Absent the last-minute shopping surge that rescued holiday sales a year ago, Christmas 2011 was in the main a dismal event for the nation's drug chains.

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2011 Holiday Sales: Not much cheer for drug chains

December 28th, 2011

NEW YORK – Absent the last-minute shopping surge that rescued holiday sales a year ago, Christmas 2011 was in the main a dismal event for the nation's drug chains.

The holiday shopping season that began on Black Friday, Nov. 25, and ended 30 days later on Christmas Eve — giving the retail community one more shopping day than Christmas 2010 — was notable primarily for its length and for little else.

Chain drug retail sales for the holiday period advanced 4.4%, compared with a 5.4% gain a year ago and a 6.8% increase in 2009, according to research by Racher Press, the publisher of Chain Drug Review. Same-store sales edged up just 2.2% this year versus gains of 3.4% in 2010 and 5.5% in 2009

In a season that proved a disappointment across retail trade channels, consumers mustered little enthusiasm for the basic chain drug holiday assortment, one that had proven adequate in the past.

Still, the final shopping days did bring a mini-burst of consumer enthusiasm for such basic chain drug holiday merchandise as trim-a-tree, gift wrap, gift cards, low-end toys, holiday candy, gift sets and greeting cards. Also, the weather largely behaved, save for a blizzard that swept through the Midwest during the week before Christmas. Unseasonably warm weather in the eastern third of the country was blamed in some measure for the lack of holiday excitement.

But this was hardly sufficient compensation for a period marked by the absence of holiday buying and the disappearance of a basic beauty care business and the dreary performance of prescription drugs and over-the-counter drugs. Consumers simply didn't get sick through most of December.



Total Sales

Same-Store Sales

+4.4% +2.2%
+5.4% +3.4%
+6.8% +5.5%
+3.9% +1.3%
+6.1% +4.5%
*In 2007, there were 32 days between Thanksgiving and Christmas.
Source: Racher Press research

Drug chains were hurt by several factors this holiday season: a general economic malaise, intense competition from online retailers, and aggressive promotions by department stores that proved irresistible for hoards of shoppers. Against this competition, chain drug retailers had little to offer except accessible price points on basic holiday merchandise. It wasn't nearly enough.

The chain drug stores were also adversely affected by the absence of a blockbuster item that helped rescue Christmases past. Drug chains' offerings in electronics, housewares, household items, basic clothing and pet supplies couldn't compete effectively for shopper attention or sales.

True, drug chains bought cautiously in advance of the holiday shopping season and managed their inventories with their usual efficiency. Although the week between Christmas and New Year boded well for chain drug retailers — as it always does — that was the extent of the good news. 

The result of all this is that, for U.S. drug chains, Christmas just isn't what it used to be. It is no longer the premier seasonal event on the chain drug promotional calendar — Halloween has largely assumed that role.

As Christmas dwindles in importance, only the post-Christmas clearance and chain drug's ability to manage its inventory keeps this holiday in the forefront of industry attention.
What once worked to bring shoppers to chain drug stores for the holidays no longer works as automatically and effectively as it once did.