Sales soar during holiday gift-buying season
’Tis the season for toy and electronics gifts. It’s no coincidence that it’s also the biggest time of the year for battery sales. Ramping up displays can help retailers optimize the season.
(For the full category review, including sales data, click here.)
“One-third of all battery sales occur from October through December when consumers are buying gifts that require batteries,” said Jeff Jarrett, the marketing director for Duracell. “Visibly disrupting consumers’ shopping patterns reminds consumers to purchase.” Jarrett said that adding one extra display can increase battery sales by 25%. “We always recommend a battery center near the front of the store and at checkout, but additional locations are crucial during this season.”
Energizer recommends a feature and display program, along with multiple purchase prompts in high-traffic areas. “Shoppers expect to find batteries in the home, checkout and secondary locations,” said Lou Martire, VP trade development at Energizer Holdings.
Batteries are still a highly impulsive category, with 58% to 60% of purchases made on impulse, according to Kent Klagos, VP North America sales for Rayovac. While drug stores steer away from stocking large value packs typically found in club stores or mass merchants during most of the year, the holiday season is an opportunity for the drug channel to grab some of that business.
Alkaline batteries continue to grab the biggest share of sales. “Alkaline batteries are the star of the category, and AA’s are “the big kahuna,” Jarrett said. AA batteries generate around 50% of category sales, according to Rayovac data, with AAA sales accounting for 18% of category sales. “We’re seeing an increase in AAA sales as electronic devices in the home get smaller,” Klagos said.
Alkaline batteries with extended product claims are driving the category. Energizer MAX batteries, for example, now feature a new Power Seal Technology that allows them to hold power for up to a decade in storage. “This extended shelf life provides consumers with added assurance that their batteries will work when needed to power essential daily devices like children’s toys, remote controls and clocks,” Martire said. Duracell recently launched Quantum, also featuring a 10-year guarantee.
Energizer also will be stressing safety this holiday season. “In response to a growing concern about the dangers of small children ingesting coin batteries, Energizer was the first to voluntarily upgrade to child-resistant packaging on its 20 mm coin lithium batteries,” Martire said.
Rite Aid: Remodeling effort helps focus RAD on overall health
Rite Aid’s efforts to convert the chain to the new Wellness store format have been running smoothly for a couple of years now, but it was this year that the chain reached two key milestones.
In May, the company announced that it had converted a majority of its stores in the Buffalo, N.Y., area to the format, for a total of nearly 100, marking the occasion with an event featuring John Standley, the company’s chairman and CEO, and Ken Martindale, the president and COO, as well as celebrity fitness expert Denise Austin.
And in September, when announcing its second-quarter 2014 earnings, the chain said the Wellness format had passed the 1,000-store mark, with 1,019 stores converted, including 114 converted to the updated Genuine Well Being format, which features a remodeled interior, an expanded product selection and, in some stores, amenities like the Vision Center, a kiosk that allows customers to order prescription glasses and contact lenses and shop for frames using photos of themselves. Genuine Well Being was unveiled at a Lemoyne, Pa., store in October 2012; the chain expects to have 1,200 locations converted to Wellness stores — including Genuine Well Being and the original iteration of the format — by the end of fiscal year 2014. According to the company, a key to the former is that it is replicable in Rite Aid markets across the country. Executives refer to its Wellness stores as an evolving concept versus a standard prototype.
“Two key ways our Wellness store format has evolved are product flow — location and placement of merchandise — and easier way-finding — navigation — throughout the store, both of which enhance the customer experience by creating a shopper-friendly environment,” Martindale told DSN earlier this year.
But the remodeling effort, a major part of the chain’s $400 million capital expenditure program for fiscal year 2014, isn’t just for aesthetics. Early on, sales at the remodeled stores were tracking ahead of the older stores, and as of second quarter 2014, front-end same-store sales were 3.4% higher than non-Wellness stores, while same-store prescription count was 0.9% higher.
The company has cited the Wellness Ambassadors — who walk store aisles with iPads and provide information about products and pharmacy services — as another key reason for the Wellness store format’s success. At the end of second quarter 2014, the company had trained more than 1,700 of them.
The chain’s innovations go beyond store formats. For example, while many of its competitors develop an in-store clinic model, Rite Aid has put its investment in a telehealth model, partnering with NowClinic. Originally introduced at nine stores in Detroit in 2011 and expanded in March 2013 to 58 more stores in the Baltimore, Boston, Philadelphia and Pittsburgh markets, NowClinic allows patients to consult via a secure webcam chat session with a doctor or nurse who can diagnose certain ailments, answer health questions and even write prescriptions. A similar initiative now available at some stores allows customers to chat with pharmacists through an iPad provided by the store’s Wellness Ambassadors. This is all happening at a time of tremendous expansion in telehealth. According to the research firm IHS, 1.8 million patients worldwide will access health-and-wellness care through electronic and video links by 2017, marking a sixfold expansion over a five-year period.
In a broader sense, the new formats and telehealth initiatives are part of an industry-wide trend toward store formats that make smarter use of space and focus on niche aspects of retail pharmacy, with the focus of Rite Aid’s Wellness stores being self-evident.
Rite Aid: Building a health business around wellness
One year after DSN’s groundbreaking ‘Gets Well’ issue, Rite Aid keeps growing profits and cred with shoppers and Wall St.
One year ago, DSN featured an exclusive report, “Rite Aid Gets Well,” on the cover of the Dec. 10, 2012 issue, examining how the company’s core strategy built around wellness empowerment was helping it turn around its business.
One year later, Rite Aid isn’t just “well” — it’s even better than that.
In September, Rite Aid reported its fourth-consecutive quarter of earnings growth, as the company continues to grow sales and gain momentum around its core wellness-based initiatives, including its Wellness+ loyalty program, its Wellness and Genuine Well-Being format stores and the growing cadre of Wellness Ambassadors that are helping to transform the experience of shopping a Rite Aid store.
Importantly, Wall Street also has begun to reward the company for its efforts. At press time, Rite Aid shares were hovering above the $5 mark, having hit a 52-week high of $5.44 — the last time its stock traded that high prior to that was September 2007. And analysts seem to expect that the momentum will continue.
“Rite Aid reported excellent quarterly results buoyed by strong sales growth and expanding margins. Earnings estimates have thus surged, sending this drug store chain to Zacks rank No. 1 — “Strong Buy,” noted an Oct. 16 update from Zacks Investment Research.
To be sure, there is an undeniable stickiness to the results Rite Aid is putting on the board these days. While the yearlong feud between Express Scripts and Walgreens has long been over, it appears that Rite Aid has been able to hold on to a large number of the customers it picked up in the fray. “Prescription same-store sales of 0.9% tracked ahead of our 0.6% forecast, suggesting Rite Aid is maintaining its share of [ESI] scripts, estimated by the company at about 75%,” noted Goldman Sachs analyst Robert Jones, of the company’s recent second-quarter results.
Just as the program has been a major driver of Rite Aid’s overall growth, Wellness+ also has been a major component of the company’s strategy to retain ESI patients — the loyalty program rewards members 25 points per script where state laws allow.
Here, DSN takes a brief look at two of the most critical factors behind the ongoing turnaround at Rite Aid — its Wellness stores and the Wellness+ card.