Inside This Issue - Opinion
Some things to look for – or not – in 2013
January 21st, 2013
by David Pinto
The year that just ended was among the most dramatic chain drug retailing has seen, particularly if drama is measured in terms of its potential for lasting change.
Viewed that way, here are seven landmark events of 2012 — and the impact they may begin to exert in 2013.
• The Walgreens-Alliance Boots alliance. Walgreens’ agreement to acquire Alliance Boots, announced last June, will forever change chain drug — and mass market — retailing in America, beginning this year. Hundreds of Walgreens drug stores will shortly begin carrying several prominent Boots own-label brands, most notably the retailer’s best-selling No7 beauty care brand. As well, Walgreens’ front-end presentation will likely take on some of the characteristics of the Boots stores in the U.K., particularly beginning to more closely mirror Boots’ productive emphasis on private label.
• Farther afield, Walgreens should begin to benefit from the expertise and efficiencies Alliance Boots has developed in drug wholesaling, particularly as that expertise relates to pharmaceutical distribution. As well, Walgreens will likely begin examining the potential offered by Boots’ extensive line of generic drugs.
Ultimately, if not in 2013, Walgreens’ world-class reputation for pharmacy systems and technology will begin to reap benefits throughout Boots’ extensive network of drug stores, one that stretches from Ireland and the U.K. through Europe and as far east as Thailand.
• The emergence of Judy Sansone as a CVS leader. With the departure, in 2011, of Mike Bloom, CVS‘ chief merchant, who left to assume the role of president of the Family Dollar dollar store retailer, Sansone was named to replace him. After a year of gaining experience and confidence on the job, she is poised to exert an impact on the drug chain that stretches beyond purchasing and merchandising and into that rarified atmosphere of strategic thinking and planning, one successfully occupied by so few chain drug merchants over the years. Her emergence in a strategic planning role will coincide neatly with the initial unveiling, expected before spring, of CVS’ store of the future, one that largely reflects Sansone’s concepts and ideas as they relate to merchandise and merchandising.
• The emergence of CVS president Mark Cosby as an industry influence. As is true of Sansone, Cosby has spent the past year getting comfortable in a new industry, a new company, a new position. As 2013 dawns he is equipped to become a more visible and prominent figure in chain drug retailing, even as his influence at CVS becomes more dramatic and more effective. The year that began earlier this month will be a year of major contribution for Mark Cosby.
• The re-emergence of Rite Aid. As 2012 ended, America’s No. 3 drug chain reported its first profit since the quarter that ended in May 2007. This year will largely determine whether Rite Aid can sustain that positive momentum or whether, on the other hand, Walgreens, CVS and several of America’s most effective regional drug chains will have opened up too much ground between themselves and Rite Aid for the Camp Hill, Pa.-based drug chain to overcome — even with Rite Aid’s growing commitment to its impressive wellness+ merchandising program.
• The unveiling of NACDS’ Total Store Expo merchandising show. Total Store Expo, announced last June, initially had the National Association of Chain Drug Stores closing the door on its long-running Marketplace Conference — the 2012 show was that event’s last — with the intent of replacing it with the more dramatic and, on paper, more productive, creative and potentially rewarding Total Store Expo.
The initial show, set for Las Vegas in August, aims to combine the most productive elements of the association’s Marketplace Conference, pharmacy expo and supply chain event. If NACDS can pull it off — and every initial indication is that it will do so — Total Store Expo will immediately become the most important trade show mass retailing has to offer. Indeed, even at this early date retailer and supplier interest in the event has surpassed the most-optimistic estimates — and the real push hasn’t yet begun.
• The unknowns surrounding the new heath care program. Those people who claim to know believe the new law will reap many benefits for chain drug retailing, the most obvious one being the 35 million people who will find it easier to obtain — and pay for — prescription drugs. This much is certain: The chain drug industry, more than any mass retailing segment, is prepared to embrace any uptick in prescription drug volume that will come its way.
Also true is the fact that America’s drug chains are more dominant in prescription drug sales than they have been at any time in the past 25 years. This is true despite competition from both the Internet and mail order, the latter of which has begun declining in its contribution to total prescription sales. More Americans today — far more — fill their prescriptions at a chain drug store than have ever done so.