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Walgreens Cosmetics

Sensing weakness within the department stores, Walgreens is making a bid to capture upscale cosmetics customers, reports Amy Merrick in The Wall Street Journal (2/8/07). Walgreens, at $47 billion in annual sales “the nation’s largest drugstore chain,” is introducing “seven skin-care lines from five countries — France, Spain, Greece, Germany and Switzerland — at nearly 1,000 of its stores.” The move by Walgreens follows that of CVS, which “has been expanding its successful partnership with Lumene, a high-end Finnish skin-care and cosmetics brand,” and with Boots, a British brand. Target also sells “about 20 lines from countries including New Zealand and Portugal.”

Walgreens says its goal is to increase the average number of items purchased per trip to four items from 3.3 items. The question is “whether shoppers will pay $10 to $60 for creams, scrubs and lotions, some of which are sold in upscale department stores and in Europe.” Hopefully, shoppers like Debora Pitlik, who usually buys Clinique at department stores, isn’t typical. Debora says she’s not opposed to the idea of buying expensive cosmetics at Walgreens, but says she “always walks right by the new cleansers, lotions and creams” simply because she usually buys them “somewhere else.”

Walgreens hopes it can change Debora’s behavior by offering up exotic alternatives that can’t be found “somewhere else.” For example, a brand called Red Water, from Greece, “uses thermal spring water from Pella, the birthplace of Alexander the Great, while Artdeco, the top-selling color-cosmetics brand in Germany, includes caviar and silk in its face creams." Part of the Walgreens plan involves promoting the relatively less expensive ($20-$25) items first to get shoppers hooked. Walgreens is also investing in training in-store "beauty advisors," seen as critical to persuading time-strapped shoppers to try the new offerings. Walgreens "says it expects to roll out about 13 of the 137 items to nearly all its roughly 5,500 U.S. stores beginning this summer." ~ Tim Manners, editor