Big A adds 99-cent department, postal services – News – Margins on new department average about 22% – Brief Article
Liz Parks
SOUTH GATE, Calif. — Big A Drug Stores, fighting back against intensifying competition from 99-cent stores in its neighborhood markets, started rolling out a section of basic general merchandise items that retail for 99 cents or less.
In another move designed to generate traffic, the U.S. Postal Service ranted Big A permission to put 200-square-foot post office substations in all stores. Big A currently has post office substations in three of its 22 stores.
Big A, which operates 15 Drug Emporium discount drug stores and seven traditional drug stores within its Big A division, has been testing the new 99-cent department since January, said chief executive officer Edward Dallal.
Big A made space for the department by extending its 24-foot power aisle another 12 feet. The department, which is planogrammed, is located at the front of the store and bears signage that reads, “Hot Buys.”
“We’re averaging about $1,000 per store per week,” said Dallal. “It’s very encouraging.”
Margins on the department average about 22 percent. Despite the low retail prices, most customers typically pick up a dozen or so items from the section so the average purchase within the department is relatively high.
“There is a lot of competition in California,” said Dallal. “With the economy as it is today, there are a lot of people shopping a round for the lowest prices. The 99-cent departments are another way for us to create store traffic.”
To keep the 99-cent departments replenished, the retailer uses a variety of suppliers to stock the department, but its main supplier is Racine, Wis.-based Promotions Unlimited
“We didn’t want just novelty items in the department,” explained Dallal. “Although the price points are low, the products have to be of good quality so it has been challenging to find suppliers.”
The product mix includes picture frames, playing cards, household chemicals, stationery, boxes of pens and envelopes.
When closeouts become available at a price point that fits the department, Big A will add them to the mix, as it did recently with Camay soap. In other instances, the company will use a good quality generic or off-brand.
“We’re telling our suppliers, give us something that costs 75 cents and we’ll sell it for 99 cents,” said Dallal, who noted that the company is promoting the department with coupon books, circulars and in-store signage.
The 99-cent departments are expected to be in all stores by the end of July and the post office substations will be in all stores by the end of August.
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COPYRIGHT 2002 Gale Group
