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.
Cardinal reinforces true ‘independence’
Embrace diversity. You don’t have to be Leader to be a leader.
That is Cardinal Health’s modern message to its roughly 6,300 independent pharmacy customers that aren’t members of its franchise division of Medicine Shoppe and Medicap pharmacies. In a gradual but sweeping shift in how it goes to market, the wholesale and health services giant has reduced its emphasis on the Leader store brand in favor of a new approach to the pharmacy market on behalf of its sprawling base of independent pharmacies. While not in any sense abandoning the Leader logo or its marketing and ad circular programs, Cardinal has developed a more customized and store-specific approach to its retail network that encourages each pharmacy owner-operator to fully develop his or her own brand and local market identity.
Cardinal’s customers can still participate in all Leader programs, and many do, says company spokeswoman Tara Schumacher. But independents by nature want to trade on their own brand of personal service and their own good name to build customer loyalty. Cardinal, she said, has realigned its independent pharmacy division under Steve Lawrence, SVP independent sales and marketing. The new paradigm: customer-specific flexibility in marketing, merchandising and store support.
That new, let-the-owner-decide-what’s-best approach is what greeted the roughly 2,000 independent pharmacists who swelled Cardinal’s customer ranks when the company finalized its buyout of Kinray, the nation’s largest independently owned drug wholesaler, early this year. And for those owner-operators accustomed to Kinray’s highly individualized and high-touch brand of service, the change must have been a welcomed one.
Under Cardinal’s new strategy, “if an independent pharmacy wants to market itself under what it perceives is a broader brand, but wants to be an independent pharmacy and not a franchise, they can still have all the Leader program materials — store banners, signs, circulars,” Schumacher told Drug Store News. “But instead of encouraging customers to become Leader stores, we now offer local store marketing services, where we’ll help any customer build awareness of their own store name.”
“We’re focused more on growing our independent base of customers, not necessarily on growing the number of Leader customers,” she added. “It’s about whatever makes the most sense to our customers’ businesses. So if an independent pharmacy wants to market themselves as Joe’s Pharmacy, we’ll support them in that; if they want to market themselves as Joe’s Leader Pharmacy, we’ll help them with that, too.”
The shift in approach culminated on July 23, 2010, when Cardinal unveiled a broad set of new applications designed to help independents compete far more effectively under their own hard-won marketplace identities. Cardinal called it “the industry’s first fully customizable suite of marketing tools that enable independent pharmacists to build and market their own brand within their communities — without having to tie their marketing efforts to a national banner program.”
The change was based on “extensive customer research [that] told us that an increasing number of retail pharmacies want to be able to exclusively market their own store names in their local communities,” Lawrence said. “But until now, they haven’t had easy-to-use, quality marketing tools that can help them do that in a cost-effective way.”
Now available to Cardinal’s customers:
Customized store websites that can feature a store’s full brand identity, along with online order refills integrated with a store’s pharmacy system and tie-ins with commercials, store circulars and other marketing activities;
Cardinal’s new in-store radio system, which allows for store-specific ads;
A new, customizable in-store signage and circular system;
A new outbound calling system to help pharmacies improve patient relationships and medication adherence, linked to the store’s pharmacy system for reference tracking; and
A new series of radio and TV ads that can be customized to promote an individual store’s brand, products and services.
“A lot of our customers have said, ‘we like the brand equity we have.’ So now the marketing materials can reflect just that,” Schumacher said.
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.