Rite Aid Hops to Easter Opportunity

Easter is not one of most important retail holidays, but it's a good opportunity for drug chains -- and one that Rite Aid (RAD) is hopping on.

IBISWorld, a market research firm, and the National Retail Federation predict Easter spending will increase two percent this year, to about $14 billion. The gain is not huge, but it's the first advance in several quarters, and that provides an opportunity for CVS (CVS) and Walgreen (WAG), too.

Rite Aid, in particular, is trying to seize the season this year. For Rite Aid, said company spokesman Eric Harkreader, the holiday isn't just about chocolate-covered Peeps, edible Easter grass or bags of black licorice jellybeans, all of which the drug chain will promote. It's not even about the pre-filled Easter baskets, Reese's Pieces Carrots or giant wicker eggs.

It's about shopping.

Easter product presentations set the spring tone. By drawing in consumers with colorful Easter displays, Rite Aid hopes to pick up impulse sales in higher-margin goods like gardening supplies, spring cleaning items, allergy products and outdoor gear like patio furniture and grills. It's also going after college students returning home for spring break, and their parents, by promoting sample size bath and body products, small electronics, books, and magazines as Easter gifts.

Drug chains focus on three merchandise categories (outside of pharmacy) to pull in shoppers: over-the-counter drugs, beauty aids and seasonal merchandise. Almost everything else is a convenience purchase. Prompting impulse sales of things like beverages, toys, magazines and frozen pizzas reinforces the relationship with the customer, a particularly important aspect of business given that supermarkets, supercenters and warehouse clubs often operate pharmacies.

By combining regular and seasonal needs, drug chains seek to emphasize their value as a convenient alternative. While retailers with broader selections have advantages during more lucrative holidays such as Christmas and Halloween, drug chains can sell Easter candy and egg-coloring kits just as effectively as supermarkets or supercenters or warehouse clubs.

If Rite Aid gets it right, Easter will put some spring into its step