Hard Times Hit NACDS Annual

Retailers and manufacturers at the National Association of Chain Drug Stores Annual Meeting faced harsh realities during their four-day top-tier conference.

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PALM BEACH, Fla. — Retailers and manufacturers at the National Association of Chain Drug Stores Annual Meeting faced harsh realities during their four-day top-tier conference last week, with topics such as stockkeeping unit effectiveness plans, destocking, margin-slicing promotions and aggressive discounts taking center stage.

But the challenges seemed to pull some of the 2,000-plus attendees together during meetings at The Breakers Hotel here, where they said the sessions were surprisingly optimistic, with a shared willingness to work toward a common goal — even with some financial arm wrestling.

“There is a positive attitude in a down economy,” said Ido Leffler, chief executive officer of Yes To Ltd., a first-timer to Annual.

Andy Giancamilli, chief executive officer of Snyders Drug Stores, North America, pointed to masstige items as having proved to be an “excellent value” during hard times and that products with a “feel-good price are doing well.” Giancamilli, however, predicted easier financial times are at least five to six years away.

“It becomes a psychological mind-set, the way the consumer shops to save,” he said, explaining that frugal shopping behaviors take some time to shake.

Giancamilli, who took on the role of NACDS chairman in December, said the mind-set also affects daily life. For example, he’s taken to only driving his SUV, eschewing his fancy sports car, because he feels embarrassed to do so.

And shopping in ritzy areas, such as Palm Beach’s Worth Avenue, is considered a “no-no,” said Palm Beach resident Sherry Heller, wife of Gerald Heller, former chairman of May’s Drug.

But the beauty firms who gathered here from April 18 to April 21 said they are well positioned for the crippled economy — for as long as it lasts.

Business is up in some channels, for example, such as in dollar stores. Mike Botterman and Eric Schiffer of 99 Cents Only Stores said beauty manufacturers are helping fuel sales, as more want to develop items specifically for their stores, namely special sizes.

Markwins International Corp., which recently announced Bill George had rejoined the firm after a several-year hiatus from beauty, said the consumer hit hardest by the economy is the shopper bringing home an annual household income of $50,000 or below.

“If value is king, we should continue to reign,” said George, who said his firm is well positioned for these times with capital for in-store demos, coupons and samples. “We’re not rolling in dough, but we have a healthy balance sheet,” George said.

At Physicians Formula, meetings with retailers touched on destocking, which is said to be affecting everyone.

“It hurts consumption,” said Ingrid Jackel, chief executive officer of Physicians Formula Holdings Inc., adding that some retailers are “maybe only stocking their top 1,000 stores with sku’s. What about the others?”

But even in the gloomy climate, Jackel said retailers were eager to hear about new items.

“Our 2010 is very exciting. We have new franchises within natural and mineral and some excitement in color. We’re expanding in new directions. We need to stimulate shoppers,” she said.

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