ShareThisJordan Wiklund was trying to figure out what to get his sister-in-law for Christmas.
A sweater at Macy's, perhaps? How about a DVD at Best Buy? Maybe some towels at Target? Earlier this week, the 27-year-old St. Paul, Minn., resident made his choice.
"Bought a Snuggie at Walgreens for $10," he said. "Can't miss!"
Walgreens? Really?
The blanket "just happened to be there," Wiklund said. "I don't normally think of Walgreens as a place to buy gifts, but it worked out. She is really hard to buy for."
Long regarded as a possible, though not necessarily ideal, destination for last-minute gift seekers, Walgreens and CVS are increasingly challenging department stores, discounters and specialty shops for sales throughout the holiday shopping season.
About 14 percent of adult consumers, or some 18 million people, did some holiday shopping at drugstores during Black Friday weekend and Cyber Monday in November, according to the National Retail Federation. While drugstores trail discount stores, department stores and even supermarkets for holiday traffic, the numbers are still impressive given the limited amount of space pharmacies devote to seasonal items.
"Drugstores have successfully captured a greater share of holiday dollars despite the fact that they might not be" thought of as holiday retailers, said Scott Erickson, a Minneapolis partner in the retail and distribution practice of consulting firm Deloitte.
Formidable merchandisers in their own right, CVS and Walgreens have stocked their shelves with clothes, toys, portable televisions, digital cameras and high-end fragrances to complement their regular assortment of toothpaste, cold remedies and toilet paper.
The figures demonstrate how fragmented and competitive retail has become, with various store formats encroaching on each other's territory.
Drugstores have been particularly vulnerable as large discounters Wal-Mart and Target offer pharmacy and photography services. In response, pharmacies expanded their store sizes from 2,500 to 15,000 to 20,000 square feet and added seasonal goods in the center aisles, said Jim Danahy, CEO of CustomerLAB, which advises retail pharmacy chains.
At first, drugstores stuck to low-cost stocking stuffers. But gradually, they branched into calling cards, cellphones, and, most recently, toys, Danahy said.
"They are now in full-scale competition with Toys 'R' Us," he said. Drugstores "have been refining their expertise, using their strength as retail buyers to become better at it. Indeed, they now have the buying clout to compete with any retailer."
Pharmacies' biggest asset is the element of surprise, said Erickson of Deloitte.
"With department stores, you know what they have," Erickson said. "Drugstores mix it up. You never know what you are going to find in the holiday aisles."
Since the stores are not large holiday merchandisers, they must make sure the products they do carry sell, analysts say.
But done correctly, such holiday merchandise can be "quite profitable" and give drugstores a real boost in sales, Danahy said. Last year, holiday sales for major drug chain grew a healthy 5.4 percent, following a strong 6.8 percent increase in 2009, according to Racher Press, which publishes the trade publication Chain Drug Review.
(Contact Thomas Lee at thomas.lee(at)startribune.com. For more stories visit scrippsnews.com)
Editors: This story is for print use only. Must credit Minneapolis Star Tribune
