Kmart perseveres with Rx, clinic deals
One has to admire a person who perseveres through hardship and difficulty, and the same goes for companies that keep going and keep trying, no matter what the market throws at them.
One such company is Sears Holdings and its mass-merchandise chain Kmart. Kmart has borne the brunt of a difficult economy in recent years, facing store closings across the country and declining sales. U.S. sales for the chain in 2009 were $15.7 billion, when it had 1,327 stores, but last year, that number declined to $15.6 billion in 1,307 stores. But that hasn’t stopped Kmart from offering important services at its in-store pharmacies, whose number totaled 981 last year.
In February 2011, Kmart began offering flu shots to customers at 500 of its pharmacies at the reduced price of $15 — or for free to Medicare Part B beneficiaries — while giving those who were members of the Shop Your Way Rewards program 15,000 points — a $15 value — emphasizing the ability of the influenza virus to persist as late as May, past its usual peak season. The company also emphasized the expertise of its pharmacists, available to patients with health-related questions.
Previously, the chain had offered flu vaccinations for $25 at its walk-in flu clinics. Customers who bought a flu vaccination also received a coupon book worth up to $45 and a 10%-off shopping pass for use on health and beauty products and consumables.
Kmart also has leveraged its status as a mass merchandise retailer to attract customers to its pharmacies. In October 2010, it introduced a program whereby customers who transferred their prescriptions over received a $20 Kmart gift card for each prescription transferred, for up to five prescriptions per household. In addition, it introduced the “Transfer for a Cause” program, also donating $5 for up to five prescriptions to the Breast Cancer Research Foundation in recognition of Breast Cancer Awareness Month.
Resilient Kroger readies for recovery
In retailing, it’s a given that a long-term, severe recession will cut through the ranks of food, drug and general merchandise retailers like a scythe through wheat, pushing weaker players out of the market as consumer spending dries up and Darwinian realities winnow the field. But it’s also true that the strongest merchants can emerge not only intact, but also with even brighter prospects if they innovate, invest and retain the loyalty of their customers.
Clearly, Kroger belongs in the latter category. The Cincinnati-based supermarket and combo-store behemoth weathered a tough 2010 with a 2.8% increase in same-store sales across its multifaceted retail empire and net earnings of more than $1.1 billion. The company also increased share of grocery sales by 80 basis points, according to Nielsen research, and in the final months of the fiscal year ended Jan. 29, 2011, appeared to regain momentum in drug and non-food sales.
“Kroger’s business proved resilient in 2010, weathering a challenging environment that continued to affect many of our customers,” said chairman and CEO David Dillon in March. “We were particularly pleased to see solid growth in our drug/general merchandise department where sales had softened during the recession as customers scaled back discretionary purchases.”
Sadly, the start of Kroger’s new fiscal year also witnessed the loss of one of its top pharmacy and non-food executives, EVP Don Becker, a 42-year company veteran who died unexpectedly in February at 62 years old. Becker oversaw drug, grocery and general merchandise buying, marketing and merchandising, and also was responsible for The Little Clinic operations.
Dillon called Becker a “dear friend and extraordinary leader” who “leaves a legacy of enthusiasm and passion for doing what’s right.”
Despite that major setback, Kroger appears to be laying a solid foundation for continued success. The company operates 1,950 in-store pharmacies that filled nearly 140 million prescriptions in 2010.
Besides a strong presence in the flagship Kroger combo stores, that pharmacy network sprawls across a complex web of such regional chains as King Soopers in Colorado, Ralphs in California, Smith’s Food & Drug Centers in Utah, Fry’s Food & Drug in Arizona and Fred Meyer in Oregon.
In 2010, Kroger also purchased its erstwhile partner in walk-in patient-care centers, The Little Clinic. The buyout gave it control of one of the nation’s largest operators of retail-based clinics, with 77 professional centers in select Kroger, Fry’s and King Soopers stores in Ohio, Kentucky, Tennessee, Arizona and Colorado. The company also provides management for 40 branded clinics in Florida and Georgia.
In the midst of a tough economy, Kroger also invested a total of roughly $2 billion last year in store remodeling, the Little Clinic purchase, new technology and other improvements. Steady investments in automation have helped transform the pharmacy, where pharmacists in any of its stores and operating companies can see into any customer’s patient profile and prescription record via its nationally integrated pharmacy automation platform. That system, called the EasyFill Pharmacy Retail Network, allows pharmacists “a single view of the patient across Kroger,” according to Chris Hjelm, SVP and CIO. The system also tracks all pharmacy transactions in real time, he said, so “we know when a prescription is sold, not just filled.”
Kroger’s pharmacy team also continues to expand pharmacy and clinic-based services, including a variety of immunizations and biometric screenings for such conditions as diabetes, hyperlipidemia and obesity. Some Kroger pharmacists also now participate in long-term programs for diabetes management, education and coaching, in coordination with registered dietitians and certified diabetes educators.
Kroger also continues to wield one of retailing’s most effective loyalty card programs. The company reported that more than 90% of its customer transactions now involve the use of the Kroger card.
Costco focuses on Rx as U.S. sales soar
Many analysts have voiced concern that despite numerous indications of a slow, but healthy, economic recovery in the United States, growth in the number of jobs has lagged, even as it has exceeded economists’ expectations.
But another indicator that the economy is picking up speed is U.S. sales growth at Costco Wholesale, the members-only mass merchandiser based in Issaquah, Wash. For fiscal 2010, sales at the company’s 424 U.S. stores — which the company officially calls warehouses — were $59.6 billion, compared with $56.5 billion in 2009.
Most of the company’s sales come from its famous bulk-sized packages of various consumer packaged goods and such products as furniture and food. But prescriptions at the pharmacies still accounted for a steady percentage of sales, at $1.5 billion, while nonprescription pharmacy items, like over-the-counter drugs, had sales of $1.7 billion.
The company also has ramped up online pharmacy retailing. “Costco continues to expand physical infrastructure and continues to make improvements to the online ordering experience for pharmacy customers,” Costco SVP pharmacy Vic Curtis told Drug Store News. “With mail-order, specialty and retail business growing nicely year over year, the further integration of e-commerce solutions is important for Costco members.”
Costco also has introduced such initiatives as the Costco Member Prescription Program for uninsured Americans and the Costco Pharmacy Benefit Partnership, a prescription benefit program. In addition, the retailer has plans to introduce such services as refill reminders and automatic refills.
“Even though we rate at or near the top in customer surveys, we think we can do even better,” Curtis said. “This not only includes the in-warehouse experience, but also with regard to making it easier to use Costco pharmacy online refills [and] pickup in warehouse, status check [and] pickup reminders.”