RED APPLE BRANCHING OUT WITH HBC DISCOUNT STORE CONCEPT

JOEL ELSON

NEW YORK -- Red Apple Cos. here is launching the first of possibly several freestanding discount health and beauty care stores. A 10,000-square-foot freestanding unit, to be called Sloan's Discount Health and Beauty Aids, is scheduled to open this month adjacent to a Sloan's Supermarkets store in the Brooklyn Heights section here. Red Apple owns about 62 supermarkets under the Sloan's and Gristede's banners. "It seems that [discount drug stores] are making all the money," said John Catsimatidis, chairman and chief executive officer. "We wanted to cash in on the opportunity."

Depending on how well the Brooklyn Heights store performs, Red Apple also may convert several of its smaller supermarkets into discount HBC units as well. "We may turn stores that are not doing well as supermarkets into discount HBC stores," Catsimatidis said.

Housed in a former restaurant that Red Apple acquired, the Brooklyn Heights store will feature about 5,000 items in such categories as skin care, cosmetics, hair care, panty hose, analgesics, cough and cold, first aid, oral and stomach remedies.

The mix will yield 25% margins for retailers, said Charles Criscuolo, president of Red Apple. It will be priced 15% less than HBC assortments featured at most supermarkets, said Criscuolo. Most items will retail under $10, though an upscale hair care line may run up to $15. Quality King, a private-label line, also will be offered in shampoo, conditioner, toothpaste and

and mouthwash. It will represent about 5% to 10% of the assortment. Though Red Apple considers the discount HBC concept "an experiment, we think there's a good future in HBC," said Catsimatidis. Red Apple will evaluate the Brooklyn Heights store after six months to decide if other discount units will be opened.

"We want to assess the progress of the first HBC store after the first quarter," Catsimatidis said. The chain is also considering opening discount HBC departments in its larger supermarkets. One such section may open in a 7,000-square-foot Roosevelt Island, New York, Sloan's supermarket that's slated to be expanded by 18,000 square feet in May.