Classic private label gives way to influx of exclusive brands

Classic private label gives way to influx of exclusive brands

Molly Prior

With pharmacy accounting for the bulk of chain drug stores’ total sales and the onslaught of new competition for prescription dollars, retailers in the chain drug industry are looking to the front end to create a unique shopping experience for their customers.

Private label programs and proprietary brands are hardly new in chain drug. However, heightened competition on price and crossover with several formidable retail channels, namely mass, dollar and grocery stores, have raised the stakes for programs and products intended to differentiate the front-end mix.

“I think the days of classic private label programs as we knew it, which was the store-branded version of a national brand, have diminished in the HBA category,” said Progressive Beauty Brands founder Rick Goldberg, who has been involved in such projects as Target’s Mossimo hair care line, Rite Aid’s 411: Hair Info products and CVS’ new Cristophe hair care collection. Today, it’s about how a manufacturer and a retailer can pool their resources collaboratively to create an exclusive brand, he added. This is precisely the route taken by such retailers as Duane Reade with its exclusive apt. 5 color cosmetics brand and Rite Aid with its homegrown hair care line 411: Hair Info, backed by celebrity stylist Vivienne Mackinder.

Over the last year or so, retailers have evolved this concept even further by seeking out brands that have written success stories overseas, bringing these brands–previously unfamiliar to U.S. consumers–stateside and injecting them into their front-end strategies.

CVS has grabbed hold of several brands that have proven successful in Europe. Last summer, CVS began rolling out Lumene, an upscale Finnish skin care and cosmetics brand. CVS laid out the red carpet for its new exclusive brand, outfitting 2,200 of its stores with custom-made lighted endcaps for Lumene. The retailer spread the word about the new beauty line by sending direct mailers to beauty customers through its ExtraCare loyalty card program.

Last fall, the retailer cleared room for an edgy men’s grooming line called XCD, which was enjoying great success in the United Kingdom, through an exclusive partnership with Boots The Chemist. Today, the XCD line, created by King of Shaves, is in all 4,100-plus CVS stores and likely will gain space in about 5,200 stores once CVS completes its acquisition of 1,260 Eckerd stores.

Last month, CVS introduced shoppers to its latest exclusive brand, Cristophe Beverly Hills Hair Care. The 13-SKU line, created by celebrity hairstylist and salon owner Cristophe, bowed in all CVS stores and Cristophe Salons. The line is intended to offer consumers salon quality at a typical mass price point. CVS’ obvious dedication to creating exclusivity and uniqueness in its front-end merchandising has prompted the retailer to appoint a dedicated manager to oversee its portfolio of proprietary brands. The retailer has named Janice Jacobs director of proprietary brands and limited brand development.

Rite Aid also aligned itself with a brand that had proven its worth overseas. The retailer added the U.K. salon brand Umberto Giannini to its hair care category several years ago and has expanded its exclusive offering of hair products steadily, adding fun, innovative items, such as portable shine cloths and a collection of hair cosmetics.

In addition to exclusive brands, drug stores, conscious of other retail channels trying to take a bite out of chain drug’s core, also have added exclusive concepts. Both CVS and Brooks Pharmacy have inked deals with L’Oreal’s French skin care brand Vichy to create service-backed skin care centers in select stores.

In addition, CVS and Target, as previously reported in Drug Store News, closed a deal with Boots Group to test the U.S. appeal of several of its proprietary brands, such as the color cosmetics line No. 7, in select stores. Boots has outfitted the 18 Target doors and 12 CVS doors with a lighted fixture featuring the Boots logo. Now Boots has a perfect venue to enter the U.S. marketplace with two top retailers, said Progressive’s Goldberg.

Manufacturers say that this kind of innovative thinking from top management and category buyers is what will define chain drug’s role in the retailing industry and secure its co-existence with formidable players such as Wal-Mart.

However, the success of these exclusive deals hinges on the retailers’ and manufacturers’ abilities to map out a strategy for the launch and long-term support of the brand. Expectations have to match, Goldberg cautioned. He pointed to Target’s deal with Isaac Mizrahi’s an example of a solid partnership. Target created awareness for the brand by leveraging Isaac Mizrahi’s persona in a comprehensive marketing program that included a billboard in New York City’s Herald Square, television commercials and a slew of print ads.

And brand experts remind that one year of success does not make a brand. There are certain brands that can hit the market and take it by storm,” Goldberg said. “The issue is: Do they have the staying power to sustain growth beyond a two- or three-year window?”

The reality is, a brand that inks an exclusive deal with one retailer is vulnerable to the whims of that retailer. Should the retailer decide the brand has not lived up to its expectations, the retailer could cut the brand from its offering, taking away the, brand’s retail distribution instantly, which is why many of these brands have signed exclusivity agreements for relatively short timelines of two years to three Wars. The recent expiration of Wal-Mart’s exclusive deal with Rimmel, Coty’s cosmetics brand, allows the value-priced brand to expand its reach and brand name even further after having already built a success story in the nation’s largest retailer. Mary-Kate and Ashley, affectionately known as the Olsen twins, also have outgrown Wal-Mart and now are expanding their once-exclusive bath and body line beyond Wal-Mart’s doors.

I think the drug channel has the largest challenge in front of them,” Goldberg noted, referring to the reliance on pharmacy. “How are they going to attract loyalty in their customers? [Loyalty] is not based on convenience–it’s based on selection.”

COPYRIGHT 2004 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.

COPYRIGHT 2004 Gale Group