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.
Safeway rebounds with sharper focus
After being hemmed in by recession, cash flow problems and costs, a venerable lion of West Coast food and drug retailing is roaring again.
Safeway shed a few more unprofitable stores in 2010 and early 2011, but emerged with sales and earnings results that help affirm its long-term strategy. The chain generated sales of $41.05 billion in the fiscal year ended Jan. 1, 2011, up less than half a percent from the previous year. But with a smaller, more productive store base and other improvements came a return to profitability; net income for fiscal 2010 was $589.8 million, compared with a net loss for 2009 of $1.1 billion.
Chairman, president and CEO Steve Burd cited “price reductions, reinvigorated private-label brands and targeted marketing” for the upturn, as well as new curbs on shrink and operating costs.
In the midst of a still difficult economy in 2010, Safeway also opened or remodeled another 74 stores in line with its Lifestyle prototype, which offers customers “wood-like flooring, relaxing earth-toned decor and subdued lighting with spotlights on featured products … [for] a warm, inviting ambience,” according to the company.
“Our … store renovations are almost complete, with 85% of our 1,694 locations now transformed into Lifestyle stores,” Burd reported Feb. 28.
Pleasanton, Calif.-based Safeway remains one of the nation’s top pharmacy retailers. Pharmacies operate in nearly 80% of its 1,694 supermarkets, giving it some 1,320 in-store pharmacies across a broad swath of the western and southwestern United States and in the Philadelphia market. That healthcare prowess is tied to a reputation as one of America’s top supermarket sources for organic and healthier-choice foods.
In April, Safeway took a big step to regaining full power in its pharmacy division with the hiring of pharmaceutical industry veteran Darren Singer as its new SVP pharmacy, health and wellness. The appointment fills a long-running management void that opened a full year earlier, when Dave Fong, Safeway’s top pharmacy executive, left the company as SVP pharmacy and family health. Fong’s position had been filled on an interim basis by Gary Rocheleau, but no permanent replacement had been named since Fong’s quiet departure in April 2010.
Singer, a 25-year veteran of GlaxoSmithKline, will regulate retail pharmacy operations, specialty care, pharmacy services, compliance, benefit management and managed care. He will report to merchandising president Kelly Griffith.
Singer, who among other roles at GSK was VP marketing for OTC wellness, could bolster Safeway’s ongoing efforts to marry pharmacy with health and nutrition. “His … proven track record in running some of the most visible and valuable brands in the pharmacy and wellness industry are well-suited to his leadership role,” Griffith said.
Safeway calls its pharmacists “experienced health consultants” who provide immunizations for whooping cough, tetanus and other conditions, along with the flu. Increasingly, the company is taking such health services as immunizations and health screenings outside the stores and into local businesses, schools, senior centers and other settings.
Safeway also is aligning those pharmacy care programs with a broader message designed to appeal to the total health-and-wellness needs of consumers. In mid-February, those efforts got another boost with the launch of SimpleNutrition, a shelf tag system designed to make it easier for shoppers to find better nutrition choices. Safeway called the new green tags “a first step in helping customers modify the selection of products that support a healthier lifestyle,” and said the tags point out one or more of 22 different nutrition and ingredient benefits for tagged items — e.g., organic, gluten-free or low-sodium products. Barbara Walker, group VP consumer communications and brand marketing, called it “a quick snapshot of the nutrition and ingredient benefits” of many foods.
Safeway also has broadened its nutritional message appeal with another branded line of healthier foods. Launched in late January, Open Nature is a new line of more than 100 naturally raised and unadulterated foods, beginning with products sold in the meat departments. The brand — which joins Safeway’s other healthy- alternative brands, O Organics and Eating Right — will expand to other food categories throughout 2011, the company reported.
RCEC to bring pharmacists, NPs together
ORLANDO, Fla. — Studies have indicated that the best people to get patients to adhere to their medication therapies are store pharmacists, while the second-best people are nurses. Thus, it’s only natural that getting nurses and pharmacists to collaborate will further improve adherence. The collaborative care track that The Drug Store News Group will introduce at the Retail Clinician Education Congress in August is a step in that direction.
Collaborative Care Day, which will take place on Aug. 2 at the Gaylord Palms in Orlando, Fla., will provide up to six dually accredited continuing education credits for pharmacists and nurse practitioners. The one-day track is a new addition to the annual RCEC, which will run Aug. 1 to 3 in line with National Convenient Care Clinic Week. The collaborative care track will include sessions with nurse practitioners and pharmacists on working together to improve health outcomes, common respiratory ailments, pediatric pharmacology, drug interactions — especially involving over-the-counter medications — hypertension and Type 2 diabetes.
“We know that pharmacists are essential providers in helping patients manage their drug regimens and drug-adherence protocols,” Drug Store News publisher Wayne Bennett said. “We also know that retail nurse practitioners provide the community with an important access point for not only treating minor illness and injuries, but also vaccinations and other health-condition monitoring services like high blood pressure, cholesterol, and diabetes screenings and assessments.”
Collaborative Care Association executive director Tine Hansen-Turton also is enthusiastic about the track. “We know the best health care in this country is provided by a team,” she said. “We are excited to introduce the collaborative care track at the Retail Clinician Education Congress, which is a hallmark of how health care will be provided in the future.”
Also new to RCEC 2011 is a special executive track featuring special sessions aimed at healthcare system executives and hospital administrators. The executive track sessions take place Aug. 1. The exhibit hall will be open all three days. For more details, drugstorenews.com/rcec-sponsorship-information.