Working together to maximize ethnic HBC categories
How do drug chains maximize marketing opportunities in ethnic hair and beauty categories? That was the subject of conversation among nearly 40 retailers and manufacturers during a recent Drug Store News seminar.
Experts shared their thoughts during a roundtable discussion moderated by Jay Forbes, vice president of new trade development for Drug Store News and its sister publication. Discount Store News; along with Marie Griffin, editor-in-chief of Drug Store News; and Liz Parks, special projects editor for Drug Store News. (See box below)
What follows are some highlights from the roundtable question and answer session.
Q What more can manufacturers and distributors do to develop customized marketing/advertising programs that will help drive consumers into mass market stores for ethnic products?
A Lisa Foster, American Drug Stores: Manufacturers could partner with retailers and supply them with coupons that could be redeemed only in that particular retailer’s stores.
Manufacturers and retailers could share their consumer databases and use them as the basis for customized direct mailings featuring special product offerings.
Bill Geary, Waigreens: Manufacturers should have a better understanding of a retailer’s marketing vehicles. Retailers have a wide range of vehicles to reach consumers, but at Walgreens, our chain-wide rotos are our best vehicle. Manufacturers and retailers should also get more creative with their marketing and advertising and not just constantly focus on item and price. We should make sure we maximize each promotion, and we should review all our promotions to make sure we’re moving in the right direction.
Steve Hewes, Genovese: Manufacturers should try forming partnerships with manufacturers selling non-competitive products to create joint promotions that cut across product categories. Then a retailer could build an endcap featuring strong brands in three or four product categories that might make the promotion more interesting to the consumer. Also, a drug chain does not have 500 square feet of merchandising space for ethnic to compete with beauty and barber supply stores, we just have to have “the best of the best” products.
Q The beauty and barber stores make themselves a destination shop with ethnic products. What role do chain drug retailers want their ethnic section to play? Should it be a destination shop, a convenience department or some combination of both?
A Jeff Fesinstine, Duane Reade: We see the ethnic department as both a convenience (department and a destination department. Most of our stores have a basic set, but in some stores, we have a larger section with greater variety. We need manufacturers to help us bring added value into the department, whether it’s a basic set or an extended one. We would like manufacturers to provide us with coupons, in-store demonstrations, anything that would give the department in our stores added value to the consumer.
Kathy Horton, Rite Aid: We are at the point where we have pretty much identified which of our stores are destination stores for ethnic products. On the West Coast, we are in the process of refining the role or roles for that department. We need manufacturer expertise to help us make ethnic products a destination category. We need to have a better understanding of how manufacturers are going to market with their products. We have the outlets that can reach the consumer, but we are looking for something exclusive to offer our customers so we can set ourselves apart.
Geary: All stores should treat ethnic products as a destination department. At Walgreens, we want people to be comfortable shopping for ethnic products in our stores. The footage may change on a store-by-store basis, but our mission is to have the right products in all stores for our customers.
Foster: Most of our stores treat ethnic products as a convenience department, but we have a large number of stores where ethnic products is a destination department. One of our problems is how should we promote ethnic products to help make it a destination department. Sometimes some of the ethnic product manufacturers don’t have the ad budgets that can support retail circular advertising.
Hewes: For us, ethnic products are sometimes convenience departments and sometimes destination departments. It depends on the location of the store. When we have a department as large as 28 feet or 32 feet, we try to make it a destination department.
Q How can you increase the business or sales in stores where ethnic products is a destination department? How can you increase the market basket of what customers are buying?
A Chris Beuter, Revlon: Can the stores be merchandised better, in terms of giving customers more selection and greater variety? We need to think more creatively to combat the “category killers.” For example, would it help if manufacturers made selected drop shipments to high-volume destination stores?
Peter Madkin, Soft Sheen: There could be more cross merchandising across core categories. Pharmacy is a big part of a drug store’s business. Could manufacturers and retailers create cross-merchandising programs based on the demographics of a chain’s pharmacy customers?
Curtis Davis, Bio Care: Retailers can find more ways to make African-American customers feel they are important and wanted as customers by that chain.
Glenn Silverstein, A.P. Products: To bring more consumers into retail outlets, you need more creative marketing, and one opportunity may be direct mail. We have a tremendous database of consumers we could use to help retailers create chain-specific promotions. We need to get more creative at the store level, do more grass roots promotions at particular locations.
Madkin: Let African-Americans know they are welcome when they walk into a store by signing the department so it is easily located and by using graphics that show African-Americans using the products that are being merchandised. Make sure the right products are on the endcap displays. It doesn’t make any sense when a store is in a neighborhood that is 100 percent black to have a 5-foot endcap of general market shampoos. African-Americans are not heavy users of general market shampoos. Put relaxer kits on the end. Seeing the products they use frequently on display will make them feel welcome.
Foster: In my ideal store, we would take out much of the general market shampoos, the ones that don’t move in African-American neighborhoods, and give the space to products that sell well to African-Americans. I would like less space for general market hair color shades and more space for the shades from Dark & Lovely, Optimum Care or Creme of Nature.
Geary: The shelf has to be absolutely correct, and you do that by going into a category such as hair color and looking at it shade by shade. There is also a lot of opportunity to make welcoming statements to a customer by going off-shelf, too. If a customer comes into the store and the first endcap she sees is full of Gentle Treatment relaxers, she understands that we, as a retailer, are committed to the ethnic consumer. We are saying to our customers with that kind of up-front display, “This is a place we want you to shop.”
Q How do you get products displayed in rig t sections in the store and not just have everything in the category segregated within the ethnic hair care department?
A Hewes: We’re currently considering taking some ethnic products and integrating them within the general market categories they fall into. For example, merchandising ethnic skin care with general market skin care and ethnic hair color with general market hair color.
Horton: We use a direct-distribution-to-store program, but it enhances our warehouse program. We put an 8-foot ethnic section into every store that has at least a 5 percent African-American demographic, but we integrate ethnic skin care products with general market skin care products, and we integrate ethnic men’s shaving products with general market shaving products. Ethnic hair color is with ethnic hair color, and we automatically replenish these products from our warehouse.
Fesinstine: We integrate ethnic skin care with general market skin care, ethnic men’s shaving products with general market men’s shaving products, ethnic hair color with general market hair color. By having larger sections and products in separate sections, when it’s appropriate, we re hoping to meet our customer needs and enhance our value to our shoppers.
Q Are retailers and manufacturers working together to eliminate out-of-stocks?
A Patricia Bailey, Pro-Line: It is hard for a retailer to make ethnic products into a destination category if they have chronic out-of-stock problems, and out-of-stocks is one of the scariest problems in the ethnic product sections of many chain drug stores. We know we can help solve that problem. But, many chain drug operators are not giving ethnic manufacturers a role to play in helping to solve problems such as that in this category.
Silverstein: The retailer’s out-of-stocks are usually the worst for products that are selling well. The solution seems to be simply to order more, increase the re-ordering points to match the turns.
Fesinstine: We have a replenishment system that monitors our inventory to prevent out-of-stock problems. We can make adjustments very quickly if something is close to being out-of-stock or is becoming a hot item.
Hewes: Our whole ethnic program is DSD, but we’re looking at using electronic data interchange in ethnic doors. This way, the store could order directly from the manufacturers rather than waiting for a distributor representative to visit and manually reorder every two or three weeks. The EDI order would be routed through our warehouse to the manufacturer, which would then ship direct to the store. It doesn’t matter to the stores where the goods come from, as long as they come fast enough to keep the stores in stock.
Geary: We have an advantage because we warehouse ethnic products, and we have sophisticated replenishment systems. If we see an out-of-stock problem developing with our on-shelf products, we can fix it.
Q How do you reach the ethnic consumer to get the message to them that you want their business?
A Geary: We need to make sure ethnic products are represented in our best vehicles, whether print or electronic; and, at the store level, we should make certain the product presentation is complete, that what we offer in the stores meets all the needs of our consumers, including all the right shades in cosmetics. We also have to make sure we meet all the consumer needs for skin care and hosiery products, as well as for hair care and cosmetics. It’s really beyond HBA; the whole store should be consumer friendly, and not just graphics, but the product mix. African-Americans buy more of certain items, such as skin lotions, so the main thing is to understand and meet their needs, wherever there is an opportunity.
Q Is it possible to have dedicated off-shelf promotional display space in high-volume ethnic stores that treat ethnic products as a destination category?
A Hewes: We have dedicated planogram space in high-volume stores for promotions.
Horton: We also have dedicated promotional space in high-volume ethnic doors.
Q How do retailers know what’s happening in their stores?
A Geary: We know which stores have products, what planograms, what promotions scheduled, and we are constantly looking at the relationship between footage and dollars. We have made a commitment to satisfy the ethnic shopper. We constantly look at footage, and we expand a department based on the store’s demographics, and we will increase or decrease footage depending on sales.
Q The beauty and barber stores have shown the fastest growth in the market. Are manufacturers practicing a double standard when they ship the B&Bs their salon professional lines without giving mass market stores the same opportunities to carry those lines?
A Bailey: The B&Bs don’t just offer their customers selection. They offer the full line, everything in the line. B&Bs don’t cherry-pick a line the way mass market stores do because they don’t have the same space constraints or merchandising philosophy. They sell a whole regimen of products rather than an item here and there, so it’s not a question of a double standard. Also, remember that manufacturers did not create this parallel trade channel. The B&B trade class is the result of mass traditional market retailers only selling the top sellers from each manufacturer’s lines. The question really is what does each trade class, each retailer, have to offer consumers? If retailers can’t give the space, the best they can do is carry the best items and have them in-stock all the time.
Q It can be frustrating to go into a drug store and have to pay a higher-than-expected price for an ethnic product. Who determines the margins?
A Hewes: The price is dictated by what the market demands. A beauty and barber store is priced competitive to a deep discount store. In drug stores, the price will be higher because we are offering customers convenience.
Q Retail sales of ethnic products in chain drug stores have been soft. The category has seen flat or declining sales for several years now. How does that fact affect how you treat the category?
A Geary: I’d agree that the category is soft, but at Walgreens, we feel that the category of ethnic products represents an opportunity, a chance to grow the business. We’ll work along with the manufacturers to come up with creative ways to build the business. You can’t just wait for new items to grow the category.
Q If retailers could wish for, and be granted, something to improve sales in the ethnic products category, what would those wishes be?
A Hewes: I would like to have more frequent direct discussions with the manufacturers. The distributors come in frequently to discuss promotions, but we need more development of promotional activity directly with the manufacturers.
Foster: I would wish for more variety in the displays manufacturers make available to us. We might not be able to sell a whole endcap of relaxers, but we could sell a display with eight or 12 pieces of maintenance products next to another display of styling products. I would also wish that there could be more in-store demonstrations, and not just at Easter or Mother’s Day or Back-to-School. If we had in-store demonstrations on a regular basis, we could sell more product year round.
Geary: I’d like manufacturers to give us longer lead times when they are introducing new items or promotions. We work as much as 10 months out on marketing and merchandising programs. If we don’t know about a new program early enough, we may not be able to take full advantage of it. Manufacturers should be coming to us saying, “We’re doing this or that” and get our feedback while the idea is still in its early stages. What’s most discouraging is when a great new item comes out, but the merchandising vehicle is completely wrong for our stores.
I’d also like to share information with manufacturers, talk about the trends and use the information to help build the category.
Horton: We would like to see ethnic product managers bring more of a category management approach to the category. We’d like to see them bring more information to us. For us to make the right decision, we have to have the right information. And, the information they bring us should not just be about their products, but also about their categories and their consumers, so we can see trends and make decisions.
Fesinstine: I would like to see more unique and special promotional activities, including coupons and in-store demonstrations, especially in the destination stores because that would make the consumer feel more welcome in our stores.
Q If manufacturers could wish for, and be granted, something to improve sales in the ethnic products category, what would those wishes be?
A Beuter: I agree with Steve. There should be regular joint calls on retailers with manufacturers involved, as well as distributors. It has been hard to get chain-wide support programs. I wish we could get to the point where we have the distribution, cost efficiencies and necessary dialogue to execute these programs.
Madkin: I would wish for more off-shelf exposure to increase the visibility of this category and get more consumer awareness of the products that are available to them in chain drug stores. Stores that are located in neighborhoods where 25 percent of the demographic is ethnic may need to have dedicated end-caps to get more people aware of the department in the store.
Davis: I would wish for promotional space for the smaller-volume manufacturers. Most of the promotional space that is available is given to the larger manufacturers. Retailers have good selling opportunities by displaying products from smaller manufacturers, as well. It would be nice if more chains followed Walgreens’ example and let their district managers have the discretionary authority to do local promotions. I’d also wish that retailers would partner more often with the smaller manufacturers. We have a community service program that is designed to help women fight breast cancer. We have thousands of plastic shower cards that show woman how to do a breast exam by themselves. We put these cards into our relaxer kits, and we advertise them in magazines, such as Essence. We would love to have a retailer become our partner with this. It would build positive community relationships.
Bryan Moore, Ambi: I would like the opportunity to understand the role retailers have assigned ethnic products in their stores and to develop promotional and everyday programs that match that role.
Silverstein: I would wish that when a manufacturer comes out with a new item or creates a new category with a new item, the retailer would gamble more on that manufacturer and not wait six months to a year to take it into their planogram. Consumers are going into beauty and barber stores because they know new items aren’t going into the mass market stores right away.
Bailey: I would like to see more direct sharing of information and using it to increase profits and growth. It would be nice to see more effective database marketing, [with] retailers and manufacturers using their respective databases to create special programs that would be exclusive to that individual retailer.
I would also like to see retailers tie into a manufactuer’s marketing program with in-store visuals that mirror what’s in the manufacturer’s advertising and make it easier for the consumer to find the products being promoted. I’d also like to see more educational vehicles to help store personnel understand he products they carry in the ethnic department and to help them answer customer’s questions about these products.
Madkin: We want retailers to be more involved with what is going on in their stores. Sometimes what they think is happening off-shelf is not really happening. They don’t always know if promotions are being implemented. It would also he nice to have more store-specific data about what is happening in the category.
Twelve panelists participated in the discussion, including Lisa Foster, national products manager of ethnic products for Salt Lake City-based American Drug Stores; Jeff Fesinstine, ethnic products buyer for New York-based Duane Reade Drug Stores; Steve Hewes, HBC merchandise manager for Melville, NY-based Genovese Drug Stores; Kathy Horton, category manager for Harrisburg, Pa.-based Rite Aid Drug Stores; and Bill Geary, divisional merchandise manager of toiletries for Deerfield, Ill.-based Waigreens.
On the manufacturer side, the panelists included Glenn Silverstein, regional manager of New York-based A.P. Products; Bryan Moore, trade marketing manager for Douglasville, Pa.-based Ambi Products; Curtis Davis, president of Chicago-based BioCare Labs; Pat Mason, director of sales-Eastern division for Savannah, Ga.-based Carson Products; Patricia Bailey, rice president of marketing for Dallas-based Pro-Line; Chris Beuter, retail sales director for New York-based Revlon’s Ethnic Division, and Peter Madkin, director of trade development for Chicago-based Soft Sheen.
In addition to the above named manufacturer companies, the seminar was co-sponsored by Chicago-based Alberto-Culver.
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