New York — You don't notice it at first. Thumbing through the magazines at Whelan Drug on Third Avenue, the last strains of ``Penny Lane'' fade from a speaker overhead. A svelte-voiced disc jockey goes into his patter. But listen closely. The deejay isn't rapping about the Mets or the weather. He's extolling the virtues of sun-screen lotion. Or low-fat milk. And all the commercials relate strictly to products sold in this store.
Welcome to the lastest twist on sounds that sell.
Whelan Drug is one of 400 in the Adams Drug chain that use this new simulated radio service. Adams gets its customized tapes of background music combined with precise advertising pitches from a small new firm called Point-of-Purchase Radio Inc.
Just since last November, the Manhattan start-up company has begun providing six major drugstore chains (totaling 4,000 outlets nationwide) with their own specially taped ``radio'' networks.
This week Toys ``R'' Us -- the nation's largest toy chain -- will be broadcasting ``WTRS Radio'' in 100 of its 270 stores. POP Radio chairman Robert Gray says the New England Stop & Shop and mid-Atlantic Grand Union supermarket chains are considering the service.
By underpricing competitors such as Muzak, POP Radio is quickly carving out a niche in the environmental music business. The only cost to retailers is a one-time fee of about $400 per store for a sound system. Typically, each store pays $30 to $60 a month on music royalty fees or another music service.
``We'll be able to point to substantial savings with this program,'' says Jim Markham, director of industrial purchasing at Toys ``R'' Us. Some Toys ``R'' Us stores are still under contract to Muzak and other background music services. But as those agreements expire, Mr. Markham says, all stores will go to POP Radio.
POP Radio doesn't merely save users money; it may also soup up sales. Marketing studies show that some 60 percent of all purchase decisions are made on the spot.
``POP Radio takes advantage of impulse shopping by advertising to customers while they're walking down the aisle,'' says Doug Palmacci, vice-president of advertising at Adams Drug, based in Pawtucket, R.I.
Indeed, tests by the Jack Eckerd Corporation, a 1,600-store chain in 15 Sunbelt states, indicate the new service increases revenues. In May, Eckerd found that sales of a specifically advertised Hawaiian Tropic suntan lotion jumped 100 percent in 10 stores piping in POP Radio, vs. 10 stores without it.
Maurice Hennebry, manager of merchandising at Black & Decker's household products group, says B&D's tests of POP Radio ads for a Handy Mixer ``showed a significant increase in sales.''
Officials at industry leader Muzak are understandably skeptical. About one-third of Muzak's business is with retail outlets. ``Commercial-free music works to create a better selling environment,'' says Muzak spokesman Charley Furlong.
``Most studies show that 70 to 80 percent of people shopping do not want to be blatantly sold to,'' adds James J. Keenan, a Muzak adviser and professor of psychology at Fairfield University.
Independent studies do indicate that purely instrumental music, with no ads, gets people to slow down, resulting in more time and money spent in the store. For instance, a 1983 Pepperdine University study shows that average sales per customer in a single supermarket stop rose from $23.64 with contemporary music, as against $25.21 with no music and $26.41 with Muzak.
But such studies fail to include the possible effects of targeted advertising. Moreover, shoppers have not complained about the commercial format, subscribers say. ``We've received no negative feedback from customers,'' says Markham at Toys ``R'' Us, which tested the service for three months in two locations.
Mr. Keenan at Muzak concedes that instrumental music may not be the best selling sound for all shoppers. A study he conducted this summer in the offices of a major credit card company showed workers preferred a new Muzak service blending current rock, jazz, and country music with vocals. Ninety percent of the workers were under 40 years old.
``One of the keys to acceptability of sounds is age and background of clientele,'' Keenan notes.
Indeed, POP Radio sprang from an understanding of this. Mr. Gray developed a contemporary music service for The Gap clothing stores before founding POP Radio. Gray's company provides six music formats, including Hispanic. The last format has been a welcome addition in its Miami stores, an Eckerd executive says.
Well-targeted, last-minute sales pitches appeal to advertisers who are constantly searching for more-effective ways to reach specific audiences. Some 60 national advertisers, including PepsiCo, Gillette, Revlon, Kodak, and Johnson & Johnson, have bought airtime.
The taped music and chatter are updated quarterly; advertising is changed monthly. National advertisers get 10 minutes out of every hour, and store chains may use 2 minutes. Some chains sell those 2 minutes to advertisers themselves, further defraying costs. The cost per listener reached, notes Black & Decker's Mr. Hennebry, is ``very, very competitive.''