The smell test

An emergency trip to a drug store showed just how important perception is in the battle for consumers’ dollars.

On a business trip to Miami last month, I realized that I left deodorant out of my toiletry bag. It created two stark choices for me: Spend the next few days smelling like a gym rat or purchase new deodorant. Seth Mendelson

Being a professional and realizing I had to deal up close and personal with a number of people over the next few days, I opted for the latter and ended up at the first place I found: a Walgreens in Miami Beach in a decidedly upscale section of town.

Interestingly, after spending about 15 minutes in the store, I left without buying the deodorant but with a new understanding about how hard many mass retailers are trying to differentiate themselves from the competition, attempting everything to offer more upscale and high margin products.

First, lets get the deodorant issue out of the way. Perhaps because I rarely pay attention to prices, I was not ready to pay as much as $5 for deodorant in this store, which appeared to have higher prices thanks to its tony neighborhood and the fact that it is also a destination for tourists visiting the beach. Yes, I am a guy who thinks nothing about spending extra money on the better seat for a sporting event or some other selfish discretionary purchase.

Heck, I am not above paying 20 bucks for a good hamburger. Yet, a couple of extra bucks for much-needed deodorant? Never. I simply kept my arms down for a couple of days.

The second realization is how hard Walgreens is trying—at certain stores, at least—to gain the attention of those consumers who want premium products and are not afraid to pay for them. The chain operates a Look Boutique section of cosmetics, a super high-end assortment of beauty products presented in a way that would make many upscale department stores blush. I’m told that Walgreens only offers Look Boutique sections at certain premium stores, including flagship locations in New York, Chicago and Las Vegas.

Are enough consumers really spending big money on these products, including Walgreens’ own Alliance Boots line, to justify the space for this department? I don’t think so.

However, there may be another tactic at play here. The Look Boutique section may be about more than selling products, at least I hope that is what Walgreens officials are thinking. I have to believe that the halo effect of offering this department is designed to show consumers in certain areas that Walgreens is a bit more upscale than its competition and that this upscale trend traverses the entire store.

Despite this lingering recession, upscale merchandising has not lost its luster with many shoppers, including some who do not have the resources to purchase many of these items. Retailers who take an upscale angle on merchandising tend to capture the attention of shoppers who have more discretionary income or who want to believe that they have more discretionary income. The result will be greater sales on products that carry higher price points and margins. That means more profit for the merchant.

So in the end, if I read the tea leaves right, I think I have gained a bit more respect for Walgreens and its attempt to cast a different light on its merchandising programs. Trying to be different is vital in this day and age of intense competition from so many angles, including the Internet. Walgreens is making a statement that it can compete on many different levels.

And it is showing that sometimes it is not always about sales, but it is always about perception.

Now about that deodorant issue.

This entry was posted in 2013 12 Article Archives, Columns, Nonfoods for Profit and tagged , . Bookmark the permalink.

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