain a large majority of our sales and still offer the same [categories and products],” he added. “And the first one to open [in 2018] … will give us a much better location, where it’s easier to get in and out of our parking lot, and a more accessible drive-up window — all of those things that will make us more convenient for our customers.”
Lewis also is developing a new, 7,000-sq.-ft. store in downtown Sioux Falls. That store, set to open on Phillips Avenue some time in 2018, “will be an entirely different animal,” corporate VP Nikki Griffin said. “It will be a boutique assortment of product, and will cater to that new clientele who either live or work — or both — in downtown Sioux Falls.”
Strategic Solutions International intros multi-channel beauty analytics platform (K)NOW!
CHICAGO — Category management firm Strategic Solutions International is bringing a new insights platform to beauty brands and retailers with its (K)NOW! Strategic Data Solutions. The web-based portal, which made its debut last month at CosmoProf USA in Las Vegas, can offer multi-channel beauty insights exclusively to its subscribers.
Among the data that the (K)NOW! Portal gathers is hair color unit scans across channels. The company shared that while hair color represents 22% of unit scans in beauty supply stores, it only makes up 6% of black hair care unit volume in retail chain stores. This is as black-owned companies makeup 33% of total hair care sales, up from 14% in 2009.
The (K)NOW! portal pairs big data management with insights from consumer usage to create a consumer-centric platform, the company said, noting that to do so it has partnered with omnichannel global leaders in information technology to create a user-friendly information gathering experience.
Features include allowing users to run custom queries and create reports based on immediate needs, interactive data visualization, desktop and mobile functionality and trended metrics across data types.
“The (K)NOW! Strategic Data Solutions portal represents the first-ever opportunity for retailers, manufacturers and beauty executives to access quick and exclusive beauty insights, on their time — which is priceless,” portal creator and Strategic Solutions International CEO Romina Brown said. “This introduction initiates SSI’s revolutionary effort to create multi-channel insights based on consumer product usage.”
Click-and-collect emerges as high-growth op for non-food, GMDC says
COLORADO SPRINGS, Colo. — Click-and-collect is emerging as a high-growth channel opportuntiy for non-food manufacturers, Global Market Development Center noted in its latest next practice report "Connecting with Click-and-Collect: Strategic Upside for Non-Categories."
“As retailers move swiftly into the uncharted territory of click-and-collect, one thing is certain: supplier partnerships must be deepened to successfully navigate digital transformation, manage shopper expectations and effectively create a positive outcome for all trading partners,” stated Patrick Spear, GMDC president and CEO.
The grocery industry is increasingly pushing online and some of the biggest retailers are ramping up click-and-collect models. That future is making many a bit jittery, especially for non-food, center-store categories. And while online grocery sales could exceed $100 billion by 2025, click-and-collect is emerging as a high-growth channel opportunity with a projected $6.6 billion of CPG sales per year by 2020 according to an IRI study.
“Non-food categories have long been recognized as basket-building categories for the retail grocery industry," stated Mark Mechelse, director research, industry insights and communications, GMDC. "In other words, they help drive in-store transaction size and build margin. No one – manufacturer or retailer – wants to lose these benefits as a result of the click-and-collect movement.”
In contrast to fresh and frozen foods, where brick-and-mortar stores are the preferred shopping destination, non-foods and HBC are seeing double-digit sales growth online, up 19.4% and 17.9% respectively from 2015 to 2016 according to Nielsen Homescan data cited by Acosta in its report "Bricks & Clicks – Understanding the Omni Channel Landscape." General merchandise isn’t far behind, registering 8.7% year-over-year growth online during the same time period.
To succeed and embrace this digital movement, nonfoods retailers and manufacturers must rewire their go-to-market strategies by working together to develop seamless, integrated strategies and plans that breed profitability, growth and success for all involved parties, GMDC suggested.
“Manufacturers should work with retail customers to make it easy to find products on the site by monitoring keyword search and optimize product descriptions and detail pages so items are easy to find," suggested Keith Anderson, VP retail insights at Profitero, and lead author of the whitepaper for GMDC. "Menu placement and ease of navigation is important for full-basket retailers that tend to mimic supermarket aisles.”
Profitero also suggests that creating in-cart suggestions similar to strategic cross-merchandising display execution inside brick-and-mortar stores, manufacturers should work with retailers to create cross-display opportunities online. Virtual bundling and cross-merchandising is another effective tactic. Unlike in a physical store, merchandise bundles needn’t be physically co-packed.
The collection point itself represents another prime opportunity to make the non-foods sale. Innovative approaches and out-of-the-box thinking will be required to add product displays, deploy digital advertising/promotions or other new technologies to capture shopper attention for non-foods goods.
“The good news is that we only have a small handful of large vendors today that do one-third of our business,” said Spencer Baird ,SVP merchandising, B2B and pick-up at PeaPod. “This means we can get to a lot more depth in our planning with them and find ways to create mutual value for our customer and the vendor. We will also partner closely with a group of smaller vendors," he said. "We’re not wed to the old ‘scale trumps all’ mentality because if you look at where our business over-indexes, in many cases it is on smaller, more progressive areas in nutrition or health sometimes, progressive is in the bag of smaller manufacturers.”
To meet the challenges and opportunities head on to enable a positive outcome through click-and-collect, GMDC offered these next practices:
- Since 69% of shoppers who use click-and-collect buy additional GM/HBW items, extend the technology platform to begin suggesting meal items and additional food-item purchasing with complementary non-foods;
- Create impulse displays or other POP materials near the point of pickup to increase sales;
- Place more non-food items on the first page of the click-and-collect site. When searching for items online, consumers have a propensity to not click through to the second and third pages; and
- Leverage geo-fencing technology to know when the consumer is near the store or ready to pickup their order.
Partners and supporters whose contributions have made the report possible are Newell Brands, Big Time Products, Melita and RugDoctor. Insight providers include Profitero, IRi , Acosta and Nielsen.