Two New York Times articles caught my eye recently as the drugstore and grocery wars heat up during this cold weather spell across the country:
Beer in Brooklyn — an example of localization
One was a piece from last week about Duane Reade, my local drugstore chain during the two decades I lived in ?Manhattan and Brooklyn, and which was bought by Walgreens last spring. The article highlighted its efforts to localize a new store in Williamsburg, Brooklyn, with something the neighborhood apparently sorely lacked: a specialty beer bar.
This kind of community-focused effort to capitalize on local needs and strong identities of neighborhoods has lately become a hallmark of Duane Reade, which changes up its product mix based on the needs of the particular store. In Midtown Manhattan fresh flowers are sold, while in the ethnic-filled Bronx more Goya Hispanic foods are stocked. In Harlem, there are 40-foot-wide sections devoted to African-American hair products.
Groceries are filling the drugstore aisles
While local efforts are being more popular at Duane Reade, other drugstore and non-supermarket retailers are expanding their product mixes to reflect how customers want to do their shopping. The New York Times reported today that chains such as CVS and Walgreens are expanding in the grocery business, offering fresh produce, frozen meats and even sushi. The report says CVS plans to make over about 20 percent of its 7,100 stores to reflect this new product expansion, with the hope of increasing sales by getting customers in the stores more frequently.
The grocery wars had already become super-competitive, with traditional supermarkets competing with the likes of Wal-Mart and Target, so adding the drugstore chains to the mix will make the competition even tougher.
I think it’s clear that those who invest in using the data to understand how to please the most profitable ones will take the lead here…at least for those who want to catch up to Wal-Mart. With so much competition, straight discounting will only go so far, and Wal-Mart remains the leader in terms of being able to scale and play the low-price game to its fullest.
But, if the other players make sure they are satisfying the needs of their most profitable customers in their local communities and finding out how they want to shop and what grocery items they want to buy, there’s a good chance they can stand out on this highly competitive playing field.
