TWO WAL-MART STORES TEST BEAUTY BOUTIQUE

JOEL ELSON

ORLANDO, Fla. -- Wal-Mart is testing a beauty boutique concept at two stores here to capture greater incremental sales of high-margin products in the cosmetic and fragrance categories.

Although Wal-Mart refused to comment on the test, industry observers said the concept was originated by Procter & Gamble as part of a partnering relationship. If successful, the company would roll out the new merchandising concept to all its stores nationally, said the sources.

The 700-square-foot section, called the Beauty Care Center, has taken a cue from some of the popular body ecology shops that have sprung up around the country by interspersing higher-ticket merchandise with everyday-priced products.

Positioned along the front perimeter wall just before the pharmacy department, the section is designed in a square-shaped U alcove.

It offers a wide assortment of beauty products from the conventional health and beauty care aisle, and also includes high-priced fragrances.

A glass counter at the center of the section contains the fragrance category, with a clerk on duty to offer shoppers assistance.

The back and sides of the U are devoted exclusively to cosmetics. The back of the section is approximately three aisles wide, while each side uses a 36-foot-long gondola to display added cosmetic selections, said an industry source, who wished to remain anonymous.

"The inside gondolas of the U contain in the skin category, including hand, body and facial products, acne treatments and skin care for men; bath, including

specialty soaps, baby powders, oils and lotions; dipilatory products and sun protection.

"Signage identifies the whole department as a Beauty Care Center, which Wal-Mart is trying to use to bring incremental sales to high-margin HBC items," the source noted. According to local observers, Wal-Mart is pleased with the new section's performance and sales it's generating in the approximately six months it has been up and running.

The mass merchandiser plans to expand the test to two more stores in April, in anticipation of rolling the concept into its other stores, local observers said.

"They feel a good percentage of this business has been captured by department stores, specialty body and bath shops and through direct home sales. They see an area poised for tremendous growth."