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On Target: More pharmacies and a low-price promise

BY Mike Troy

SPRING HILL, Fla., and , BRONX, N.Y. —Target expanded its pharmacy presence last month with the opening of 23 new stores nationwide, and extended a bold pricing promise to more aggressively combat Walmart’s assertion that its prices are “unbeatable.”

The addition of 23 new stores, 17 of which feature an expanded fresh food offering, gives Target a total of 1,719 stores nationwide and pushes its pharmacy total to 1,562 units. While that milestone is noteworthy, and pharmacy remains a strategic priority for the company, it is the expansion of food and the stronger stand on pricing that are seen as more significant strategic initiatives even if they are complementary to strategies already established in pharmacy.

Target is out to increase customer traffic in its stores, while simultaneously overcoming the perception among some customers that it isn’t as sharply priced as Walmart.

Expanding the presence of food and consumables is an obvious measure to generate increased customer traffic, and Target took an important step in that regard when it introduced a discount store format called Pfresh, which, as the name implies, includes perishable products. At a new 135,000-sq.-ft. store in Spring Hill, Fla.—an hour north of Tampa—the Pfresh format is on display and quite attractive. The fresh presentation is compelling enough that customers unfamiliar with the much larger SuperTarget concept may think they are in one.

As of the end of the first quarter, Target’s plans call for Pfresh to be in about 100 stores by year’s end, and if it’s deemed to be working, from 2010 most new and remodeled stores will feature the expanded food offering.

Beyond simply adding food, another experiment apparently expanded during July at new stores is Target’s “low price promise.” At multiple locations inside two new stores visited by Drug Store News, Target called out the promise with signing on endcaps at each checkout lane and in the large food and consumables area where Target is most eager to get credit for prices it contends are competitive with those found at Walmart. The pricing promise was tested earlier this year at stores in Orlando, Fla., Denver and Minneapolis, and allows Target to match prices on advertised items from nearby stores.

New messaging around pricing and expanded food offerings is intended to generate more traffic, which ultimately should benefit the pharmacy and healthcare businesses, which are among Target’s best-performing segments. Target already offers a differentiated experience in addition to being competitive with its $4 generic offering, and now it is poised to benefit from more customers being exposed to its prescription and healthcare offerings.

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Washington, Mo., considers repealing recently passed PSE legislation

BY DSN STAFF

NEW YORK The objective here is closing down clandestine methamphetamine labs. The question is: Who is going to bear the cost? And the answer, ultimately, is the consumer.

It seems that one of the primary reasons behind legislation like this, which is also under consideration by the California state legislature as well as several local municipalities throughout Missouri, is cost shifting.

Indeed, one solution that would prevent the practice of “smurfing,” a practice whereby meth addicts exceed their legal purchase limits in pseudoephedrine products by buying across several nearby pharmacies, is electronic logbooking. By granting access to PSE logbooks to law enforcement in real time, law enforcement officers would not only be made aware of a “smurfer” as they were driving between pharmacies, but would also identify who that smurfer was and where they lived.

Setting up that comprehensive electronic logbooking system requires resources, however. State coffers have traditionally been tapped for that purpose, and at least in the case of California, the Consumer Healthcare Products Association has offered to help defray that cost. In the case of Missouri, more than $500,000 has already been earmarked for the implementation of an electronic logbooking system at the state level.

However,  a not-as-much-talked-about cost is also borne by law enforcement, as pointed out by Franklin County Sgt. Jason Grellner in Missouri. After all, it requires additional resources to actually apprehend and prosecute those criminals, he suggested. And a system that better defines who those criminals may be, by his estimation, could cost the state as much as $350,000 per criminal per year.

Therefore, Grellner argues, it’s a fiscal responsibility to take PSE off the OTC market altogether, and require a prescription for the popular decongestant.

That, in a nutshell, is cost-shifting. Because reverse switching PSE translates into less revenue for retailers (and consequently less taxable revenue, as well) for those consumers who choose to forego PSE-provided relief, and for those who don’t, it’s a greater healthcare cost because now consumers have to schedule an appointment with their primary care practitioner and pay the co-pay for that doctor’s visit on top of the cost of the PSE product.

Regardless of how the consumer ultimately pays for the elimination of meth labs — whether through increased taxes to cover escalating law enforcement budgets or through increased personal healthcare costs — there is another argument to be made here. Switching PSE to prescription-only status may result in fewer meth labs busted, but it’s not going to do anything about those meth addicts still on the street. Necessity is the mother of invention, and for addicts, that simply means sourcing their meth from somewhere else.

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