It’s been an interesting summer for chain drug retailing.


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Inside This Issue - Opinion

The top chain drug events of the summer

August 13th, 2012
by David Pinto

It’s been an interesting summer for chain drug retailing.

Here, in no particular order, are the season’s most interesting events:

• Walgreens merged — if that’s the appropriate word — with Alliance Boots by acquiring a 45% interest in the world’s leading drug retailer/wholesaler. The word “leading” needs to be explained here. It is not meant to connote financial or store-count leadership, such as leading in sales or earnings or number of drug stores or any other measure frequently used to make comparisons in America’s chain drug store community. Rather, it is used here to connote dominance — and, used in that context, Alliance Boots is the most important (and dominant) drug retailer and wholesaler on the planet. Viewed another way, it is represented, often significantly, with a retail or wholesale presence (often both) in more of the world’s communities than any retailer or wholesaler located in any part of the world has ever been represented. Viewed from that perspective, Walgreens, in our view, has pulled off a magnificent coup — because it literally opens up a world of possibilities for a chain drug retailer whose opportunities had become increasingly limited.

• Walgreens and Express Scripts settled their differences. No one really knows who won in the end — and it really doesn’t matter. Potentially, the biggest losers are the retailers who gained sales and customers as a result of Walgreens’ decision, reached last fall, to no longer accept Express Scripts prescriptions. On September 15 that period will officially end — and the prescription drug community will need to find other, more permanent ways of continuing to build top-line ­performance.

• The National Association of Chain Drug Stores held its final Marketplace Conference. This space — and this publication — has long lauded the Marketplace Conference as an essential and splendidly productive business venue. But we are bound to acknowledge, as the doors closed on the final Marketplace in Denver, that the event had at last outlived its usefulness, that both retailers and suppliers had come to ignore it or, worse, take it for granted. What’s replacing it, however, has remarkable potential for making industry people forget that there ever was a Marketplace Conference. A year from now NACDS will open the doors on its first Total Store Expo. In theory it is the perfect meeting for its time and circumstances, one that brings together the key elements of community pharmacy — specifically, the pharmacy, front end and supply chain components — in one grandly conceived marketing, merchandising and product exposition. The association is already hard at work in a determined effort to transform concept into reality. Initially at least, the response from both retailers and suppliers has been a strong one. Industry people are prepared to give this new Expo a try. It’s up to NACDS to turn that initial enthusiasm into a long-term commitment to a concept no one has yet tried.

• Walmart is celebrating its 50th anniversary. What makes this event so remarkable is what the retailer has accomplished in its first half-century in business. Everyone knows by now that Walmart is the world’s largest retailer — and second-largest company of any kind. Perhaps less well known is the fact that Walmart International, if its performance were separated from its parent, would be the world’s No. 3 retailer in terms of sales. Or the fact that a retailer whose sales reached $2.4 billion in 1982 was able to report net earnings of $1.3 billion just a decade later. Or the fact that … but you get the idea. Walmart’s success, whatever the blemishes that have cropped up along the way — most recently including the Mexican Affair — is a remarkable and truly American retailing success story.

We would be remiss, in recounting the chain drug events of the summer of 2012, if we failed to mention the resurgence of Rite Aid and the initial success of that retailer’s “wellness stores.” Or the intelligent use of the inherent but previously overlooked synergies between the CVS drug chain and its Caremark unit, synergies that have made each component of CVS Caremark — as well as its MinuteClinic unit — more productive and more valuable than it was previously imagined they’d be. Or Walgreens’ largely overlooked acquisition of the 144-store USA Drug chain. Or Lewis Drug’s 70th anniversary. Or Shoppers Drug Mart’s 50th. Or …

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