Walgreens: Beauty Private Label Growth

What's been the change in the shelf space attributed to private label versus brands for drugstores?

It has been the most aggressive throughout this last 36 months, the most aggressive across the marketplace, at Walmart, Target, CVS, Ulta and Walgreens. The last 36 months has been the fastest pace of exclusive own brand onset that I've seen in my entire career. Just the pace of all of them getting into new brands, and trying to figure out how to get customers back through the doors.

Their problem is that they're losing foot traffic. The desperation of growing share has led to these efforts towards decimating the national brands, because they think that's the problem, and putting in new brands, which they believe is going to save their business. But those actions haven't changed the shape of their business in this 36-month period.

Target is now starting to see an uptick in some of their new stores that they've put out in the market, which has been great because they had such a bad period. They had a bad relationship period with their customers so that as a total box they suffered. It wasn't because of beauty; it was because of their total box through a depression. People weren't going into their stores frequently. So they changed the entire look, feel, tone of most of the brands across store and they got foot traffic coming back in.

Walmart hasn't changed the rest of the store; CVS hasn't changed the rest of the store; Walgreens hasn't changed the rest of the store. So the only outlier between Target and the rest of them, minus Ulta, is they changed the rest of the store too. They added more brands across the rest of the store, that allowed more energy in the store. I don't know what the right way to say it is. But they got the feet through the door, and the other ones didn't.

Let's just take Walgreens, or your experience of Walgreens: how would you look at the split in private label and the traditional brands, in your shelf space, for beauty?

Well, we won't take what I did, I'll take what they have right now. Right now, they would have at least 30% of their shelf dedicated to their own brands, between skincare and color cosmetics, those two categories only. They really have a very small offering in haircare and a very small offering in indulgent bathing, personal wash, that sort of thing.

In Target, they're much more evenly distributed. They would have 25% of their space, and color cosmetics would be their own brands or partnership brands. They would have the same for skincare; they would have the same for multicultural; they would have the same for hair care. They're very consistent about carving out the same amount of space and continuing to increase that.