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"EVERYDAY LOW PRICE" RETAILING CONCEPT WILL BECOME MORE ROUTINE

This article was originally published in The Tan Sheet

Executive Summary

"EVERYDAY LOW PRICE" RETAILING CONCEPT WILL BECOME MORE ROUTINE, Jack Salzman, VP, senior securities analyst and associate director of research at Goldman Sachs, told the Cosmetic, Toiletry and Fragrance Association annual meeting in Boca Raton, Fla. March 1. Predicting that "everyday low pricing is going to spread," Salzman declared: "We won't call it everyday low pricing. We may call it different forms, it may manifest in different ways on different product categories, but the content behind EDLP, which is essentially to reduce promotion allowances, to reduce discounting and pass that savings on to the consumer, will take on new meaning . . . for the consumer down the road." One company that seems to have embraced the EDLP strategy is Procter & Gamble, which initiated what it describes as a "transfer" of retailer promotion funds to lower list prices on a limited basis in late 1991 and early 1992 and expanded this low- pricing strategy to 40% of its U.S. business last spring. Under the program, P&G began selling products to retailers at lower prices, but simultaneously cut promotional dollars provided to stores. Salzman also forecasted that, in all channels of distribution, "we're looking for a sort of smearing, a convergence by a lot of retailers." Deep discount mass merchandisers "are going to start looking like mass merchandisers, mass merchandisers are going to start looking like supermarkets and supermarkets are going to start looking more upscale," he commented. Salzman also predicted that specialty stores "will become a national channel of distribution" within the next five years. "We think there's a specialty" retailer "out there somewhere" for personal care products. "We don't know if the Cosmetics Plus or Cosmetics Centers or Perfumanias or companies like that are the right forms, they probably need to be modified . . . but we think the consumer wants this form of distribution," he said.
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