Inside This Issue - Opinion
Eventful year reshapes chain drug industry
August 27th, 2012
by David Pinto
This has been a year of unprecedented change for chain drug retailing. Indeed, in less time than it takes to tell, the industry has been altered in ways both subtle and dramatic.
So quickly have things happened that many have been accepted as normal or ignored as inevitable. Here, in no particular order, are some of events that have recently reshaped the chain drug industry in America — and elsewhere.
• Just over a year ago Walgreens opened a new flagship store at 40 Wall St., in New York City, under the Duane Reade banner. In the main the store — which has since been followed by similar models in Chicago and elsewhere — has been praised for raising chain drug store merchandising and marketing to a new level of excitement and productivity, while its merchandise assortment has been warmly received for its imaginative appeal to three different constituents. Of course, chain drug retailing being what it is, critics have complained that 40 Wall St. isn’t really a chain drug store at all but rather a mass merchant masquerading as a drug store by offering a pharmacy, an on-premises physician and a basic assortment of drug store merchandise. The store has, according to sources at Walgreens, thus far lived up to its expectations in every way — and then some.
• A year ago Mike Bloom, CVS’ senior merchant, left that company to assume the presidency of Family Dollar, the nation’s No. 2 dollar store chain. His departure left huge conjecture in its wake: Will Bloom be capable of making the transition? Will CVS? Will things change? How will they change? A year later this much is certain: Bloom has indeed made the transition. In the bargain he has brought a new sense of merchandising urgency and professionalism to Family Dollar. It also appears that CVS has successfully made the transition. Judy Sansone has effectively filled Bloom’s shoes, as her many supporters knew she would. If she’s different from Bloom in the way she approaches her job and her staff, she appears no less effective. And CVS, aided by Walgreens’ dispute with Express Scripts, has posted some of the strongest performance figures chain drug retailing has seen in some time.
• A year ago Mark Cosby joined CVS Caremark as president of the drug store unit. In an industry where senior executives have generally been both visible and widely accessible to the supplier community — Larry Merlo, though an operator rather than a merchant, is hugely popular among CVS’ suppliers — Cosby’s low industry profile has been a topic of conversation, though the people with whom he has met have generally been impressed. For his part, Cosby maintains that he’s been busy learning a new business — he most recently worked at Macy’s — a new culture and a new way of doing things. In an industry in which senior-management visibility is expected, encouraged and appreciated, however, some industry people are anxious for CVS’ president to become more engaged.
• Over the past year Rite Aid has unveiled its “wellness store,” a new concept that effectively delivers on the drug store promise of health and wellness and uses the latest technology to assist its customers/patients in achieving and maintaining good health. While the concept is only now being rolled out, it shows every initial promise of transforming Rite Aid from a distant No. 3 in chain drug retailing to a serious retailer capable of attracting customers and sales.
• In June Walgreens and Alliance Boots announced an agreement to merge — Walgreens paid $6.7 billion to acquire 45% of Alliance Boots, and is expected to eventually gain the other 55%. Never in the long and often exciting history of chain drug retailing in America has any one transaction aroused such curiosity, speculation, confusion and skepticism. Analysts and second-guessers immediately had Walgreens opening drug stores in such far-away locations as Antarctica, while Boots, they claimed, was poised to take over the Walgreens drug stores in this country. Such nonsense aside, most pundits agreed that this was a stunning transaction — though these same people were often at a loss to explain what made it so stunning. All that anyone needs to know at this point, however, is that two world-class retailers (in Alliance Boots’ case, retailer and wholesaler) have agreed to merge. It’s difficult to conceive of anything other than remarkable and game-changing progress going forward, especially given the experience, wisdom, knowledge and previous accomplishments of the people who put it together.
What else has happened this year? NACDS announced that it intends to unveil a new meetings concept next year, Total Store Expo. The initial Expo will open its doors in Las Vegas on August 10, 2013. Anticipation is already high. And Lewis Drugs is celebrating its 70th anniversary. Anniversary or not, Lewis is a drug chain worth a visit. To get to Sioux Falls, S.D., take a left at Minneapolis ...