Walgreens, Drug Chains Make Back to School Gains

Drug chains are likely to do better than most retailers in the upcoming and lean looking back-to-school season, according to the National Retail Federation's back to school study, which could enhance the sector's standing as a shopping destination.

NRF noted that drug stores have become more popular destinations for additional occasions recently as their merchandise mix has expanded in areas such as school supplies, small electronics and groceries that provide consumers reason to shop even when they are not looking for over the counter drugs or health and beauty products. The study indicated that 22 percent of families will shop at drug stores for backâ€"to-school 2009, a four percentage point increase over last year's 18 percent. Discount stores may remain the most popular places to purchase back to school supplies, with 75 percent of consumers planning to shop them, but drug chains should get a boost, particularly as most are intent on delivering solid values this holiday season. So they have a chance to demonstrate their competitiveness on price and, by doing so, build on the convenience they already offer.

Drug chains get more than one opportunity to emphasize their convenience advantage during the back to school season. Walgreens spokesman Robert Elfinger pointed out that drug chains such as his own offer a fast, no nonsense shopping trip that doesn't turn into an epic journey with distance to the store and traffic. Not only that but as school begins, the proposition becomes more attractive, which can have a nice halo effect as regards tired parents. Elfinger noted:

Customer can get everything they need at our stores. We're focusing on essential items and our own brands. They do well for us and we expect them to do really well this year. We're kind of insulated from sales declines because most of our supplies are essential for school. Our school supplies are always strong anyway, as people procrastinate and need things at the last minute. We're there for those people. Another time we see a sales bump is in the first week or two after school starts and the teacher needs kids to have something their parents hadn't thought of. Then they go to the most convenient Walgreens and pick it up.

Drug chains aren't the only retailers that are more popular this year, and it certainly helps to have a reputation for low prices. For example, discount stores gained this year compared with last, when 73 percent of consumers said they would visit for back to school supplies. Clothing and electronics stores were basically flat year over year. Department stores experienced a two-percent slip, as 57 percent of shoppers said they would stop by last year. Interestingly, the intention to shop online fell this year by three percentage points from 25 percent in back to school 2008, although the sector kept ahead of the 21 percent in the year previous.