Christmas shopping discount

That is what the nation's leading economists were telling the country as Drug Store News was putting this issue together--and just in time for the holidays, too.

The good news, particularly, for discounters and certain drug chains, is that Christmas 2001 is turning out to be a better season than many could have reasonably anticipated. The "Grinch(es)" that stole the economy won't take Christmas, too.

To be sure, consumers planned to spend less this year on Christmas than they had in recent years. Who has the money? Unemployment has reached a 10-year high. Investors are still hurting from the collapse of the tech sector a year ago. Bonuses won't exist this year for many workers who in recent years have come to count on them to fund holiday shopping. The country is at war and is still very much reeling from the events of Sept. 11.

Yet consumers need Christmas perhaps more than ever this year, and they are figuring out ways to put presents under the tree. They certainly aren't going to short-change the kids. Consumers won't spend as much, but they will spend. They are shopping where the value is.

In the days following Thanksgiving, traffic in the malls was down, as was business in department stores and specialty retailers.

Meanwhile, at Wal-Mart, even if the average market basket had fallen away from the mark set the same time last year, more traffic in the stores fed a 14 percent same-store sales lift on Black Friday. Consumers flocked to Wal-Mart stores that day for $84 19-inch color TVs, $74 DVD players and kids' bikes for $25 to the tune of more than $1.25 billion.

Target has Barbie and Ken dolls for $3.88. Kmart is offering stuffed animals based on characters from the Disney feature "Monsters Inc." for $9.99--an exclusive. This is certainly nothing new for discounters, but this year, even their prices have been sharper than usual.

For drug stores, especially chains like Walgreens, CVS and Rite Aid that have made a significant commitment to growing the seasonal business, value-driven gift items have become a much bigger part of the Christmas program, particularly toys--and not the cheap knock-offs at which kids generally turn up their noses. Toys in the drug store aren't so new; toys that kids actually want to play with is a fairly new idea, however. And the drug chains have done a good job of making the price points hard to ignore during a tight Christmas.

Walgreens has Harry Potter action figures for $9.99 and B.I.O.-Bugs for $35--$5 off the suggested retail price. CVS has G.I. Joes for $9.99 and Barbie Bake With Me Ovens for $19.99. Rite Aid advertised select games for Nintendo Game Boy and Sony PlayStation One for $14.99 and DVD players for $110 after rebate.

The early results were positive, but certainly the opportunity was not maximized. Product selection was terrific, but the chains could have started telling the customer that they had these items a little earlier.

In the weeks following Thanksgiving, toys and gifts were helping to grow the market baskets of those customers driven to the drug store for two 12 packs of soda for $5, buy-one-get-ones on Christmas lights and various other decorative items. Photo customers processing film from Thanksgiving presumably had at least two opportunities to respond to drug's holiday shopping value proposition: once when they dropped off the film and again when they picked up their photos.

While the economy may have bottomed out already, it is highly unlikely that any turnaround will be completed over the next 12 months. Consumers are going to get used to living with less and continue to respond to the strong value proposition in 2002. Drug chains may want to keep that in mind when they start thinking about next year's holiday promotions. They just might find themselves a destination for holiday gift shopping--and not just the last-minute variety.