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More than the economy hurt holiday sales.

NEW YORK -- Hurt more by the severe weather and a sharply curtailed holiday shopping season--27 days between Thanksgiving and Christmas versus 32 days in 2007--chain drug retailers suffered through the most dismal holiday selling season in memory last year.

Sales for the 27 days between November 28 and December 24 advanced by 3.9%, compared with a 6.1% increase a year ago. Same-store sale for the period inched ahead 1.3%, compared with a 4.5% gain in 2007. Much of the small increase came from the sales of prescription drugs. Front-end sales were virtually fiat and, at some drug chains, actually declined.

The weather was the major culprit for this poor performance, most notably during the week before Christmas, when severe storms and bitingly cold weather combined to keep shoppers indoors in record numbers. From coast to coast and in major urban centers in between, temperatures plunged to single digits, windchills produced negative readings, and snow and ice made even the shortest trips hazardous excursions.

While the weather during the 2007 selling season could best be described as uncooperative, this year's weather performance was both dangerous and discouraging to even the heartiest of Christmas shoppers. Atop that was the hovering specter of a dismal economy, one characterized by high unemployment, the ongoing mortgage crisis, financial scandals that daily worsened and a total absence of encouraging news.

Perhaps the only leavening agent was the basic merchandising assortment that has come in recent years to characterize the chain drug approach to Christmas. For once it was just what the depressed shopper ordered. And so such basic merchandise as trim-a-tree--which consumers, somewhat surprisingly, heartily embraced--giftware, greeting cards, candy and, most notably, basic beauty care gift assortments sold briskly at some drug chains in some neighborhoods.

Moreover, the mall across the highway was not the competitor it had been in past years. Malls remained empty or sparsely attended for much of the holiday selling season despite ongoing sales and pace cuts that broke all records. Consumers just weren't buying.

So it was that convenience and neighborhood locations fit the bill, at least to the extent that holiday shoppers respond ed to any stimulus.

For the second consecutive holiday season, December was marked by an absence of flu. So it was that prescription drug and O-T-C sales, while lackluster, didn't suffer any dizzying declines, though soft Rx sales have been a constant since early autumn. This December's Rx performance was neither a surprise nor a disappointment. It simply was what it was.

The good news in all this is that chain drug retailers have learned how to manage Christmas. Inventories were lean, self-through acceptable and holiday promotions--designed primarily to attract customers to the store rather than to specific merchandise offerings--largely successful. Moreover, Christmas is no longer the make-or-break selling season it once was for chain drug retailers, or remains for other retail trade classes.

But this was scant consolation for the chain drug community in a season where even the fall of the holiday--on Thursday--seemed to conspire to limit sales. After all, who shops in midweek, even at holiday time?

So Christmas 2008 was, in the end, a self-fulfilling prophecy for the chain drug store industry as it was for all of mass retailing. The marketplace forces --the recession, the weather, the shortened shopping season --collectively worked to steal the holiday selling season, much as the Grinch once stole Christmas.

                      2006      2007      2006      2005      2006

TOTAL SALES          +3.9%     +6.1%     +7.3%     +8.0%      +6.3%
SAME-STORE SALES     +1.3%     +4.5%     +5.9%     +6.3%      +4.9%

* In 2007 there were 32 days between Thanksgiving and Christmas.

Source: Racher Press research.
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Comment:More than the economy hurt holiday sales.(News)
Publication:Chain Drug Review
Geographic Code:1USA
Date:Jan 5, 2009
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