In the News: Walgreens & Rite Aid

Most of you know by now that Walgreens, the largest drug chain in America, is set to acquire Rite Aid, the third largest chain. Assuming antitrust regulators approve the deal, which Reuters said would close in the second half of 2016, I wondered what effect it will have on the DRTV business. So I asked a few veteran drug-chain reps for their opinions.

The acquisition "will be a disadvantage for many ASOTV vendors," said Mike Govindani of Screen 2 Store. "The overall store count will decrease as Walgreens will ultimately close non-profitable stores and those that are in the same vicinity as an existing Walgreens location. The net result will be less doors -- at least in the short term."

Several other reps I spoke to confirmed this and recalled the negative impact of past consolidations, such as the CVS acquisition of Long Drugs in 2008 and the Walgreens acquisition of Duane Reade in 2010. "We did a lot more business between the two," said one rep, speaking of the former consolidation. "Typically in an acquisition, many stores are closed down for various reasons, and it also causes disruption operationally for long periods of time to the existing business at both companies."

It seems the media is calculating the new Walgreens store count without factoring in closures. For example, CNN Money reported that, post-acquisition, Walgreens would have "nearly 13,000 U.S. stores ... (which) would catapult the merged company above CVS, which has 7,800 stores." But every insider I spoke to said the new whole won't equal the sum of the parts -- or even close to it. Word is the number of Rite Aid stores closing could be 25 percent or more, one insider told me.

Putting aside the issue of less doors, such consolidations have their pros and cons, the reps explained. Managing campaigns becomes easier, but failing to get into an account is all the more devastating. "If Walgreens passes on an item, it's a major blow to any vendor that's supporting their SKU with heavy media," Govindani said. "This is especially true if their retail campaigns are subsiding their media spending."

Bacon Bake

Description: A bacon pan
Main Pitch: "Cooks crisp, delicious, healthier bacon in minutes without the greasy mess"
Main Offer: $19.99 for one with Bacon Keeper
Bonus: Double the offer (just pay a separate fee)
Marketer: Telebrands
Watch the spot

The World Health Organization (WHO) recently released a report that links a certain type of cancer with processed meats such as bacon. "Devastating that scientists say bacon causes cancer," Paul Basset Davies tweeted soon after, "and we face the fact we'll have to give up science."

There is truth in jest, and this joke reveals something about people's feelings about bacon. Namely, they know it's unhealthy, but they love it anyway.

I read something similar about hamburgers a while ago. At a time when people are more health-conscious than ever, hamburgers are growing in size and calories (witness the 1,330-calorie Baconator Triple). The article declared this a "counter-trend," but I remember thinking it was more like common sense. When people go out to eat (a rare treat when everyone is trying to be healthy) they don't want to eat diet food. They want to eat things like the biggest, baddest burger they can find.

S7 Analysis: The sheer awesomeness of bacon gives this sub-category an emotional advantage that tends to defy logical criteria. The Perfect Bacon Bowl, a 2014 True Top Spender, was definitely different, but was it needed? A bacon-lover would say, "I don't understand the question?" Having "healthier bacon" as a primary pitch tends to undermines this advantage. Logic reasserts itself, and let's face it: There is no logical reason to buy a product like this. A pan is much quicker.

Crack Away

Description: A concrete crack sealer
Main Pitch: "Fill in those cracks and make your property look new while preventing further damage"
Main Offer: $14.99 for a one-quart bottle
Bonus: 2nd bottle (just pay a separate fee)
Marketer: Telebrands
Watch the spot

Allstar 'fast failed' with a similar product, under the name Insta Fill, in the summer of 2014. (See No. 12 in this Weekly Round-Up.) The bet is that a large enough percentage of people currently have cracks in their concrete that need filling. Past history indicates this is probably not the case.

S7 Analysis: The weakness here is a combination of two criteria. The product probably isn't needed by a large enough buying group (i.e. target). If it were, this one would have a decent shot at success because the pitch is quite motivating.

Weekly Round-Up

1. Bandu. Pitch: "Turn any household chair into a full gym." Comments: This concept has been tried twice before on DRTV. This Weekly Round-Up from 2012 has the details. Generally speaking, fitness is not a great short-form category, and this product isn't especially exciting or unique.[ss]
 
2. Flip and Store. Marketer: Telebrands. Pitch: "The fast and easy way to store more." Comments: The Website is down, so I'll assume this one is no-go. Organization is a very tricky category. [ss]
 
3. Perfect Fit Cushion. Pitch: "Transforms from one amazingly comfortable position to another." Comments: This one is reminiscent of Hampton's Total Pillow, a 2010-2011 hit, but it's too soon for the concept to make a comeback. The category has also flipped from good to bad, producing nothing but flops these days. [ss]
 
4. Purrfect Pouch. Marketer: Lenfest. Pitch: "Comfy cat carrier and grooming sack in one." Comments: Cat products are unpredictable, but my gut is that this one is too utilitarian to find success. It's also a bit of a fashion statement, which makes it doubly unpredictable. [ss]
 
5. Step By Step. Marketer: Telebrands. Pitch: "Cut the rise and effort in half when stepping into your doorway." Comments: Another dead Website. I think it's a 'problem scale' issue. Getting out of a car from a seated position (Car Cane) is much higher on the scale than stepping up onto a doorstep. The market size is obviously much bigger for the former as well. [ss]

Magic Path

Description: An adult coloring book
Main Pitch: "A relaxing escape you can enjoy without ever leaving your home"
Main Offer: $12.99 for one
Bonus: Pocket version of book, 5-piece colored pencil set (free)
Marketer: Telebrands
Producer: Sullivan Productions
Watch the spot

Get ready because here it comes! Now that it's clear Colorama, a coloring book for adults, is a success, we're going to see an adult version of every kid activity and puzzle imaginable tried on DRTV. Insofar as the first success makes sense, this one also makes sense. Beyond that, I continue to be at a loss when it comes to this category.

On that note: Congratulations to Telebrands and Sullivan Productions for seeing something I clearly did not!

S7 Analysis: The first success defies the S7, so this project does as well. There's no sense trying to explain with logic something that is emotional and trend-related.