DRSN041208p81 4/21/08 3:46 PM Page 81

ANNUALANNUAL

TheREPORT people shaping the industry ------2 Chains expand focus amid uncertain economy ------15 The Drug Store News Power Rx 50------16 Mass retailers push pharmacy by expanding programs ---17 Regional players strengthen foothold by finding niche-----18 Supermarkets emphasize health/nutrition connection------19

Drug StoreStore News News www.drugstorenews.comwww.drugstorenews.com 08AprilApril 21, 21, 2008 2008• •81 1 DRSN_042108_p83.qxd 4/9/08 8:47 PM Page 83 08 ANNUALREPORT Bill Baxley, Kerr Drug ill Baxley, senior vice Baxley has been with Kerr for crease inventory.” The big- president of merchandis- more than 40 years, beginning gest long-term challenge? B ing and marketing for as a stock clerk in 1967. After “Constantly reinventing Kerr Kerr Drug, said if he weren’t in graduating from pharmacy Drugs,” he said. the drug store industry, he’d be school in 1971, he began work- Baxley said the most sur- of service to humanity, “devel- ing at Kerr’s Store No. 1 in prising development of the oping goals for peace.” Raleigh, N.C. past year occurred outside Those who know Baxley As a retailer, Baxley said with the “collapse of the finan- probably wouldn’t be surprised his top goal this year is to cial markets,” and of Bear by his altruistic leanings. “improve margin and de- Stearns in particular. Paul Beahm, Wal-Mart aul Beahm, senior vice the healthcare arena, where he’s tinue today, but after a major president and general spent the majority of his career. restructuring of Wal-Mart’s en- Pmerchandise manager for Beahm was reassigned to the tire merchandising organization pharmacy, is a veteran Wal-Mart home goods area several years in early 2006, Beahm is back in merchant with a well-estab- ago, as Wal-Mart sought to inject the area where he is most famil- lished track record of helping new life into that business by ex- iar, with responsibility for phar- Wal-Mart achieve its merchan- ecuting a broad slate of product macy merchandising and third- dising objectives, especially in initiatives. Those initiatives con- party contract administration. Mike Bloom, CVS Caremark PEOPLE ike Bloom, senior with People’s Drug Stores was promoted to senior vice vice president of and with the Florida division president in 2003. M merchandising for of Toronto-based Shoppers In his current role at CVS, CVS Caremark, has nearly 30 Drug Mart. Bloom is responsible for all years of retail experience and Since that time, Bloom has aspects of CVS’ merchandis- joined CVS in 1991 after serv- held a number of positions ing strategy related to its front- ing as a manager/executive related to merchandising and store products. Chris Bodine, CVS Caremark hris Bodine’s 20-plus year chief executive officer. Bodine responsibility for pharmacy tenure with CVS Care- will retain responsibility for merchandising, business de- Cmark will come to an end trade relations, Rx purchasing velopment, IT, MinuteClinic in 2009, when he will retire for and MinuteClinic. and PharmaCare. He assumed personal reasons. He most recently served as that role in early 2007. Before In preparation for his retire- executive vice president and that, he served as executive ment, Bodine is assuming a new president of CVS Caremark vice president of merchandis- role as special adviser to the Health Care Services, with ing and marketing. Terry Burnside, Medicine Shoppe ccording to Medicine continues to be an issue that revenue streams.” Shoppe president Terry is threatening reimburse- If Burnside weren’t in the A Burnside, one of the ments,” he said. “As prescrip- industry, he said he would potential setbacks for the phar- tion margins continue to de- work for an organization like maceutical industry is the aver- cline, pharmacies are faced the Leukemia & Lymphoma age manufacturer price. with the need to diversify Society to help with fundraising “Although we dodged a their product and service of- for research and find cures for bullet as an industry, AMP ferings in order to find other life-threatening diseases.

Drug Store News www.drugstorenews.com April 21, 2008 • 83 Drug Store News www.drugstorenews.com April 21, 2008 • 2 DRSN_042108_p84 4/9/08 9:01 PM Page 84 08 ANNUALREPORT Warren Bryant, Longs Drug ongs Drug chairman and served as president and chief at the Market Basket chain. chief executive officer executive officer of Dillon’s and In addition to serving as vice LWarren Bryant has been the as senior vice president of chairman of the National As- key to Longs’ turnaround since Kroger’s Western division. A sociation of Chain Drug Stores’ arriving in 2002, when the chain California native and graduate board of directors, the father of was struggling to compete. of California State University, two also is a member of the Before joining Longs, Bryant Los Angeles, Bryant began his California Governor’s Council worked for Kroger, where he retail career as a grocery sacker on Physical Fitness and Sports. Charles Burnett, Costco ew pharmacy executives Costco chief executive officer started his own Save Mart chain. can claim to have found- Jim Sinegal. The pharmacy But Burnett, recipient of the F ed the retail operation worked so well that Costco Harold W. Pratt Award in 2007, they head, but Charles Burnett began opening them in all of its hasn’t always been a pharma- is one of them. stores and now has 385. cist. He earned a law degree at He opened the first Costco Before coming to Costco, the University of San Diego in pharmacy in Portland, Ore., in Burnett headed the pharmacy 1970 and practiced law for a 1986 at the request of old friend division at FedMart and then short time. Jerry Cardinale, Rite Aid

erry Cardinale, a Rite Aid ment and reverse logistics. Cardinale also served as Rite PEOPLE veteran, was named to That makes him data-savvy— Aid’s vice president of infor- J his current post of senior he favors consumer-purchas- mation systems development vice president of category ing information the most, an from March 1996 to May 1998. management in June 1998, area where manufacturers are And before that, he was vice where he focuses on category ahead of retailers, to better president of merchandising, a management in areas of sup- understand consumers and position he held for more than ply chain, inventory replenish- buying habits. five years. Ron Chomiuk, Wal-Mart hereas Paul Beahm pharmacy operations after a at Kmart and helped that com- and Chuck Fehlig are successful career elsewhere. pany enjoy some of its best years Whomegrown Wal- After spending nearly a in pharmacy. Today, Chomiuk is Mart pharmacy and healthcare decade at Perry Drug Stores, doing the same thing at Wal- executives, Ron Chomiuk is a Chomiuk joined Kmart in 1995 Mart as the retailer gains market different story. He is a relative as director of pharmacy opera- share and new customers via its newcomer, having joined Wal- tions. He went on to hold posi- $4 generic program and ag- Mart in 2001 as vice president of tions of increasing responsibility gressive promotions. Michael Cirilli, Duane Reade ichael Cirilli, vice pres- cally and internationally? In the business model and have objec- ident of merchandis- United States, the potential re- tives and goals in place to reach Ming for Duane Reade, cessionary economy must be sales and gross-margin forecasts. believes that the biggest chal- managed; are we prepared? If he weren’t working in the lenge over the next three years The Bronx, N.Y., native be- pharmacy industry, Cirilli said will be the election of the next lieves that, unless retailers are he’d either be a teacher (math president. What effect will his or careful, focus and direction can or history) or a coach (baseball her policies have, both domesti- be lost. They must know their or basketball).

Drug84 •StoreApril News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store 2008 News • 3 DRSN_042108_p86.qxd 4/9/08 8:39 PM Page 86 08 ANNUALREPORT Tony Civello, Kerr Drug hen chain pharmacy and his ability to call his own University of Pittsburgh’s phar- was staggering un- industry colleagues to action macy school in the mid-1960s. W der the impact of with strong language, Civello Through his leadership of federal reimbursement cuts and seemed the perfect choice to NACDS, as well as his numer- burdensome regulations a few head the National Association ous appearances on Capitol years ago, it found in Kerr Drug of Chain Drug Stores as its Hill in support of pharmacy chairman and chief executive chairman from 2005 to 2007. initiatives and his other activi- officer Tony Civello a leader Civello led the buyout of ties, Civello has become one of who seemed born for the role. Kerr in 1997 and guided its evo- retail pharmacy’s best-known With his clear-eyed assessment lution from a traditional drug advocates. He’s also a tireless of the dangers posed by Medic- store retailer to a retail health champion of a broader health- aid cuts, declining pharmacy and wellness leader. But before care role for community phar- reimbursements and mandato- coming to Kerr, he built a career macists, and he’s put his ry mail-order plans; his willing- spanning four decades at career and the company he ness to take on both Congress Pittsburgh-based Thrift Drug leads on the line in support of and the managed care industry; after his graduation from the that effort. Keith Cook, Medicine Shoppe or Medicine Shoppe vice move caused everyone in the challenge for retailers, “especial- president of pharmacy retail and pharmacy benefit ly if [the average manufacturer F solutions Keith Cook, the manager industries to take a price] goes through as originally most surprising thing that step back and evaluate their planned.” Also, he adds, “as occurred in the pharmaceutical own businesses in light of this more and more patents expire industry over the past year was new business model.” on some of the larger branded PEOPLE the CVS Caremark merger. Over the next three years, products, top-line sales will con- He said, “Although we don’t Cook believes that declining tinue to decrease because of know the full impact yet, this margins will continue to be a generic introductions.” Kermit Crawford, Walgreens ermit Crawford embod- dent of pharmacy services, came arena. He now champions what ies the new paradigm at out of store operations before he calls a “comprehensive ap- KWalgreens: a veteran being tapped as vice president proach to drug cost manage- executive who blends years of of PBM services for Walgreens ment” on behalf of Walgreens’ experience as a pharmacist, Health Services in 2004. PBM clients, focusing on such store manager and district man- Crawford’s years in the areas as a low-cost drug formu- ager for the company with an field—after his graduation from lary, generic utilization, the intimate knowledge of pharma- Texas Southern University of company’s 90-day retail refill cy benefit management and the Houston’s pharmacy school in option and “a wide variety of complex issues surrounding 1983—give him plenty of per- clinical prior authorization and managed health care. spective in guiding Walgreens step care therapy programs” to Crawford, senior vice presi- through the managed care save payers money. Vic Curtis, Costco ostco vice president of Drug, where he managed sev- rapid transition to generics. pharmacy Vic Curtis eral pharmacies. “The biggest challenge for C has been with the A 1978 graduate of the our industry over the next chain since 1991 and worked Idaho State University School three years will be sustaining his way up the ranks, starting of Pharmacy, Curtis said the top-line growth in a market- as a pharmacy manager. biggest challenge for Costco place where generic growth Before arriving at Costco, and the industry in general in outpaces the growth of inno- Curtis worked for Sav-on the next few years will be the vative new branded drugs.”

Drug86 • StoreApril News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store 2008 News • 4 DRSN_042108_p88 4/9/08 9:10 PM Page 88 08 ANNUALREPORT Chris Dimos, Supervalu hris Dimos joined Super- ing pharmacy retail, and he Council Work Group on Supply valu in June 2006 as part most recently served as vice Chain Issues. Cof its acquisition of president of pharmacy services Dimos believes the biggest Albertsons, and he is now in for Albertsons. Dimos is also a challenge for pharmacies over charge of 920 pharmacies across member of the Dean’s Advisory the next three years will be to the United States. Council at Purdue University’s “demonstrate the value of phar- Dimos began his career as a School of Pharmacy and is chair- maceuticals and the practice of nuclear pharmacist before enter- man of the NACDS’ Policy pharmacy to consumers.” Mark de Bruin, Rite Aid ark de Bruin, Rite Aid’s associated with drug-drug in- is composed of highly educated, executive vice presi- teractions, improving medicine passionate healthcare profes- Mdent of pharmacy, feels compliance and serving as an sionals …. The value is in the that the greatest challenge facing accessible healthcare resource. information that they can pro- pharmacy is the industry’s abil- “This [demonstrated value vide and their accessibility in ity to demonstrate its value proposition] will be needed to the communities.” proposition—ranging from the offset reimbursement pres- He also serves as chairman of prevention of adverse events sures,” he said. “The profession the policy council for NACDS. Rob Easley, Rite Aid ob Easley joined Rite Aid tant goal this year is to “work category management, mar- PEOPLE as chief operating officer with our leadership team to keting, merchandising, supply Rin the fall of last year after develop and implement strate- chain, and pharmacy services a 16-year stint with H-E-B, gies, processes and technology and operations. where he was senior vice presi- to significantly improve the It is speculated that Easley is dent, chief marketing officer and customer and associate experi- being groomed to succeed Mary head of pharmacy. ence in Rite Aid stores,” is in Sammons as chief executive offi- Easley, whose most impor- charge of store operations, cer when she decides to retire. John Fegan, Ahold ohn Fegan, senior vice bly go into teaching and mentor- creased reimbursements. president of pharmacy for ing young students if he were to “That’s going to necessitate JAhold USA, oversees more choose a different path. He sees focusing on the service with than 560 in-store pharmacies. a rocky but promising future for medication usage and wellness An affable and well-known pharmacy over the next three maintenance,” he added. presence who has been chair- years as the industry works to Those services, Fegan said, man of the FMI Pharmacy Con- maintain “a profitable revenue will be “as important or more ference, Fegan said he’d proba- stream while absorbing de- important than the product.” Chuck Fehlig, Wal-Mart huck Fehlig is a name counter categories. Known for his candor and well-known among In that capacity, Fehlig for clearly communicating C Wal-Mart vendors in played a key role in major Wal-Mart’s merchandising the health and beauty care Wal-Mart initiatives around priorities, Fehlig has sought to area. The veteran Wal-Mart the launch of nonprescription establish clear expectations merchant serves as vice presi- versions of weight-loss drug within the supplier communi- dent and divisional merchan- Alli and, more recently, allergy ty so they know what success dise manager for over-the- medication Zyrtec. looks like at Wal-Mart.

Drug88 •StoreApril News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store 2008 News • 5 DRSN_042108_p91 4/9/08 9:08 PM Page 91 08 ANNUALREPORT David Fong, Safeway here’s probably no phar- years and now heads a chain managed care. A graduate of macy executive with with 1,325 pharmacies. the University of California, T more experience in West Fong arrived at Safeway in San Francisco School of Coast retailing than David Fong. 2004 after a long career at Pharmacy, Fong has served on The senior vice president of Longs Drug, where he started a number of boards and com- pharmacy for supermarket as an intern in 1973 and mittees in his home state, chain Safeway has worked in worked his way up to group including the California State California retail for more than 30 vice president of pharmacy and Board of Pharmacy. Helena Foulkes, CVS Caremark elena Foulkes, senior keting and operations services key player in the development vice president of health from January 2007 to October and launch of the CVS Phar- H services for CVS Phar- 2007 and senior vice president of macy ExtraCare loyalty card macy, has been with the compa- advertising and marketing from program in February 2001. The ny for more than 15 years. April 2002 to January 2007. popular loyalty program ex- Before assuming her current While Foulkes has had many panded further in 2007 as role, the Harvard graduate was achievements during her time at ExtraCare card usage exceeded senior vice president of mar- CVS, she is credited with being a 63 percent of front-end sales. Larry Gatta, Longs Drug s part of the vaunted State University, Gatta spent 20 tant thing for Longs over the PEOPLE team of executives who years in retail before arriving at next few years is to “maintain A arrived at Longs in 2002 Longs, including stays at Rite the strong, trusted relation- to lead its turnaround, Larry Aid, Phar-Mor and Giant Eagle. ship we enjoy with our cus- Gatta has played a key role in In February, he was promoted tomers” and to continue to di- helping Longs remerchandise to senior vice president and versify its offerings of “health its stores and reshape its image. chief merchandising officer. and wellness goods and serv- A graduate of Youngstown Gatta says the most impor- ices in our markets.” Andy Giancamilli, Katz Group or those who may not be well-known from his days as Group—which is bringing its up to date on retail opera- president of U.S. Kmart stores, diverse array of local drug store Ftions north of the border, and before that Perry Drug banners under a unified Rexall the man serving as Katz Group’s Stores in Michigan. logo—the 57-year-old pharma- president is Andy Giancamilli, a Giancamilli came to the drug cist and merchant has applied U.S. retail veteran with wide store chain after a three-year his effective management style experience in American drug stint as an executive vice presi- to the top-to-bottom makeover store retailing. Giancamilli is dent at Canadian Tire. At Katz of the Rexall drug store concept. Mark Griffin, Lewis Drug etailers should focus on “Let’s not wait for the other becomes the focus of your busi- their core competencies, shoe to drop in Washington— ness … then you’re in trouble.” Rrather than allow outside that will delay the business of In his off time, Griffin is on the forces, such as reimbursement buying and selling product— racquetball court. He’s been considerations, dictate their let’s focus on the blocking and playing since college and even decision making, noted Mark tackling of drug store retailing,” sponsors an annual competition Griffin, Lewis Drug owner, pres- Griffin said. “There is a lot of anx- in Sioux Falls, S.D., that attracts ident and chief executive officer. iety in the industry ... but if that the nation’s professional players.

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •91 6 DRSN_042108_p92-93 4/11/08 10:36 AM Page 92 08 ANNUALREPORT Randy Heiser, Giant Eagle Mary andy Heiser, vice president of Mastrian (BS ’65) and CVS Caremark’s pharmacy for Giant Eagle, is a executive vice president and president Kelly, R member of an esteemed group of CVS pharmacy Larry Merlo (BS ’78). of alumni from the University of Heiser currently serves on the tech- Pittsburgh’s College of Pharmacy. The nology committee of the National Target group includes industry veteran Enzo Association of Chain Drug Stores Cerra (BS ’73), Kerr Drug’s president Pharmacy Industry Council and is a ary Kelly keeps a and chief executive officer Anthony member of the Northeastern Ohio relatively quiet pro- Civello (BS ’67), Rite Aid’s special Universities College of Pharmacy Mfile among her adviser of corporate strategy Jim advisory council. peers in chain pharmacy, despite her years of partici- pation in professional and industry gatherings. But as vice president and general Lisa Holsclaw, Kroger merchandise manager of ver the past three decades, become vice president of merchandis- health, beauty and pharma- Kroger’s Lisa Holsclaw has ing, and was promoted in 2006 from cy for Target, she is unques- Ogone from ringing up custom- president of Kroger’s Indianapolis- tionably one of retail phar- ers’ purchases to running one of the na- based central division to vice president macy’s most powerful deci- tion’s largest pharmacy operations on of drug, pharmacy and general mer- sion makers. the strength of her talent for merchan- chandising for all Kroger stores. Kelly has overseen the dising nonfoods and guiding people. “There are no secrets to being an exec- growth of Target’s health- Holsclaw is a 1981 graduate of Emory utive,” Holsclaw once told Emory’s care operations—it now University who rose through the ranks, Goizueta Magazine. It’s simply about fields more than 1,400 phar- beginning as a Kroger cashier in the people. If we think about how we macies—and its adoption of mid-70s while an undergrad in market- would want to be developed and treat- such new innovations as ing at the Atlanta-based university. She ed as we come up through the ranks, ClearRx, a new concept in PEOPLE moved to Indianapolis a decade ago to we’ll all be so much better off.” prescription packaging that

The difference between working with other medical suppliers...

We believe in getting you what you need when you need it.

VAX1797

92Drug• StoreApril News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store 2008 News • 7 DRSN_042108_p92-93 4/11/08 10:37 AM Page 93 ANNUALREPORT 08 Jerry Kuske, Katz Group erry Kuske may be the Kevin management to front-end makeovers Bacon of chain pharmacy retail- and data-driven merchandising. Jing. Over the past two decades, a For the past five years, Kuske has lot of people have worked with this served as executive vice president and talented executive. chief merchandising officer for Katz Kuske’s years as a key executive with Group Canada. He came to Katz from such companies as Kmart, Ahold and Ahold USA, where he was senior vice PayLess have put him in contact with president of general merchandise. Prior many industry insiders and made him to that he worked with Perry and with inverts the medicine’s con- one of pharmacy’s most respected mer- Kmart, where he became senior vice tainer and includes an easy- chants. Through it all, he’s retained a president and general merchandise to-read label with larger boyish West Coast charm as he applies manager for hardlines. His early career type and clear instructions. his talent for store layout and category was spent with PayLess in Oregon. Kelly was also instrumen- tal in Target’s move three years ago to become the first national retailer to voluntar- ily decide to place pseu- John Learish, Rite Aid doephedrine-based cough, ohn Learish has piloted Rite Aid’s and promotions. cold and allergy products six-health platforms, a calen- At Rite Aid, Learish is in charge behind the pharmacy count- J dared program that Rite Aid uses of all aspects of marketing, in- er. The decision, she said at to promote its pharmacists’ knowledge cluding advertising, promotion, the time, came because “as a of one of several conditions—allergy, point of sale and special events, national retailer, it is becom- summer skin care, pain management, such as the chain’s semi-annual ing increasingly difficult to diabetes management, weight manage- Health & Beauty Expos. meet the requirements of ment and heart health—and to tie that Before joining Rite Aid in 1994, each individual city, county pharmacist know-how into the front Learish held marketing positions at and state law.” end through educational pamphlets Giant Eagle and Phar-Mor.

and working with VaxServe.

How sweet it is! Medical & Surgical Products, Vaccines & Injectables. 800.752.9338 | VAXSERVE.COM

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •93 8 DRSN_042108_p94.qxd 4/11/08 4:04 PM Page 94 08 ANNUALREPORT Timothy LaBeau, Drug Fair imothy LaBeau, president the financial meltdown. “All of a lacking” in retail, so that’s where and chief executive officer sudden, we are in a financial cri- Drug Fair can distance itself Tof Drug Fair Group, grew sis,” he said. from the competition, he said. up in Watertown, N.Y., and LaBeau added that the most LaBeau said the biggest hur- attended Cornell University, ma- important company goal is to dles for the next three years will joring in economics and finance. continue to serve customers be fighting reduced reimburse- The most surprising thing with the best possible experi- ments, surviving the onslaught that has happened over the past ence. It’s a competitive market, of predatory pricing and over- 12 months, in LaBeau’s opinion: but customer service is “sorely coming mandatory mail order. Matthew Leonard, CVS Caremark atthew Leonard, sen- iation of Chain Drug Stores communication and corpo- ior vice president of Pharmacy & Technology con- rate planning. M pharmacy at CVS, ference. IMS Health donated $10,000 was awarded the IMS Health The award is presented to a to the NACDS Foundation in Pharmacy Partnership Award leader who values the impor- Leonard’s name. at the 2007 National Assoc- tance of data in fact-based Dawn Lepore, Drugstore.com rugstore.com is on the druggist in 2004, after playing a she was also a member of brink of becoming an e- key role in building Charles Schwab’s Executive Committee PEOPLE Dretail success story—the Schwab’s highly successful e- and a trustee of SchwabFunds. company posted its first profit in commerce business as chief Lepore currently serves on its fiscal 2007 fourth quarter— information officer. the board of eBay and served on and all under the direction of Lepore formerly was vice the board of Wal-Mart prior to president, chief executive officer chairman of technology, opera- joining Drugstore.com. and chairman Dawn Lepore. tions and administration for the Lepore holds a B.A. from Lepore joined the online-only Charles Schwab Corp., where Smith College in Massachusetts. Tim Lesneski, Meijer im Lesneski joined Meijer macist, plays an integral role in scriptions, Meijer threw out its as a pharmacy intern, be- Meijer’s efforts to make a health- trump card, offering free antibi- Tginning what, to date, is a care connection with customers. otics. The retailer recently filled 22-year career at the Grand Pharmacies, along with the its 1 millionth free prescription. Rapids-based supercenter. As HBA department, have been “HBA, OTC and pharmacy group vice president of hard relocated near the entrance. And are important departments at goods and drug store merchan- when Wal-Mart shook things up Meijer, it’s a destination depart- dise, Lesneski, a registered phar- by introducing $4 generic pre- ment for us,” Lesneski said. Randy Lewis, Walgreens f we can’t do it, who can?” about its growing effort to hire making his company a standout That was the challenge workers who suffer from physi- in that effort. Iuttered by Randy Lewis, sen- cal or mental disabilities. “This is not charity,” said ior vice president of distribution It’s a role he has come to Lewis, an MBA graduate of the and logistics for Walgreens, at champion, tirelessly. Lewis, who University of Texas who joined the grand opening of the com- seems to possess a permanent Walgreens after serving as a pany’s DC in Anderson, S.C., twinkle in his eye, is passionate partner at Ernst & Young. “This last year. Lewis was talking about hiring the disabled and is fair pay for fair work.”

94Drug• StoreApril News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store 2008 News • 9 DRSN_042108_p97 4/11/08 12:06 PM Page 1 08 ANNUALREPORT Duncan Mac Naughton, Supervalu aving worked both sides tion in 2006 and, prior to that, “My most important goal this of the fence, Duncan Mac spent 13 years on the supply side year is to build on the work we HNaughton has a unique with Kraft Foods. started in 2007,” Mac Naughton view of grocery retail. Super- A graduate of the University said. “We’ll be remodeling our valu’s executive vice president of of Wisconsin-Madison, Mac stores, so shoppers have a great marketing and merchandising Naughton said his goal for the in-store experience, and adding worked at Albertsons and H-E-B coming year is to work on shopping solutions to make it before taking on his current posi- remodeling Supervalu’s stores. easier to find great meals fast.” Jim Mastrian, Rite Aid im Mastrian, Rite Aid spe- Aid’s supplier advisory board. acquired last year. cial adviser of corporate As special adviser, Mastrian Mastrian was named Rite Aid Jstrategy, has been credited is playing an integral role in chief operating officer in 2005 with strengthening vendor rela- shaping Rite Aid’s go-forward and was promoted to his current tions as the chain reclaimed its strategic direction and initia- position in August 2007. Prior to No. 3 position earlier this decade. tives, with particular emphasis Rite Aid, Mastrian served in sev- He achieved those stronger on the integration of the eral senior management posi- bonds in part by creating Rite Brooks/Eckerd stores Rite Aid tions at Revco and OfficeMax. Larry Merlo, CVS Caremark arry Merlo, executive vice He joined CVS as area vice including executive vice presi- PEOPLE president of CVS Care- president of the metro Wash- dent of stores for CVS Corp. Lmark and president of CVS ington, D.C., area in 1990—the from April 2000 to January Pharmacy, began his career in year CVS acquired People’s 2007 and executive vice presi- chain pharmacy in 1978 as an Drug. dent of stores for CVS Phar- assistant manager with People’s Over the years, Merlo has macy from March 1998 to Drug in Washington, D.C. held various positions at CVS, January 2007. Charles Newsom, Duane Reade n looking at the past 12 well as the failure of Bear Stearns. Newsom, who holds a B.S. in months, Charles Newsom, The goal for the Midwest marketing and economics from Isenior vice president of store native this year is to continue to West Virginia State, said that if operations at Duane Reade, said build a team capable of execut- he weren’t in retail pharmacy he the most surprising turn of ing company plans at a level would be working in the retail events are the sudden downturn that will position it to successful- supermarket industry. He spent in the economy driven by oil ly compete in today’s highly more than 25 years in manage- prices and the housing crisis, as competitive market. ment in the food industry. Craig Norman, H-E-B amily health and well- pharmacy operations. also access to free quarterly ness are top priorities for Norman has earned a reputa- health screenings. FH-E-B,” said Craig Nor- tion as a pharmacy innovator, In a recruitment video on man, senior vice president of driving pharmacy automation YouTube, Norman talks up pharmacy for the chain. improvements, a massive im- H-E-B’s leading-edge pharma- Norman came to H-E-B from munization program and the cy technology, its immuniza- Costco Wholesale, where he launch of My H-E-B Rx Re- tion program and its “very rose to vice president and gener- wards, a loyalty program that good ratio of pharmacists to al merchandise manager of offers discount medications and technicians.”

Drug StoreStore News News www.drugstorenews.comwww.drugstorenews.com April 21, 2008 •• 1097 DRSN_042108_p99 4/9/08 9:02 PM Page 1 08 ANNUALREPORT Craig Painter, Kinney Drugs f Craig Painter, chairman Painter has enjoyed 40-plus services. This could create an and chief executive officer years in the industry, work- environment where there is I of Kinney Drugs, was not ing with such companies as too much demand for the in the industry, one would American Stores, Sav-on, same customer, said Painter. likely find him out in the Fay’s and, currently, Kinney The most surprising thing country cattle ranching. Drugs. Intermingled in those that has happened in the last But until he makes that years was time spent as a pri- 12 months, in Painter’s opin- career change, Painter will vate consultant. ion: the delayed implementa- continue to spend his days He believes that, unless re- tion of average manufacturer seated behind a desk versus tailers are careful, they may price, which proved to be a atop of a horse, focused on find themselves being over- positive surprise and indicat- achieving the sales plans and stored and saturating the mar- ed what can be accomplished goals established for the retail- ket, with various types of re- when the industry speaks with er for 2008. tailers all providing pharmacy a united voice. Ralph Petri, Kerr Drug alph Petri, senior vice and has served in leadership administrative roadblocks in president of pharmacy roles for other pharmacy affairs the dispensing workload. He R and logistics for Kerr efforts and for meetings like also doesn’t mince words Drug, is another veteran of the Medicare Part B conference about what he sees as the chal- Thrift Drug who came to Kerr in Washington. lenges that pharmacy leaders with its purchase in 1997. Petri is what some may call must overcome. Petri began with Thrift in a “pharmacist’s pharmacist,” “The managed care world 1968, while still in pharmacy who never seems to have for- has forced us into this in- PEOPLE school at Duquesne. He’s no gotten the concerns of bench evitable game of Russian stranger to industry issues or to practitioners or the headaches roulette,” he once told Drug Capitol Hill: In recent years, they confront dealing with Store News. “They tell us, he’s chaired the National As- monolithic pharmacy benefit ‘Here’s the rate, take it or leave sociation of Chain Drug Stores managers, burdensome insur- it, and I’ve got everyone in the Medicare/Medicaid task force ance adjudication issues or network except you.’” Rob Price, CVS Caremark ob Price, chief marketing In addition to reaching con- uct. Price has said that CVS will officer at CVS Caremark, sumers through touchpoints use an estimated 1.5 million Ris currently putting much and programs like circulars, “go signs” in its stores this year. of his focus on driving the com- direct mail and e-mail mes- Among the newest ExtraCare pany’s ExtraCare loyalty pro- sages, the company also uses initiatives: in-store vertical gram, which is in its seventh “go signs” at the shelf, which kiosks known as ExtraCare year and has more than 50 mil- are a last-minute invitation to Coupon Centers that will be in lion active cardholders. the consumer to buy the prod- half of the stores by year’s end. Jerry Ray, Duane Reade erry Ray, senior vice presi- Yet, despite the challenges, with SuperX Kroger and joined dent of pharmacy opera- there’s no other industry he Duane Reade in 1995. Jtions for Duane Reade, would rather work in. For Ray, He warns that unless retailers believes that the biggest chal- serving the community in a are careful, community pharma- lenge facing retail pharmacy is pharmacy setting offers a per- cy may slip away to the mass reimbursement pressures from sonal satisfaction like no other. merchants and mail order, re- third parties and state payers, as Ray received a pharmacy sulting in a loss of personal face- well as substantial cost-increase degree from the Medical College to-face service and wellness pressures from operations. of Virginia, started his career resources to the masses.

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21,21, 2008 2008 •• 1199 DRSN_042108_p100 4/9/08 8:36 PM Page 100 08 ANNUALREPORT Jeff Rein, Walgreens hat would Walgreens’ joined Walgreens in 1982. on preventative care.” chief executive do if Rein said he’s encouraged by Rein’s top goal this year? To Whe weren’t running “a much stronger focus overall grow market share “by aggres- the industry’s top chain? by payers on using medication sively opening stores and add- “Playing or coaching base- to control healthcare costs as ing additional points of care ball,” said Jeff Rein, an account- opposed to looking at prescrip- through health clinics and phar- ing and pharmacy graduate of tion costs in a silo. There’s also macies on corporate campuses the University of Arizona, who been a much stronger emphasis or in medical centers.” Tom Ryan, CVS Caremark ith his upbeat man- largest integrated provider of According to Ryan, CVS agement style, Tom prescriptions and related health Caremark is poised to transform W Ryan, chairman, services in the United States. the delivery of pharmacy servic- president and chief executive Ryan graduated from the es. “We’ve literally created a officer of CVS Caremark, has University of Rhode Island in first-of-its-kind company—one achieved an entrepreneurial 1975, and upon graduating, with the ability to grow faster environment that has helped joined the Woonsocket, R.I.- than either of its components the company grow into the based company as a pharmacist. would have on its own.” Mary Sammons, Rite Aid long with Bob Miller, tion of Brooks/Eckerd last year. since December 1999. PEOPLE Mary Sammons’ prede- Sammons was named chair- Before joining Rite Aid, Acessor as Rite Aid chair- man last year upon completion Sammons was president and man and chief executive officer, of that acquisition and had chief executive officer of Fred Sammons has been credited assumed chief executive officer Meyer Stores. She also recently with engineering Rite Aid’s responsibilities in June 2003, served as chairman of the turnaround to the point that it after working as Rite Aid’s pres- National Association of Chain was able to execute the acquisi- ident and chief operating officer Drug Stores. Bruce Schwallie, Longs Drugs ruce Schwallie joined his key roles now is leading RX Kroger and Duane Reade. Longs in 2002 and served America, Longs’ PBM, through Schwallie said the big chal- Bas executive vice presi- a remarkable growth spurt. lenge this year for Longs and dent and chief merchandising Before Longs, the Ohio native other retailers will be the econo- officer until 2005, when he was and graduate of the University my. “The downturn in the econ- promoted to executive vice of Cincinnati College of Phar- omy will test many merchants president of business develop- macy worked for more than 25 that haven’t experienced this ment and managed care. One of years in retail, including stints at environment before” Bryan Shirtliff, Rite Aid ryan Shirtliff joined Rite to his team a year later. In 2000 Prior to Rite Aid, Shirtliff was Aid in 1998 as director of he was promoted to vice presi- an executive at both Brunos and Bhealth care and was dent seasonal and hardlines. American Stores, where he start- responsible for five category He now is senior vice presi- ed as an assistant store manager. managers within that division. dent of category management at If he wasn’t in retail, Shirtliff He was promoted to director of Rite Aid, where he is responsible said he’d be a park ranger in Na- health care and seasonal, and for product selection, merchan- tional Glacier Park where he’d added three category managers dising and pricing. spend his weekends fishing.

Drug100 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 12 DRSN_042108_p103 4/9/08 8:31 PM Page 1 08 ANNUALREPORT Kevin Tripp, Supervalu evin Tripp has spent the with a degree from the Uni- Casper and Cheyenne. better part of the past 30 versity of Wyoming, Tripp be- He joined Albertsons when K years traversing the gan his career in retail phar- the supermarket chain ac- West in a retail career that’s led macy as a college senior when quired Osco Drug and even- him to his current post as execu- Osco Drug was interviewing tually became president of tive vice president and president on campus. He landed a job its pharmacy division. The of retail Midwest at Supervalu. and spent the next nine years Cody, Wyo., native now lives A registered pharmacist learning the ropes at stores in in Illinois. Mark Valesano, Wegmans enior vice president of visory Board, as well as on the project for Wegmans—the com- pharmacy for Wegmans Education Leadership Council pany plans to test an RFID-based SFood Markets, a 70-store for the Global Market Develop- drug tracking system in its phar- grocer with headquarters in ment Center. Valesano also is on macies to determine whether Rochester, N.Y., Mark Valesano the Pharmacy Affairs Council at placing RFID tags on customers’ is an active industry participant. the Food Marketing Institute. prescription orders could make He is on the National Associa- He currently is working on a locating and ringing up the tion of Chain Drug Stores Ad- radio frequency identification orders faster and more accurate. Todd Vasos, Longs Drugs fter just six years with career that included stints as an Vasos acknowledged that the PEOPLE Longs, Todd Vasos was executive at Eckerd and Phar “economic environment at retail Anamed executive vice Mor. In his six years with Longs, continues to grow more com- president and chief operating Vasos has been a critical part of plex and demanding every officer in February. The Chicago the chain’s turnaround, helping day,” but that Longs “is well- native came to Longs as senior lead its store remodel plan and equipped to take on the com- vice president and chief market- front-end remerchandising. plexity and demands of this ing officer in 2002 after a 20-year Looking forward to 2008, retail environment.” Mark Wagner, Walgreens ark Wagner, executive was business law. I think there’s Policy makers must see the value vice president of store a real need to help all people of community pharmacy in Moperations for Wal- receive access to the legal sys- order for us to receive appropri- greens, is a 31-year Walgreens tem,” he told Drug Store News. ate reimbursement,” he noted. veteran with an urge to serve. If Wagner said the biggest chal- On customer retention: “The he wasn’t in retailing, he said, lenge over the next three years only way to win a share of shop- he’d probably be an attorney. would be “working with per’s budgets is to offer them the “My favorite class in school Congress to protect our industry. best overall value,” he said. Greg Wasson, Walgreens s president and chief be farming. “What an exciting growing healthcare crisis. operating officer of Wal- time for the agricultural industry, “There has never been a better Agreens, Greg Wasson with such things as biobased time to move the profession of has become a powerful person fuels, sustainability and organic pharmacy forward,” he said. in retail pharmacy. But he still farming,” he enthused. “Health care is in crisis. Employ- wants to get his hands dirty. His focus this year will be to ers, the government, managed Wasson told Drug Store News “work to position retail pharma- care organizations and patients his second career choice would cists as a valuable solution to the are looking for solutions.”

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •103 13 DRSN041208p105 4/21/08 3:52 PM Page 81 ANNUAL REPORT PROFILES Walgreens expands into employee health centers ------20 Winn Dixie rebuilds with remodels, private-label program----37 PBM powerhouse CVS Caremark redefines retail model------21 Meijer banks on free prescriptions, whole-health approach---38 Rite Aid confident of Brooks/Eckerd turnaround strategy ------22 Screenings, education and new look key for Kinney ------38 Cardinal muscles up support for Leader pharmacies ------23 Kerr pursues dual strategy: clinical care and retail flair------39 Personal service, diabetic care build loyalty for GNP------23 ShopKo remodels highlight jewelry and apparel------39 Better health care becomes a cause at Wal-Mart------24 Raley’s pumps up pharmacy services at combo stores------39 On financial gains, Kroger expands pharmacy services------25 Customer health, nutrition drive Hy-Vee’s initiatives------40 Safeway braces for new challenges in California------26 Hannaford starts year containing credit breach ------40 Supervalu pushing pharmacies to front of stores ------27 With new CEO, Pamida looks to store growth, MTM------40 Commitment to PBM continues to fuel Longs’ growth ------28 Snyders maintains traditional healthy focus on care------41 MTM services keep Medicine Shoppe customers loyal------29 Aurora pharmacists train for larger role with patients ------41 Target adheres to core strategy in midst of tough economy ---29 Sav-Mor continues Web-based training of pharmacists ------41 Kmart sharpens value appeal with initiatives, remodel ------30 Care Pharmacy franchise expands into Vermont------42 A leaner Ahold expands nutrition, wellness efforts------30 With Albertsons buy, Save Mart triples its store count------42 Albertsons moves ahead with strongest performers------31 Brookshire and Polk Oil futures share common road------42 Health Mart gains franchise converts at stunning pace------31 Discount Drug Mart pursues accreditation and training ------43 Costco reaching out to uninsured with prescription plan ------32 Thrifty White maintains its focus on the rural Midwest ------43 Publix achieves record expansion, stays No. 1 in service -----32 Weis Markets remodels stores, shuffles management ------43 H-E-B builds Texas base with health services, value------33 Drugstore.com turns profit, revamps beauty category ------44 Pharmacy is key contributor to Sam’s Club sales success -----33 Schnuck initiative aims to keep drugs out of drink------44 Giant Eagle caters to all with its latest store concept ------34 Brookshire marks year with new management, remodel------44 New leadership drives Duane Reade’s updated model------34 Bartell Drugs’ growth slow and local, but steady ------45 USA Drug combines folksy appeal with savvy marketing------35 Drug Fair rolls out prototype, sets sites on 100 locations------45 A&P snatches Pathmark, wine retailer in expansion push-----35 Post acquisition, bigger Navarro gets new leadership------45 Wegmans keeps eye on heightened role in health care------36 Technology a priority for Fruth’s pharmacy programs------46 Fred’s moves forward with focus on pharmacy services------36 Lewis targets diverse needs of shifting customer base------46 Fred Meyer promotes health with strong virtual presence -----37

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •105 14 DRSN_042108_p107 4/10/08 8:22 PM Page 107

ANNUALREPORT08 Drug chains expand focus amid uncertain economy BY JIM FREDERICK slowdown in blockbuster drug approvals; and the abili- ith all of this ty of supply-chain manage- consolidation ment automation and other the strong get data-driven inventory effi- stronger.” ciencies to continue outpacing WThat assessment was shrinking margins at the issued last month by Wal- pharmacy and front end. Sky- greens chairman and chief rocketing gas prices—which executive Jeff Rein, and it ratchet up trucking and sums up the competitive inventory shipping costs— landscape for big-tier drug and rising import costs, chain retailing. among other global economic There’s nothing like the concerns, also are roiling the threat of recession to put that retail sales picture. landscape into focus. Each company is dealing Like their counterparts in with those questions in its other retail pharmacy chan- own way, but one answer nels, the people who run the common to most lies in nation’s national and multire- expanding the retail mission gional drug store chains can beyond traditional pharmacy point to some recent victories into a broader menu of health- on the policymaking and leg- care services—and convinc- islative front as they grapple ing health plan sponsors, with economic uncertainty. pharmacy benefit plans and Among the gladder tidings: patients themselves that those The delay by a federal services are worth paying for. judge of new AMP-based Another, closely related ap- Medicaid reimbursement proach—forged most notably In order to broaden its portfolio of healthcare services, Walgreens bought two workplace clinic-care changes; by CVS—lies in hammering providers recently. The retailer plans to continue to expand its managed-care business organically. Passage of a TRICARE out some new kind of alliance spending bill that doesn’t with the pharmacy benefit penalize military members management industry. alike, as a viable alternative or their families for choos- CVS essentially built a to the pure-play approach.” ing retail pharmacies over new model for retail phar- Walgreens’ managers have mail-order; macy a year ago when it taken a sharply different tack. One answer common to most Growing support in Con- finalized its merger with “We have no plans at all … to “ gress for fair and speedy PBM giant Caremark. The purchase a major PBM,” said [chains] lies in expanding the retail Medicare Part D prescrip- goal—to integrate the mar- Walgreens chairman and chief tion payments; ket power of thousands of executive officer Jeff Rein ear- mission beyond traditional pharmacy The recent decision by Cali- drug store outlets and lier this year. “We believe our fornia’s board of pharmacy to detailed patient records independence from a large into a broader menu of healthcare postpone, for two years, a with the network capabili- PBM differentiates us and requirement for pharmacy re- ties and employer health enables us to successfully services—and convincing health plan tailers to provide electronic plan relationships built by compete for business as the drug pedigrees. Caremark, in order to cre- provider of choice.” sponsors, pharmacy benefit plans Most major drug store ate a pharmacy delivery Walgreens is, however, retailers also seemed to have behemoth that is greater actively courting patients for and patients themselves that those the systems and procedures than the sum of its parts. a broader set of healthcare in place that allowed them The full impact of that needs beyond basic pharma- services are worth paying for. to cope with the April 1 merger isn’t yet known. In cy services. The company ” deadline for tamper-proof her report on CVS Care- has embarked on a furious prescription pads without mark in this issue, Drug drive to build up its special- major disruption. Store News’ Antoinette ty pharmacy capabilities Walgreens and Longs also which it digested both its Nevertheless, the nation’s Alexander quotes Goldman through the acquisition of are focused on growing their acquisitions of Eckerd and largest drug store operators— Sachs retail analyst John such companies as Med- managed-care businesses or- Brooks stores and absorbed Walgreens, CVS Caremark, Heinbockel, who noted re- mark and Option Care. ganically. In its latest fiscal the impact of heavy promo- Rite Aid and Longs Drug— cently, “The [CVS Care- Just weeks ago, Walgreens year, Longs doubled revenues tional price-cutting last sum- are facing growing questions mark] operating model is pushed off in another direc- for its PBM division, Rx Amer- mer. Some analysts are pro- about such issues as store sat- not yet proven, but with tion, buying two workplace ica, by adding resources, staff jecting the company will see a uration, at least in the near every passing quarter, we clinic-care providers that and even drug store outlets to surge in same-store results this term, increasingly fickle con- are moving closer to its will allow it to take its phar- serve its client base. year, and Rite Aid itself is pro- sumers with more choices for acceptance, by payors, macy offerings right into Rite Aid may be nearing the jecting $300 million in cost- pharmacy than ever; the competitors and investors employers’ offices. end of a tough cycle during saving synergies this year.

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •107 15 top 50 4/10/08 8:53 PM Page 1

08 ANNUALREPORT

THE DRUG STORE NEWS POWER X

2007 Rx 2007 Total % of sales No. Stores Rank Company Sales Corp. Sales from Rx Total Stores with Rx 1 Walgreens, Deerfield, Ill. $34,900 $53,800 65.0% 5,9971 5,997 2 CVS Caremark, Woonsocket, R.I. 30,6002 76,3003 67.8 6,2454 6,164 3 Rite Aid, Camp Hill, Pa. 16,200 24,3005 66.7 5,059 5,059 4 Wal-Mart, Bentonville, Ark.6 13,700 239,500 5.7 3,550 3,468 5 Leader, Dublin, Ohio 11,900 13,600 88.0 3,350 3,350 6 Kroger, Cincinnati 6,900 70,200 9.8 2,486 1,940 7 Good Neighbor Pharmacy, Valley Forge, Pa. 6,900 7,700 90.0 2,700 2,700 8 Safeway, Pleasanton, Calif. 3,700 42,300 8.7 1,745 1,354 9 Supervalu, Eden Prairie, Minn. 3,300 44,0007 7.5 2,450 920 10 Kmart, Hoffman Estates, Ill. 2,800 50,7008 5.3 3,8009 1,112 11 Target, Minneapolis 2,700 63,400 4.2 1,613 1,404 12 Longs Drug, Walnut Creek, Calif. 2,700 5,260 51.4 510 510 13 Health Mart, San Francisco 2,400 3,100 77.0 1,850 1,850 14 Medicine Shoppe, St. Louis10 2,375 2,500 95.0 1,397 1,397 15 Ahold USA, Braintree, Mass. 2,000 21,00011 9.4 70911 560 16 Costco, Issaquah, Wash. 1,340 61,000 5.0 391 385 17 Publix, Lakeland, Fla. 1,220 23,000 5.3 926 708 All sales in millions of dollars. 18 Albertsons, Boise, Idaho 1,180 4,700 25.0 310 305 501 As of end of fiscal 2007, Aug. 31, 2007. 19 Sam's Club, Bentonville, Ark. 1,100 44,400 2.4 591 494 Store count as of March 31, 2008: 6,271 20 H-E-B, San Antonio 1,000 12,800 7.8 305 206 stores in 49 states and Puerto Rico. 21 Giant Eagle, Pittsburgh 945 7,100 13.3 224 210 2 Based on retail sales. 22 Duane Reade, New York 776 1,690 46.0 242 240 3 Includes Caremark; approximately 40 23 Winn Dixie, Jacksonville, Fla.12 716 7,200 8.0 520 403 percent of sales generated from phar- 24 A&P, Montvale, N.J. 656 9,40013 7.0 456 134 macy services. Retail pharmacy sales 25 ShopKo, Greenbay, Wis. 610 2,200 27.7 132 131 accounted for $45.1 billion. 26 Wegmans, Rochester, N.Y. 577 4,500 12.8 71 71 4 Retail stores. 27 Fred's, Memphis, Tenn. 573 1,800 32.2 716 296 5 For fiscal 2008 ended March 1, includes 28 Fred Meyer, Portland, Ore. 529 8,240 6.4 129 128 three quarters of Brooks/Eckerd sales; Brooks/Eckerd sales were not reflected 29 Kinney Drugs, Gouverneur, N.Y. 502 667 75.0 86 86 in fiscal 2007 performance. 30 Meijer, Grand Rapids, Mich. 427 14,420 3.0 181 181 6 Includes 2,447 supercenters, 971 dis- 31 Kerr Drug, Raleigh, N.C. 423 650 65.0 102 102 count stores and 132 Neighborhood 32 USA Drug, Pine Bluff, Ark. 368 635 58.0 150 150 Markets as of Jan. 31. 33 Hannaford, Scarborough, Maine 344 2,100 16.4 156 120 7 Retail represents about 78 percent of 34 Hy-Vee, Des Moines, Iowa 342 5,600 6.1 223 197 total sales, or approximately $34.3 35 Sav-Mor, Novi, Mich. 333 402 83.0 85 85 billion. 36 Snyder's Drug Store, Minnetonka, Minn. 328 455 72.0 91 91 8 Kmart and Sears combined. 37 Aurora Pharmacy, Milwaukee 325 333 97.6 129 129 9 Combined U.S. and Canadian operations. 38 Thrifty White Pharmacy, Maple Grove, Minn. 317 352 90.0 82 82 10 Sales figures do not include international 39 Pamida, Omaha, Neb. 315 860 36.6 213 138 store sales; store count includes interna- 40 Raley's, Sacramento, Calif. 306 3,400 9.0 129 105 tional stores. 41 Discount Drug Mart, Medina, Ohio 306 630 48.5 67 67 11 Following divestment of Tops Markets 42 Save Mart, Modesto, Calif. 226 5,200 4.4 252 115 and U.S. Foodservice and acquisition of 43 Weis Markets, Sunbury, Pa. 220 2,25014 9.8 155 117 Clements Markets by Giant of Carlisle. 44 Brookshire Grocery, Tyler, Texas 218 2,100 10.4 157 113 12 For the trailing 12 months for the period 45 Schnucks, St. Louis 200 2,400 8.3 103 100 ended Jan. 9. 46 Care Pharmacy, Alexandria, Va. 184 200 92.0 53 53 13 For fiscal year 2006, ended Feb. 24, 47 Bartell Drugs, Seattle 181 342 53.0 56 56 2007. Includes Pathmark. 48 Drug Fair, Somerset, N.J. 170 340 50.0 55 46 14 Excludes sales at 31 SuperPetz pet sup- ply stores. 49 Drugstore.com, Bellevue, Wash. 157 446 35.1 0 0 50 Brookshire Brothers, Lufkin, Texas 131 1,300 10.1 72 67

108Drug Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store2008 •News 16 DRSN_042108_p110-113 4/8/08 6:11 PM Page 110

08 ANNUALREPORT Mass retailers push pharmacy by expanding programs BY MIKE TROY count and a focus on improv- ing operations at existing he unique collection stores. Kmart ended last year of retailers who com- with 1,112 pharmacies, and prise the mass mar- although that number is like- ket segment of the ly to hold steady this year, Tpharmacy industry offered a the company has been active real mixed bag in 2007. in upgrading its pharmacies There was Wal-Mart, press- through remodeling efforts, ing forward with its indus- the addition of drive-through try-altering $4 generic drug pharmacies and other cus- program, adding pharma- tomer conveniences, such as cies and charting a new centralized patient records. direction for its in-store clin- The company also has been ics while indicating it would aggressive in promoting its also establish a pharmacy own variation of generic benefits management opera- drug savings programs and tion. Wal-Mart was also busy most recently introduced a $1 asserting itself as a company OTC program that enables uniquely qualified to serve customers to purchase a pri- as an agent of positive vate-label OTC product for change in national health- $1 when they have a pre- care reform, and of late has scription filled. offered as evidence of that Another key player in the capability the fact that its $4 mass market, supercenter generic-drug program has operator Meijer, has grown saved its customers more at a modest pace in recent than $1 billion. years, but has shown itself Wal-Mart, with annual to be an innovator and sales last year of roughly maintains a strong focus on Wal-Mart took the lead among mass retailers, pushing its $4 generic drug program, making $375 billion, understandably pharmacy and health care. changes in its in-store clinic strategy and announcing that it would establish a PBM operation. dominates headlines in the The company’s efforts to mass market, but looking establish in-store clinics hit tion, such as being in stock, beyond the actions of the a bump this year as three of while also pursuing expan- Wal-Mart, with annual sales last world’s largest retailer and the four operators who sion. Fred’s expects to open “ one of the nation’s largest leased space in Meijer 18 stores this year, and 15 of year of roughly $375 billion, under- pharmacy chains, there was stores went out of business. those units will contain a plenty of activity at the na- As a result, all but one of pharmacy. Currently, about standably dominates headlines in the tion’s other mass market the 39 clinics in Meijer 41 percent of the company’s pharmacy retailers. stores were closed. stores contain a pharmacy. mass market, but looking beyond That’s certainly the case Despite the setback, the In the warehouse club at the nation’s No. 2 dis- company recently dis- segment of the mass market, the actions of the world’s largest count retailer. Target expan- closed that its free antibiot- leading operators Sam’s ded its store base to 1,613 ic program launched in Club and Costco both con- retailer and one of the nation’s units last year, and as it has October 2006 on the heels tinued to press forward expanded or relocated older of Wal-Mart’s introduction aggressively with their largest pharmacy chains, there was stores, the percentage of of $4 generics has been pharmacy businesses. Sam’s stores with pharmacies con- well-received by cus- Club has been adding phar- plenty of activity at the nation’s other tinues to grow. The compa- tomers. The company said macies to new and existing ny also operates 210 Super it recently filled its one mil- clubs for the past five mass market pharmacy retailers. Target stores where the lionth free prescription. years, and last year those ” pharmacy department ben- To the south of Meijer’s efforts meant 494 of the efits from the increased cus- trading area, the Fred’s company’s 591 U.S. clubs lier than Sam’s Club, so news last year with the tomer traffic generated by chain of discount stores con- contain pharmacies where today virtually every one of introduction of a program the offering of food. Target tinues its push into pharma- the parent company’s $4 the retailer’s 391 U.S. clubs for uninsured members, en- ended last year with 1,404 cy by opening a larger per- pricing initiative is offered. contains a pharmacy. Costco abling them to receive dis- pharmacies and now ranks centage of new units with This year, as Sam’s Club operates 385 pharmacies in counts on hundreds of dif- among the nation’s top 12 pharmacies. The company observes its 25th year of total, and recent changes ferent products. To qualify, prescription retailers. last August, hired former operation, plans call for the have seen the company add members fill out a registra- It’s been a bit of a different Meijer executive vice presi- addition of 25 new stores, such features as patient con- tion form confirming they story at Kmart, where the dent of merchandising Bruce all of which are expected to sulting rooms where cus- don’t have insurance, which company’s March 2005 merg- Efird to serve as president, contain a pharmacy. tomers can view a video or entitles them to discounts er with Sears Holdings has and he is leading an effort to Costco began adding have a private conversation. funded by Costco and phar- resulted in a declining store improve the basics of execu- pharmacies to its stores ear- In addition, Costco made maceutical manufacturers.

110Drug Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 17 DRSN_042108_p110-113 4/10/08 10:20 AM Page 111

08 ANNUALREPORT Regional players strengthen foothold by finding niche BY MICHAEL JOHNSEN doors or transferring their Medicare and Medicaid prescription files to a larger Services, in order to sell egional drug store entity, in many cases citing durable medical equipment operations still have those economic pressures as to Medicare patients. The 67- as much opportuni- the impetus behind their store chain last year received ty to compete in decisions to sell. Earlier this an Exemplary Provider Rtheir markets, if not a greater month Spartan Stores sold Certificate of Accreditation opportunity, than their 12 of its pharmacy locations, from the Compliance Team national counterparts, de- Pharm, to Rite Aid. for the home health care spite reimbursement and But the regional operators departments in each of the economic challenges. that are not consolidating— Ohio chain’s locations, But relative strength in Lewis Drug in South Dakota, which enables the chain to this industry often is tied to Discount Drug Mart in Ohio, sell diabetic supplies, wheel- size—the larger a drug store Care Pharmacies in the chairs and walkers to the chain is these days, the bet- nation’s capital—are able to Medicare population. ter it is able to weather reim- effectively operate and pro- In Washington, D.C., Care bursement challenges, the tect market share in the mar- Pharmacies focuses on deliv- better it’s able to spread the kets they serve. ering specialty pharmaceuti- rising costs of fuel across a They do that through dif- cals to its patient base—med- widening store base and the ferentiation. Lewis Drug, icines to treat HIV, for exam- better able it is to take for example, fields a num- ple—that because of the advantage of its greater buy- ber of larger-than-typical expense of the medicines ing power. drug store outlets, at some may be a little cost-restrictive And the business of phar- 30,000 square feet to 40,000 to carry in a national retail- macy is one of consolidation square feet, versus the little er’s warehouse. these days. It’s the only retail more than 10,000 square feet According to a Lehman channel where the total store of the typical freestanding Brothers report released earli- base has contracted over the pharmacy. Stores are packed er this month, specialty drugs Care Pharmacies focuses on delivering specialty past six years. Even super- with items not often found represented roughly 20 per- pharmaceuticals, a $300 billion niche in 2006. markets, a channel that con- in the drug store—extensive cent of total pharmacy spend- tinues to lose shopping trips, home and garden offerings ing ($300 billion) in 2006 and It’s not Walgreens, CVS or Rite Aid have grown the overall store or home and office furni- is expected to rise to 30 per- “ count 4.1 percent to almost ture, for example. Indeed, cent of total spending by that are consolidating. It’s the regional 32,000 outlets, compared Lewis fields many of the 2010. “The average specialty with a decline of 5.4 percent same categories found in prescription costs $1,500 per chains and independents that are in the number of drug stores, such big-box retailers as month,” wrote Lehman ana- which today number at Wal-Mart or Target in a lyst Meredith Adler, com- either shutting their doors or transfer- some 37,500 outlets, accord- retail format that’s a lot pared with a typical prescrip- ing to a Nielsen Group more convenient to shop. tion drug cost of between $90 ring their prescription files to a larger report released last month. In an effort to differentiate and $20 per month. But while But it’s not Walgreens, itself in Ohio, Discount Drug the cost of entry may be high, entity, in many cases citing ... CVS or Rite Aid that are con- Mart is one of the few phar- the average margins on spe- solidating. It’s the regional macies to obtain accredita- cialty pharmaceuticals are economic pressures as the impetus chains and independents tion, under new guidelines typically higher than branded that are either shutting their issued by the Centers for drugs, as well. behind their decisions to sell.”

Drug112 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 18 DRSN_042108_p110-113 4/10/08 10:20 AM Page 112

ANNUALREPORT08 Supermarkets emphasize health/nutrition connection

BY DOUG DESJARDINS despite a slight increase in the number of prescriptions ven though prescrip- filled in supermarkets, which tions aren’t the big grew from 476 million to 478 sales driver they were million, reflecting the impact a few years ago—with of a higher percentage of Esales in 2007 posting their generic drugs. Those num- smallest increase in more than bers compare with a 3.8 per- 40 years—pharmacies are cent jump industrywide in becoming a more integral part prescription sales of $286.5 of the grocery business. And billion in 2007. as supermarkets get more But prescription sales are involved in helping cus- only part of the role now tomers improve their health played by pharmacies in- through better nutrition, the side supermarkets, which role pharmacies play is going now total 14,000 stores and to continue to grow. account for 15 percent of “You rarely see a new annual U.S. prescriptions, supermarket open now according to FMI data. And without a pharmacy inside,” as supermarkets become Such supermarkets as Safeway are placing emphasis on healthy living through new organic said Cathy Polley, vice presi- more focused on offering lines and health programs, providing pharmacists with opportunities to talk to customers. dent of pharmacy services customers a greater variety for the Food Marketing of healthy and organic and feature a private-label ganics, that debuted in 2005. Polley said that could Institute. “Just like meat and foods, their pharmacists are line of organic foods. And last year it started a pro- become a trend in supermar- produce sections, pharma- dispensing advice, as well Safeway, which has phar- gram called Food Flex, which kets as they try to make cies have become an essen- as prescriptions. macies in 78 percent of its analyzes food purchases pharmacies more convenient tial part of the store.” “That’s what makes phar- stores, includes them in all made by participants at the and move them from the The challenge facing super- macies in supermarkets so new stores and Lifestyle checkout stand, provides back end of stores. market-based pharmacies in unique,” Polley said. “In addi- remodels. As Safeway senior commentary on the nutrition- “Making your way through 2008 and beyond is getting tion to writing prescriptions, vice president of pharmacy al value of foods and offers the whole store to reach the consumers to think of them as the pharmacist has become David Fong explained at an better alternatives. pharmacy can be a chore, a primary destination for pre- sort of a health manager in industry seminar last year, Other chains are giving especially for older people, so scriptions—as opposed to helping customers maneuver pharmacies complement their pharmacies a more promi- you could see more super- large drug store chains—and through stores and choose the effort to deliver a healthy mes- nent position in stores. Su- markets relocating pharma- creating more innovative for- foods and other products that sage to consumers. pervalu has moved pharma- cies to make them more con- mats to get that message are right for them.” “What’s important to cies to the front of the store in venient,” Polley said. across. And they’ll be doing it Just looking at the names of understand is that pharmacy its Jewel-Osco stores in Chi- And some supermarket following a difficult year for some new supermarket store gives us an opportunity to cago, as well as some Cub chains are even offering $4 grocery-drug store combos. concepts shows why the rela- complete the total offering in Food and Albertsons-Sav-on generics. Kroger, the nation’s According to IMS Health, tionship has become so sym- nutrition and health in the stores. Supervalu retail Mid- top supermarket-based phar- prescription sales generated biotic. Supervalu’s new for- store,” Fong said. west president Kevin Tripp macy chain, introduced $4 by supermarkets dropped by mat is dubbed Premium Fresh Safeway is among the 46 said the chain wants its phar- generics last fall and rolled about 2 percent in 2007, to & Healthy, while Safeway’s percent of supermarket chains macies up front to serve as “a them out to additional ban- $22 billion from $22.3 billion Lifestyle stores put a big with its own line of organic billboard that tells people ners in early April, including in 2006. Those sales fell emphasis on healthy living foods, a line dubbed O Or- we’re in the business.” Fred Meyer and Ralphs.

Drug StoreStore News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •113 19 DRSN_042108_p114 4/7/08 11:08 AM Page 1

08 ANNUALREPORT Walgreens expands into employee health centers

BY JIM FREDERICK achieved other major growth ee health centers to work- milestones in recent months. places. At the same time, he “R” word proba- Among them: the opening of Walgreens announced plans bly doesn’t get much store No. 6,000 in New to launch its own casual play at Walgreens’ Orleans last October, the clothing line, called Casual headquarters. splashy grand opening of its Gear, in most of its stores TThe faltering economy, the first Hawaii store that same beginning this month. credit crisis, the housing month, the purchase of spe- The purchase of the two meltdown, growing fears of cialty pharmacy giant Option workplace clinic-care pro- a deep recession and a shaky Care last August, the pur- viders—Cleveland-based job market—all have put a chase of the script files of 27 Whole Health Management chill on the U.S. retail sector, Rite Aid stores in Las Vegas in and I-trax, based in Chadds and drug store retailing is January and the unveiling of Ford, Pa.—throws Walgreens’ no exception. But the brass the company’s first store in burgeoning clinic business at Walgreens seem largely Washington, D.C., last month. into overdrive and opens unfazed by the latest down- One major focus of late has what could be a major new draft in the economy. been on operating costs and front in its campaign to cap- Perhaps it’s little wonder: profitability. Rein acknowl- ture a commanding share of in 107 years of operation, the edged that calendar year the nation’s pharmacy and company has seen its shares 2007 was an uphill climb, ambulatory health market. of ups and downs. Chairman with unexpectedly high That front lies right inside the and chief executive officer operating costs, a mild flu nation’s corporate campuses Jeff Rein and president Greg season and a falloff in gener- and workplaces. Wasson, remain upbeat ic drug approvals. Rein made “Over the last 15 years about Walgreens’ long-term no secret of the fact that we’ve become more conven- prospects in an aging Walgreens “lost focus on pay- ient … with our ‘Main and America. And they’re deter- roll and expenses.” Main’ drug store locations. mined to stay ahead of the As of the second quarter Today, we’re redefining demand curve for prescrip- of fiscal 2008, the company ‘Main and Main’ to include tion medicines and health- appears to have gotten a better the work site and bring us care services with a relentless handle on its expenses, with that much closer to cus- Ending a 30-year absence, Walgreens will return to Times expansion strategy across the sales and profitability regain- tomers,” Rein said. Square in New York this summer with the opening of a store in the heart of the heavily trafficked Theater District. United States. ing momentum. Nevertheless, The two companies will be Early this year, Rein and Wasson said, “As we grow folded into a new Walgreens work sites, and to depend- add immediate purchasing Wasson reaffirmed their de- our company and focus on health and wellness division ents and retirees through our savings to further lower costs, termination to saturate the expenses, we continue to pro- under the direction of Take Take Care Health Clinics at and the company will attempt nation’s best retail locations vide the high service levels Care Health founder Hal local Walgreens drug stores. to leverage its larger network with Walgreens stores and to needed to increase sales. And Rosenbluth, the company an- “I-trax and Whole Health of clinics, pharmacies and exploit new business oppor- we’re providing the services nounced. Added to the 146 also will open the door for us healthcare services,” noted tunities. “We’re ramping up needed to draw more cus- Take Care clinics already to add work site pharmacies Mark Miller, an investment our organic growth to 550 tomers, such as more 24-hour open in Walgreens stores, the where they already operate analyst with William Blair & new stores this fiscal year, stores than all of our competi- 300 workplace clinics operat- health centers,” Rein added. Co. “With expanded access to for a net increase of 475 after tors combined, printer car- ed by I-trax and the 69 sites “This is a natural extension of payers, Walgreens believes it relocations and closings,” tridge refills in more than owned by Whole Health will the existing work site pharma- can improve transparency for Rein said. “We’ll step this up 4,500 stores by the end of this boost Walgreens’ clinic-care cy services we currently pro- corporate clients and give the to more than 600 new store calendar year, and our recent- business to more than 500 vide for companies such as company the opportunity to openings in fiscal 2009.” ly announced addition of work site and retail health Sprint, ABX Air and Toyota.” cross-sell specialty pharmacy, Much of the growth will DHL shipping services, which centers in 50 states. And, with Wall Street analysts are gen- disease-management and occur in the Northeast and will be virtually chainwide by plans to have as many as 400 erally behind the clinic expan- other services.” Southern California. A cen- the end of December.” Take Care centers open in its sion. “Walgreens’ scale should CONTINUED ON PAGE 16847 terpiece of that effort will be In January, company lead- stores by the end of 2008, Walgreens’ return to Times ers promised shareholders at Walgreens is quickly estab- Headquarters: Deerfield, Ill. Square for the first time in the annual meeting that Wal- lishing a broader healthcare 2007 sales: $53.8 billion three decades, with a unique greens would aggressively business model. Walgreens % change vs. 2006: 13.4% drug store in the heart of pursue new opportunities “Walgreens’ health and New York’s revitalized in specialty pharmacy and wellness division will marry No. of stores: 5,997* Theater District. The store, to front-end merchandising. It our store clinics and pharma- No. of stores with Rx: 5,997 be unveiled this summer, will didn’t take long to make cies with work site health Avg. store size: 14,700 square feet feature a giant, 17,000- good on that promise: last centers and pharmacies,” Rx sales: $34.9 billion square-foot video screen for month, the company broke Rein asserted. “Our unique advertising and messaging, into what could be a huge offering will allow large % of sales from Rx: 65% and multiple floors for sell- new business opportunity by employers and health plans Sales per store: $8.96 million ing and storage. purchasing two companies to provide care to employees *As of end of fiscal 2007, Aug. 31, 2007. Store count as of March 31, 2008: 6,271 stores in 49 states and Puerto Rico. Source: Company reports Walgreens already has that provide on-site employ- and plan members at their

Drug114 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store2008 •News 20 DRSN_042108_p115CVS 4/7/08 11:22 AM Page 1

ANNUALREPORT08 PBM powerhouse CVS Caremark redefines retail model

BY ANTOINETTE ALEXANDER ers. Maintenance Choice allows consumers to pur- he retail pharmacy chase 90-day prescriptions landscape is not as it [for chronic conditions] at was years ago, or CVS stores for the same price even one year ago, as at mail.” Tand perhaps nothing demon- Typically, PBMs could only strates that more clearly than allow consumers to fill 90-day CVS Caremark. prescriptions if the payer re- “We are a different compa- quested the service. And, if the ny today than we were a option was available, Miller year ago. We are a pharmacy noted that a 90-day fill at retail healthcare service compa- prices has cost less than three ny,” Tom Ryan, chairman, 30-day retail fills, but more president and chief execu- than a 90-day mail-order pre- tive officer, told analysts scription. during a recent conference “This added customer ser- call to discuss fourth-quarter vice could provide the compa- and 2007 results. ny with an additional point of Roughly a year ago, CVS differentiation versus the merged with Caremark Rx stand-alone PBMs, which have and formed a PBM power- largely ignored the 90-day house that for 2008 is expect- retail option,” stated Miller, ed to report revenues well in who noted that it was unclear excess of $85 billion. The ver- whether Maintenance Choice tical integration marked a was an offering for select new paradigm for retail phar- accounts or for all payers. macy. The first anniversary of Lehman Bros. analyst Mere- the transformational merger dith Adler stated in a research was marked with the ringing note issued earlier this year of the opening bell at the New that new PBM offerings also CVS Caremark is working to combine the strengths of its retail and PBM services to change the York Stock Exchange on include therapeutic inter- way consumers use their pharmacy benefits—it now has about 20 pilot programs under way. March 24. change, in which CVS phar- CVS Caremark is working macists will have access to ergies are likely to exceed $700 In January, Wal-Mart an- And when Humana low- to combine the strength of its branded drug formularies for million in 2008, about $50 mil- nounced it would offer its ered its earnings guidance to retail and PBM services to Caremark plans and will be lion above the latest projec- own PBM services to “select reflect higher anticipated costs change the way consumers able to advise patients of tion. In addition, because of a employers”—news that Ryan with its Medicare Part D use their pharmacy benefits. when a switch in medication larger-than-expected pickup has downplayed as details of Prescription Drug Plans, some While company executives would reduce their co-pays. in prescription drug plan-cov- the venture are still sketchy. industry observers, including have remained tight-lipped on Another offering is spe- ered lives (and revenue), the Some of what is known, Miller Adler, expressed little concern the details of the initiatives cialty at retail. Caremark has PBM revenues are expected to noted, is that Wal-Mart has for CVS Caremark, which also being developed behind a well-developed specialty be $1 billion stronger than partnered with WellPoint to operates a PDP business. closed doors in Woonsocket, business with professionals prior estimates. deliver a coordinated care Adler noted that, not only R.I., Ryan has indicated that it dedicated to specific disease “The operating model is model that is estimated to are there no indications that is developing differentiated states and pharmacy treat- not yet proven, but with every save employers $100 million CVS Caremark has difficulty offerings and that about 20 ment regimens, so an in-store passing quarter, we are mov- in 2008. Wal-Mart provides managing the business, but the pilot programs are under way. pharmacist can ask patients ing closer to its acceptance, by the “value-driven pricing,” PDP business is a small piece William Blair & Co. analyst if they want to be contacted payers, competitors and and WellPoint provides the of total revenue earnings—no Mark Miller noted, for exam- by that specialist with the investors alike, as a viable operations engine, he stated. CONTINUED ON PAGE 17048 ple, the importance of the hope that the patient will alternative to the pure play company’s new Maintenance become a regular specialty approach,” stated John Hein- Headquarters: Woonsocket, R.I. Choice offering. customer either through bockel, Goldman Sachs ana- 2007 sales: $76.3 billion* Caremark CVS “While the shifting of large retail or mail. lyst, in a recent research note. % change vs. 2006: 74%* employer and government The moves are apparently Also bringing a smile to the PBM contracts tends to grab beginning to take hold, as the faces of Wall Street is that CVS No. of stores: 6,245** headlines, the evolutionary PBM segment performed well Caremark is expecting $3 bil- No. of stores with Rx: 6,164 change in the go-to-market in 2007. Not only did pro lion in free cash flow in 2008. Avg. store size: 10,000 to 13,000 square feet strategies of the PBMs may forma sales rise nearly 13 per- The success of the fairly Rx sales: $30.6 billion*** represent the most important cent but also the 2009 selling new vertical integration development,” Miller stated season is off to a solid start, model will only grow in- % of sales from Rx: 67.8% in a recent research note. “For with 25 percent of expiring creasingly important as the Sales per store: $7.2 million*** *Includes Caremark; approximately 40 percent of sales generated from example, CVS Caremark is business having been re- competitive PBM segment pharmacy services. Retail pharmacy sales accounted for $45.1 billion now presenting its Mainte- newed as of the end of the fis- heats up, especially with the vs. $43.8 billion in 2006. ** Retail stores *** Based on retail sales Source: Company reports nance Choice offering to pay- cal year on Dec. 29. Cost syn- entrance of Wal-Mart.

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008 •• 11521 DRSN_042108_p116RiteAid 4/7/08 10:35 AM Page 116

08 ANNUALREPORT Rite Aid confident of Brooks/Eckerd turnaround strategy BY MICHAEL JOHNSEN Adler, Lehman Bros. analyst. “But we do think [Rite Aid] ite Aid remains a can achieve, by its standards, strong No. 3 in the very strong comps.” pharmacy business Rite Aid has projected more and is expected to than $300 million in cost-sav- Ronly get stronger in the com- ing synergies attributed to the ing year. Indeed, Rite Aid is acquisition for its fiscal year expected to realize the fruit of 2009, which started March 2. its labor this year, especially as Significant improvements performance across both the across Rite Aid’s pharmacy backbench and the front end operations are also expected improve in the acquired this year, arguably a more crit- Brooks/Eckerd stores. ical metric for the company as And while the consensus on both Walgreens and CVS con- Wall Street regarding the tinue to expand not only their strength of Rite Aid is still respective store bases, but also mixed—with critics charging their overall healthcare reach that it’s a heavily leveraged through the acquisitions of company that may have bit off retail health clinics, the contin- more than it could chew with ued growth of robust owned- Brooks/Eckerd, particularly and-operated pharmacy ben- given the recent economic efit management businesses slowdown—a number of fac- and the extended reach into tors bode well for the future. home health care that comes The heavy promotions of with that. Brooks’ and Eckerd’s past will In January, Rite Aid un- Rite Aid’s partnership with GNC provides it with a significant point of differentiation in the dietary have cycled through by this veiled a nationwide market- supplement category, and the drug chain aims to have 2,300 GNC stores-within-a-store by 2014. summer. “They were very ing campaign designed to promotional last year … and bring more customers into its location, and Rite Aid is deal that’s expected to close currently is flowing product that continued into the pharmacies, with the theme: already realizing stronger by June. The purchase forti- through 14 distribution cen- February time frame,” Mary “Stop Here. You’ll never have sales trends and stronger fies Rite Aid’s 31-store pres- ters, a number that it expects Sammons, Rite Aid president to switch your prescription margin trends among the ence in the area, according to to shrink going forward, and chief executive officer, again.” The campaign is fea- acquired store base, the com- published reports. which should benefit the com- told analysts in December. tured in radio spots, weekly pany has reported. On the financial front, Rite pany’s gross margins as it con- “[There were] a whole lot of Rite Aid circulars and direct “This is a process,” Adler Aid may be a heavily lever- solidates DCs. consumables in the ads and a mailers. As an incentive to cautioned. “My understand- aged company, but that debt Rite Aid made significant lot of, what I’d call, cherry- transfer to Rite Aid, patients ing is it is right on schedule doesn’t first come due until additions to its executive team picker pricing, and that we are being offered a $30 Rite in terms of systems conver- 2010 at the earliest. What’s over the past year, including did not repeat in our ads.” Aid gift card (except where sions and minor remodels. more, the retailer has ready Robert Easley (H-E-B), Brian That will also be around prescription incentive offers But it won’t be done with the access to cash today, should Fiala and Robert Thompson the time that Rite Aid cycles are prohibited). And the next systems conversions until it be necessary, so there’s lit- (both from Target), and John through the integration of two times that a patient’s pre- the middle of June and the tle concern of not having Coster (National Association Rite Aid and Brooks/Eckerd scription is filled, the cus- minor remodels until the end enough liquidity on hand to of Chain Drug Stores)—all product inventory and tomer gets a $5 gift certificate of September.” continue making capital proven leaders. Fiala, Rite Aid planogramming, a period in the mail. And Rite Aid is relatively improvements in a potential- executive vice president of when out-of-stocks may have And the conversions of all well-positioned in the market- ly down economy when cap- store operations, brought in tracked higher than normal. those Brooks/Eckerd stores place—the chain has a strong ital markets are likely to be Thompson from Target to Those two factors alone into Rite Aid locations— foothold across 76 percent of more conservative. manage Rite Aid’s West Coast should help drive Rite Aid’s including exterior signage, the nation’s top 197 markets, Besides that, the company CONTINUED ON PAGE 16847 front-end comps into the an interior remodel and a according to Rite Aid, and double digits this summer, complete technology sys- holds either the No. 1 or No. 2 Headquarters: Camp Hill, Pa. when the Brooks/Eckerd tems makeover—is well on pharmacy share spot in 70 2007 sales: $24.3 billion* store base is added to its schedule. As of February, the percent of the largest metro-

% change vs. 2006: 39.6% Aid Rite same-store sales results. chain had tabulated more politan statistical areas, in- “If you go back and look at than 800 systems conver- cluding Baltimore, New York, No. of stores: 5,059 the numbers that CVS gave sions, out of the more than Philadelphia, Pittsburgh and No. of stores with Rx: 5,059 after it bought its Eckerd 1,600 Brooks/Eckerd stores, Washington. Avg. store size: 11,200 square feet stores, it had at certain points as well as 220 remodels. And Rite Aid earlier this Rx sales: $16.2 billion in the front end 20 percent More than 60 percent of the month shored up its position comps. We’re not expecting Brooks/Eckerd stores that in northwest Ohio with the % of sales from Rx: 66.7% anything like that; if nothing were in close proximity to purchase of 12 Pharm drug Sales per store: $4.8 million else the economy is certainly Rite Aid stores have been stores from Spartan Stores *For fiscal 2008 ended March 1, includes three-quarters of Brooks/Eckerd sales; Brooks/Eckerd sales were not reflected in fiscal 2007 performance. Source: Company reports slower,” stated Meredith combined into one retail for an undisclosed sum in a

Drug116 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 22 DRSN_042108_p118.qxd 4/10/08 6:44 PM Page 118

08 ANNUALREPORT Cardinal muscles up support for Leader pharmacies BY JIM FREDERICK Headquarters: Dublin, Ohio hree forces are posi- 2007 sales: $13.6 billion tioning the 3,300- % change vs. 2006: 4% Leader store Leader phar- No. of stores: 3,350 macy network to No. of stores with Rx: 3,350 Tride out a rough economy as its independent owners gear Avg. store size: 2,500 square feet up for better days ahead: its Rx sales: $11.9 billion parent company is realigning % of sales from Rx: 88% to improve store support, new Sales per store: $4.1 million efforts are under way to boost Source: Drug Store News front-end sales and more Leader store owners are get- ting in on the revolution in programs; online ordering Healthcare Supply Chain Independents in the Leader network get systems, marketing clinical care and medication and training support from parent company Cardinal Health. systems; hand-held mobile Services division at the end therapy management. devices; and managed care of January, replacing Mark What Cardinal offers inde- tions in such areas as asthma teamed up with Medicine and reimbursement solutions Parrish. pendents under the Leader control, diabetes care, durable Shoppe and other Cardinal to “help pharmacies partici- “Frankly, one of our key banner is the muscle and medical equipment and well- retail groups last year to co- pate fully in benefit plans challenges over the last security of volume purchases, ness,” Cardinal noted recently. sponsor the tour. and capture reimbursement three to four years is we lost sophisticated marketing and An example of how the Among the other services opportunities.” sight of what was happen- brand identity in a crowded parent company facilitates Cardinal makes available to Cardinal has restructured ing in the middle of the market. Its store-support that expertise is Medication Leader-affiliated drug store its pharmaceutical supply market, and we have team has also given Leader Therapy Management in owners are its Cardinal operations under a new team reestablished strong leader- owners the tools to turn their Community Pharmacy, a 17- Inventory Manager system, led by George Barrett, former ship and strong programs in pharmacies into destination city educational tour for phar- to help cut inventory holding chief executive officer of this segment,” said Cardinal centers for clinical and health macy owners developed and costs; bulk-purchasing opp- Teva North America, who chairman and chief execu- education services. taught by pharmacists from ortunities for generic drugs took over as vice chairman tive Kerry Clark, addressing “Many of our member The University of Arizona and other products through of Cardinal Health and chief a Lehman Brothers Healthcare pharmacies offer specializa- College of Pharmacy. Leader its Source contract buying executive officer of its Conference March 19. Personal service, diabetic care build loyalty for GNP ood Neighbor Pharmacy, a store- Headquarters: Valley Forge, Pa. Neighbor Good support and mer- 2007 sales: $7.7 billion Pharmacy chandising um- % change vs. 2006: 5% Gbrella owned by distribution No. of stores: 2,700 and health services giant AmerisourceBergen, is cele- No. of stores with Rx: 2,700 brating its 26th year. The Avg. store size: 3,100 square feet anniversary isn’t GNP’s only Rx sales: $6.9 billion reason to be upbeat: it’s also % of sales from Rx: 90% enjoying stronger backing from its corporate parent and In a 2007 survey of pharmacy customers across the country, Sales per store: $2.8 million clear signs that GNP’s focus GNP ranked No. 1 on 27 of 63 satisfaction measures. Source: Drug Store News on personalized patient care and disease management is a GNP’s more than 2,700 “Good Neighbor is rated marketing programs at GNP idends from its high-profile hit with many consumers. independent pharmacy ow- No. 1 in 27 of the 63 satisfac- with new services designed “Managing Diabetes: Living By all accounts, GNP is ners got a big vote of confi- tion measures,” Wilson to better solidify GNP’s Without Limits” campaign, now the flagship of Amer- dence when the results of Health Information report- brand and drawing power in offered through GNP’s in- isourceBergen’s store support, the 2007 WilsonRx Phar- ed, “including overall con- a crowded marketplace. store Diabetes Shoppe market- marketing and merchandis- macy Satisfaction Survey venience, pricing and insur- Among recent offerings is ing and merchandising pro- ing programs. The company were tabulated. GNP phar- ance, professional and store Independent Edge, a soft- gram. It has generated posi- has just about completed a macies ranked highest in service, Web site issues and ware platform aimed at hel- tive press and new business, three-year process of merging the survey, which was overall satisfaction.” ping pharmacy owners in thanks in large part to the its old Family Pharmacy net- mailed to 67,028 households That’s got to be good news the network boost profitabil- efforts of “Iron” Andy Holder, work into the GNP program and received responses for GNP members. They may ity and efficiency and im- a charismatic type 1 diabetic and scrapping its dual-brand from 33,531 pharmacy cus- also take satisfaction in efforts prove patient care and drug and Ironman triathlon com- approach to the independent tomers throughout the con- by AmerisourceBergen to therapy monitoring. petitor who is a spokesman pharmacy marketplace. tinental United States. pump up store-support and GNP is also reaping big div- for the campaign.

118Drug Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store2008 •News 23 DRSN_042108_p120 4/7/08 7:05 PM Page 1

08 ANNUALREPORT Better health care becomes a cause at Wal-Mart

BY MIKE TROY benefits of paying low prices example, Wal-Mart in April and affords a higher degree 2007 announced plans to al-Mart last of flexibility on the pricing open 400 in-store clinics year may have front, because it is not as during the next several slowed the definitive as “Always.” years and alluded to the pace of new To date, no other mer- possibility that it will open storeW construction, but it chandising initiative deliv- as many as 2,000 clinics moved full speed ahead ers on the “Save money. over the next five to seven with pharmacy and a range Live better.” brand promise years. Its strategy is some- of other initiatives that posi- than the $4 generic pro- what different from retail- tion the company as a more gram. That explains why ers that are offering a sin- significant factor in the Wal-Mart continues to ag- gle-branded concept, be- world of health care. gressively promote it with cause Wal-Mart is partner- The clearest example is the extensive in-store signage ing with local hospitals company’s impact on the as a means to grow phar- and other organizations to prescription drug industry: macy volume among cus- operate its clinics. according to Dr. John Agwu- tomers who are already Clinics and prescription nobi, president of Wal- shopping its stores but drug pricing are just the Mart’s professional services have their prescriptions beginning of how Wal-Mart division, the company saved filled elsewhere. In addi- sees itself influencing the Americans more than $1 bil- tion, the $4 program was healthcare industry. Because lion since the $4 generic prominently featured on the company has slightly drug program was launched the cover of a circular dis- more than 2 million employ- Wal-Mart’s $4 generics program shook up the prescription in September 2006. As a tributed in early April. ees, 1.4 million of whom are drug industry; now the chain also has joined efforts to have a result, $4 prescriptions now With Wal-Mart likely to employed in the United more sweeping effect on healthcare quality and efficiency. represent approximately 40 continue hammering on the States, Wal-Mart has a large percent of all prescriptions $4 program, the good news stake in improving the effi- expertise in information tech- With several organiza- filled at Wal-Mart, and near- for competitors is that the ciency of industry practices. nology to build a framework tions working behind the ly 30 percent of the $4 pre- coming years will see phar- That’s why, a year ago, for secure and portable elec- scenes on the technology scriptions are filled without macies added at a slower Wal-Mart partnered with tronic medical records. challenges facing the health- insurance, compared with rate due to a slowdown in the University of Arkansas Electronic health records care industry, Wal-Mart also an industry average of about U.S. supercenter expansion. and Blue Cross Blue Shield can help reduce adminis- became an inaugural mem- 10 percent, suggesting the That trend began last year of Arkansas, Alabama and trative costs in the health- ber of a group with a broad- program has helped Wal- as Wal-Mart opened 191 Illinois to announce the for- care system and eliminate er industry perspective, Mart attract new customers. supercenters, compared to mation of The Center for the medical errors that called Better Health Care The introduction of Wal- the previous year, when the Innovation in Health Care cause thousands of unnec- Together. The coalition’s Mart’s flat-rate pricing pro- format achieved its peak Logistics at the University essary deaths every year. members also include AT&T, gram and the competitive expansion rate of 279 units. of Arkansas. The center Wal-Mart plans to provide the Howard H. Baker, Jr. response from other phar- In both years, more than will research technology its associates and their fam- Center for Public Policy, the macy retailers together are half the new units came gaps and roadblocks in ilies, including retirees, Center for American Pro- one of the reasons pharma- from the conversion or relo- health care, and identify with personal, private and gress, the Committee for ceutical sales recorded their cation of an existing dis- applications that are work- portable electronic health Economic Development, the lowest level of growth in count store. That’s expected ing well to determine how records by the end of 2010, Communications Workers of more than 15 years last year, to be the case again this they can benefit the larger and says the electronic America, Intel, Kelly Ser- advancing just 4.5 percent, year, and Wal-Mart has healthcare system. The cen- records will be a safe and vices and one of Wal-Mart’s according to IMS Health. reduced its targeted super- ter will also look at ways secure way for associates to staunchest critics, the The $4 initiative clearly center openings to 170 that information can be bet- hold on to and access their Service Employees Inter- had a big impact on the pre- units; in 2009, that figure is ter shared throughout the medical information. national Union. scription drug industry, but expected to fall to 140. system, to reduce medical it is just one component of Other formats contribute errors and to bring greater how Wal-Mart is looking to to pharmacy growth, but at a quality and efficiency to the Headquarters: Bentonville, Ark. influence the broader health- lesser pace. Last year, Wal- delivery of care. 2007 sales: $239.5 billion*

care industry and reinvent Mart added seven discount Independent of that initia- Wal-Mart its image in the process. Last stores and 20 Neighborhood tive, Wal-Mart is involved in % change vs. 2006: 5.8% fall, Wal-Mart introduced its Markets. This year, no dis- another technology-oriented No. of stores: 3,550* new marketing campaign count stores are planned, but partnership, called Dossia, No. of stores with Rx: 3,468 with the tag line “Save the company appears to be with companies such as Ap- Avg. store size: 160,000 square feet* money. Live better.” The getting more serious about plied Materials, AT&T, BP phrase replaced the familiar Neighborhood Markets, with America, Cardinal Health, Rx sales: $13.7 billion “Always” tagline, which 25 units due to open. Intel, Pitney Bowes and Sanofi % of sales from Rx: 5.7% related directly to the every- Although there will be Aventis. The goal is to intro- Sales per store: $67.5 million day-low-price philosophy. fewer stores added, more duce greater efficiency into *Includes 2,447 supercenters, 971 discount stores and 132 Neighborhood Markets The new campaign does a of them will have in-store health care. The participating as of Jan. 31. Source: Company reports, Drug Store News better job of quantifying the healthcare clinics. For companies expect to use their

Drug120 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store2008 •News 24 DRSN_042108_p122 4/9/08 1:09 PM Page 122

08 ANNUALREPORT On financial gains, Kroger expands pharmacy services BY JIM FREDERICK nizations, obesity manage- ment, diabetic care, choles- fter three years of terol screening, emergency improving sales contraception and more,” and profitability, notes one company report. it’s clear that Some services are offered AKroger Co. is back. Evidence online, including the of that can be found in recent EasyFill prescription refill reports of Kroger’s plans to system and an interactive open a 120,000-square-foot Health Guide that provides unit, in Richmond, Va., its health assessment tools and biggest store yet. medication guides. Coast to coast, Kroger Kroger also continues to wields a massive presence add Kroger Patient Care in supermarket-based phar- Centers in some stores, and macy, both through its to provide—often through Cincinnati-based Kroger- clinical pharmacists or phar- brand flagship stores and macy residents—mobile through a slew of local sub- services such as diabetes sidiaries. Among them: screenings, immunizations Utah-based Smith’s Food & and wellness education. In Drug Stores; Dillons, in addition, noted the compa- Despite vigorous competition from Wal-Mart, Kroger has gained share in more than three- Kansas, Missouri, Arkansas ny, many pharmacists “have quarters of its top markets. The company has made pharmacist training certification a priority. and Nebraska; Ralphs and received various certifica- Food 4 Less in California; tions in disease state manage- to Wal-Mart Stores’ deep- accounting week in fiscal market share in some of its King Soopers and City ment, including NIPCO certi- impact $4 generic drug offer, ’06, to $1.18 billion. In addi- primary markets.” Kroger, Market in Colorado; Fred fication programs, APhA’s first launched in the second tion, Kroger reported that it she added, may reap Meyer, based in Oregon and Immunization Delivery train- half of 2006, Kroger also con- gained share in 37 of its 44 “tremendous opportunity” also operating in Idaho, ing, and Cooper/Clayton tinues the gradual rollout of top markets; it holds the from recharged merchandis- Washington and Alaska; Smoking Cessation facilita- its own generic promotion. No. 1 or 2 position in 38 of ing efforts and its growing Fry’s and Fry’s Marketplace, tor's training. Current pro- Since the beginning of April, the 44. ability “to extract new centered in Arizona; QFC, or grams being developed and the program—which offers “Kroger’s strategy is insights from its loyalty card Quality Food Stores, in implemented include smok- pharmacy customers 30-day working,” said chairman database.” Washington and Oregon; ing cessation, respiratory care supplies of more than 300 and chief executive officer That ability stems from and Indiana-based Jay C and adult immunizations.” me-too medications for $4— David Dillon, with lower what Dillon describes as “a Food Stores. Its top five mar- Elizabeth Keyes, vice has been extended to 126 prices and diverse product substantial database that kets are Los Angeles, president for professional stores in the Mid-Atlantic offerings that he said are provides valuable insight Atlanta, Houston, Seattle resources and business de- region and 62 stores in cen- “well-suited for what contin- into the shopping behaviors and Phoenix. velopment for the Amer- tral Tennessee and southern ues to be a challenging eco- of our customers” via the Altogether, the company ican Pharmacists Assoc- Kentucky. In addition, the nomic and competitive envi- company’s loyalty card pro- fields 2,486 supermarkets and iation, lauded Kroger chain is offering generic ver- ronment.” gram. Kroger is also reaping combination stores in 31 recently for its “commit- sions of the birth control In a mid-March report, benefits, the CEO added, states. As of the end of fiscal ment to provide their phar- drugs Ortho-Cyclen and Deborah Weinswig, a from its partnership with 2006 on Feb. 3, 2007—the macists with the necessary Ortho Tri-Cyclen, as well as Citibank financial analyst, dunnhumby, a London- most recent period for which training to prepare them for a fertility drug, for $9. praised Kroger for having based consumer insight and comprehensive figures are an ever-expanding patient All told, Kroger pharma- “improved financial returns data management firm that available—that total included care role.” Over the past cists dispensed more than 121 while reducing risks, deliv- he said “allows us to design 1,920 stores with pharmacies. several years, she added, million prescriptions in 2006, ering above industry top- tailored offerings for each The numbers underscore APhA and Kroger have according to the company. line growth, and capturing customer segment.” the chain’s determination to jointly trained “thousands That marked a retail value of be one of the industry’s of their pharmacists to pro- $6.5 billion in prescriptions, Headquarters: Cincinnati dominant pharmacy retail- vide immunizations and “an increase of approximately ers: the number of Kroger- lipid management.” 9 percent vs. 2005.” 2007 sales: $70.2 billion owned supermarkets that Kroger is also driving Companywide, it’s clear % change vs. 2006: 6.2% Kroger include pharmacies has risen growth by focusing on con- Kroger has regained its No. of stores: 2,486 from 72 percent in 2002 to 78 venience, among other fac- footing within a supermar- No. of stores with Rx: 1,940 percent last year. And tors. “Since 2000, we have ket industry roiled by Wal- Kroger’s pharmacy team installed over 460 new drive- Mart’s turbulent market- Avg. store size: 2,500, 57,000, 65,000 and 145,000 square feet continues to develop and through windows,” the com- share drive. Sales rose 8.2 field a variety of clinical and pany reported last year, percent in the fiscal year Rx sales: $6.9 billion residency programs through- upping its total in drive- ended Feb. 3, 2008, to $70.2 % of sales from Rx: 9.8% out its divisions. “Special through pharmacies to well billion, and net earnings Sales per store: $28.2 million emphasis is pharmacy care over 600. were up 15 percent after Source: Company reports, Drug Store News programs, such as immu- In a measured response adjusting for an extra

• April 21, 2008 Drug Store News 122Drug Store News www.drugstorenews.comwww.drugstorenews.com April 21, 2008 • 25 DRSN_042108_p124Safeway 4/4/08 4:41 PM Page 124

08 ANNUALREPORT Safeway braces for new challenges in California BY DOUG DESJARDINS cational pamphlets and occa- sional seminars. In March, it espite the negative expanded into a new area by impact of generics, offering vaccinations to guard Safeway expects against shingles, a fairly com- pharmacy sales to mon ailment that’s typically Dremain strong this year as it overlooked. Vaccinations are continues to ramp up remod- provided on a walk-in basis at els and to test a new small-for- all of its pharmacies. mat store in response to the “The only way to prevent arrival of British giant Tesco. against contracting this debil- Known primarily as a itating disease is to get a sin- supermarket chain with more gle shot,” said David Fong, than $42 billion in sales last Safeway senior vice president year, Safeway also ranks of pharmacy. “Receiving a among the top 10 pharmacy shingles vaccination is as easy retailers in the country with as stopping at the pharmacy estimated annual sales of during your regular shop- more than $3 billion. The ping trip.” chain now has pharmacies in Pharmacies are also posting 1,325 of its 1,745 stores, or signs that point out that the about 76 percent, and in- same virus that causes chicken cludes them as a standard pox causes shingles and that part of new stores and adds people who’ve had chicken pharmacies in remodels when pox are at a greater risk of con- space allows. tracting the disease. While Safeway is averse to Safeway also introduced a discussing pharmacy sales as healthy-living program in a separate part of its busi- stores, called FoodFlex. The ness—it rarely breaks them program tracks the food that out even in its annual re- participants purchase at ports—they came up during Safeway through their loyal- Safeway continues to reach out to customers through its pharmacies, offering pharmacist-patient its most recent earnings call ty cards and provides an consultations, seasonal immunizations, educational pamphlets and occasional seminars. on Feb. 21. Safeway chief analysis of the food and rec- executive officer Steve Burd ommendations for more mation about the concept its stores remodeled by the Safeway is also looking said pharmacy sales had an healthful products. except to say we should have end of 2008. toward non-food items to impact on overall sales for its But the greatest challenge something out of the ground The chain is forecasting help differentiate the super- fourth quarter, which came in facing Safeway this year and in the first half of the year.” same-store sales to increase markets and drive sales. One at the low end of expectations. beyond is the arrival of Tesco. Safeway is expected to open about 3 percent in 2008 and of those is Blackhawk Net- “Same-store sales were neg- The British grocery giant the first stores somewhere in plans to remodel 250 stores works, a business Safeway atively impacted by an un- debuted in Safeway’s home Northern California near its despite challenges in the founded five years ago that precedented switchover from state of California last De- corporate home. economy and inflation that distributes gift cards and branded to generic drugs,” cember, and since has opened The one bright spot in Tes- really kicked in during the phone cards at Safeway Burd said. “And if you look at more than 50 stores. While co’s arrival is that its Fresh & first quarter. “We’re seeing a stores, as well as thousands of the other drug store chains, initial plans had called for Easy stores do not have phar- cautious consumer, and just other locations. Safeway says you’ve seen the same thing Tesco to open as many as 300 macies; only a small section is about everyone is forecasting it’s now “the largest distribu- happening.” Fresh & Easy stores by the dedicated to over-the-counter a recession,” Burd said. “But tor of third-party gift cards in Safeway reported $301.1 end of the year, last month, medicines, something that we see no reason to change the country” and that the million in earnings for its the company announced a isn’t likely to change in stores our earnings guidance for business is increasing by 100 fourth quarter ended Dec. 29, 90-day hold on new store dedicated primarily to easy, the year.” percent each year. with same-store sales increas- openings, putting the brakes in-and-out access and pre- ing 4.4 percent. For the full on its rapid expansion plans. pared foods. Headquarters: Pleasanton, Calif. year, Safeway generated a 15.7 To counter the challenge, Safeway also continued to percent increase in profits to Safeway is preparing to test a expand in 2007, opening 20 2007 sales: $42.3 billion $888 million and a 5.2 percent smaller store format that will new stores and remodeling % change vs. 2006: 5.2% Safeway jump in total sales to $42.3 bil- be similar, though larger, 253 to its new Lifestyle format. No. of stores: 1,745 lion. It also generated an esti- than Tesco’s 10,000-square- “At the end of the fourth quar- No. of stores with Rx: 1,354 mated $3.3 billion in pharma- foot Fresh & Easy Neigh- ter, we had 57 percent of our cy sales. borhood Markets. store base converted to our Avg. store size: 45,000 square feet At its pharmacies, Safeway “It’s going to be an experi- Lifestyle format, and that per- Rx sales: $3.7 billion continues to reach out to cus- ment, and, traditionally, we centage is higher now with the % of sales from Rx: 8.7% tomers, offering patient con- like to keep experiments close stores we’ve remodeled this Sales per store: $22.6 million sultations with pharmacists, to the vest,” said Burd. “So year,” Burd said. The chain Source: Drug Store News seasonal immunizations, edu- we’re not releasing any infor- expects to have 77 percent of

Drug124 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 26 DRSN_042108_p127 4/4/08 5:01 PM Page 1

ANNUALREPORT08 Supervalu pushing pharmacies to front of stores

BY DOUG DESJARDINS els now feature the pharma- cy counter and OTC sections upervalu isn’t a at the front of the store near name most people the entrance, a departure associate with phar- from its traditional place macy, but that’s near the back of the store. Schanging now that it ranks “Pharmacies at Supervalu as the ninth-largest retailer and in supermarkets in gen- in the country, with more eral tend to be buried in the than $3 billion in annual back of the store. So a lot of sales. And it plans on mak- people never even see ing pharmacies a more inte- them,” said Supervalu Retail gral part of its stores this Midwest president Kevin year by continuing an ambi- Tripp at a recent investors tious remodeling program. conference. “But pharmacies Since its June 2006 acquisi- are a key element in our tion of Albertsons–Sav-on, Fresh & Healthy format and which added more than 720 we want everyone to know pharmacies to its portfolio that they’re there.” and made it a major player Tripp said the new format in the business, Supervalu is now in place at several has focused on renovating Jewel-Osco stores in the its store base and uniting a Chicago area and at a hand- With pharmacies under the banners of Jewel-Osco, Cub Food and Albertsons–Sav-on in its portfolio, Supervalu wants customers to be aware it’s a presence in the healthcare industry. far-flung network of phar- ful of Cub Foods and macies, which operate under Albertsons–Sav-on stores. Those screenings are con- banners that include Jewel- And he said the new location ducted by certified pharma- Pharmacies at Supervalu and in Osco, Cub Food and Sav-on. reflects the fact that pharma- cists and designed to detect “supermarkets in general tend to be And now it’s managed to cy is considered a key ele- both diabetes and pre-diabet- tie together its 920 pharma- ment in the chain’s new ic conditions that can develop buried in the back of the store. cies under a new software Premium Fresh & Healthy into more serious problems. network. In late February, format, which is the focus of Screenings are available So a lot of people never even Supervalu completed a long its remodeling effort. by appointment during reg- process of integrating all its He noted that Supervalu ular pharmacy hours; results see them. pharmacies into its new ARx ranks among the top 10 phar- are provided at the time of software system. The system, macy retailers in the nation in the test. KEVIN TRIPP, ” which replaced four separate terms of revenues and store- Supervalu doesn’t expect SUPERVALU RETAIL MIDWEST PRESIDENT ones, provided a single plat- fronts, and it’s something the to add many pharmacies this form for insurance claims company want customers to year. Instead, chief executive spokeswoman Haley Meyer. Safeway, Supervalu doesn’t and pharmacy workflow know about. Placing the officer Jeff Noddle said the The smaller-format stores plan to launch a new format management and added pharmacies closer to the 2,450-store chain plans to emphasized organic foods in reaction to Tesco’s move such new technologies as entrance should make a state- remodel up to 165 stores to and all-natural products and into California and the electronic prescribing. ment about Supervalu’s its Premium Fresh & were seen as an alternative to Southwest, home to hun- “By equipping our phar- place in the industry and the Healthy format compared such grocers as Whole Foods dreds of Albertsons–Sav-on macies with the innovative key role pharmacy plays in with just 125 in 2007. and Trader Joe’s. The first stores. Tesco plans to have technologies included in supermarkets. “We’re pleased with our store opened in early 2006. up to 200 small-format Fresh ARx, we’re providing our “We want them to be a bill- early remodel performance Supervalu had planned to & Easy Neighborhood Mar- pharmacists with greater board that tells people we’re and plan to maintain our open up to 50 stores if the kets open in California, opportunity to apply their in the business,” Tripp said. commitment to the remodel format proved successful. Arizona and Nevada by the expertise as medication Enhancing that message is program,” Noddle said. He And, unlike its rival end of 2009. experts and develop creative the education that pharma- also said that remodeled solutions to common health cies are providing this year, stores are expanding their conditions,” said Chris with programs that inform offering of fresh foods and Headquarters: Eden Prairie, Minn. Dimos, Supervalu vice presi- customers about such long- prepared meals to serve con- 2007 sales: $44 billion (projected)* dent of pharmacy. term health problems as dia- sumers on the go. Supervalu % change vs. 2006: NA** The new system also betes and blood pressure. Supervalu also is putting makes it easier for customers Supervalu is adding new less emphasis on testing new No. of stores: 2,450 to reorder prescriptions and screenings and preventive formats as it works to revamp No. of stores with Rx: 920 check their refill status using treatments, as well. The its existing stores. It closed its Rx sales: $3.3 billion the ARx 24-hour telephone screenings include one type two-year-old Sunflower Mar- % of sales from Rx: 7.5% refill system. that can detect diabetes in its kets chain in February, shut- Supervalu also is testing a earliest stages, being offered tering five stores located in Sales per store: $14 million *Retail represents about 78 percent of total sales, or approximately $34.3 billion, new store format that high- at pharmacies within six three states. “Ultimately, the remaining sales are from distribution/wholesale business. **Fiscal 2007 sales, for the period ended Feb. 23, of $37 billion did not include lights its pharmacies. Some Supervalu banners in 10 format did not meet our all acquired Albertsons stores for full year. Source: Drug Store News of its new stores and remod- states since November. goals,” said Supervalu

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •127 27 DRSN_042108_p129Longs 4/4/08 4:47 PM Page 1

ANNUALREPORT08 Commitment to PBM continues to fuel Longs’ growth

BY DOUG DESJARDINS base there beyond its stores in Phoenix and Mesa. or a chain that some On the front end, Longs analysts were writing reported nearly flat sales— off five years ago, with a 0.1 percent increase— Longs Drug has fared and saw early gains erased by Fpretty well. It produced anoth- a 1.7 percent decline in fourth- er profitable year in 2007 and quarter revenue, weakened by expects the trend to continue an economy that’s hurt gener- in 2008 as it expands its store al merchandise sales. But that base and grows its burgeoning weakness is expected to be off- PBM business. set by Longs’ ability to self- The 510-store chain report- distribute nearly all of its ed net income of $98.9 mil- front-end merchandise and by lion for its fiscal year ended what Bryant said are plans to Jan. 31, compared with $79.5 “implement a new demand million last year, and total forecast and delivery system” sales of $5.26 billion, up 5.8 for the front end in 2008. percent over fiscal 2007. It also continued to consoli- Longs Drug chief executive date operations last summer officer Warren Bryant said by exiting three states— the results show that Longs Washington, Colorado and Longs is planning to offset its nearly flat front-end sales by self-distributing about 80 percent of continues to “make progress Oregon—and by closing 23 its front-end merchandise and implementing a new demand forecast and delivery system. in becoming a stronger, more stores. The three states were consolidated and more prof- territories Longs entered in has 53 drive-through win- itable company.” the 1980s and 1990s, but had dows, and includes them as a We put an infrastructure in place That’s been the mantra for never cultivated. “They were standard part of new stores “ Longs since it started its turn- really underdeveloped mar- and adds them where space [last year] to grow our PBM ... we around plan in 2002, and, for kets, and for us to reach a crit- allows to remodels. the most part, it’s produced ical mass there would have Walk-in clinics are another believe we’re seeing the early results results. Pharmacy sales have taken a substantial invest- work-in-progress for Longs. continued to grow—increas- ment,” Bryant said. In December, it opened its of those efforts. ing 1.7 percent last year—but For the coming year, Longs first in-store clinics in Hawaii WARREN BRYANT, ” the fastest-growing part of its plans to open or relocate 20 to with partner Access Medical LONGS DRUG CHIEF EXECUTIVE OFFICER business has been RX Amer- 30 stores “in multiple for- Clinics and operates clinics at ica. Revenues for its PBM mats” and to remodel up to 40 four stores in California with In a March 10 report, ana- expansion into self-distribu- nearly doubled in fiscal 2008 stores, which will boost the partner QuickHealth. Hawaii lyst John Heinbockel said tion,” Heinbockel said in his to $68.9 million compared number of remodels to 60 per- has become something of a promoting Vasos to his new report. “Stout, on the other with $39.6 million in 2007. cent and push the chain closer battleground for Longs since position was an “important hand, had primarily a ware- And the growth of Longs’ to renovating its entire store Walgreens opened its first change” that should make house club and supermarket PBM is no coincidence. As the base. It also expects same- store there in December. Longs stronger. background.” company adds more clients, store sales to jump 1 percent Walgreens’ arrival is the first “We view these changes Longs also lost one of its it’s gaining a reputation as a to 3 percent for the year. major challenge in Hawaii positively. Vasos is responsible first leaders in February when top-notch service provider The chain also is reducing for Longs, which operates 38 for many of the most impact- Joe Stratton passed away at that can handle larger groups, the size of its standard stores stores there and has dominat- ful initiatives the company has age 99. Stratton joined Longs something it’s managed to do by about 2,000 square feet. ed the market since the 1950s. pursued over the past several in 1945 after World War II, and by adding more resources. While the size of the selling Longs also made major years, including the upgrade eventually became vice presi- “We put an infrastructure in floor of its new stores is management changes in of the private-label program, dent of operations and served place [last year] to grow our about the same, it’s been able March when it promoted the development of a new on the company’s board of PBM,” Bryant said. “We to eliminate a large chunk of Todd Vasos to executive vice store remodel prototype and directors until 1977. brought in some new sales- the back of the store because president and chief operating people, and we believe we’re of its ability to self-distribute officer, replacing Karen Stout. Headquarters: Walnut Creek, Calif. seeing the early results of about 80 percent of its front- Vasos had served as senior 2007 sales: $5.26 billion Drug Longs those efforts.” end merchandise. vice president and chief mer- As a sign of that commit- Longs also operates 23 chandising officer for three % change vs. 2006: 5.8% ment, the chain even opened small pharmacies dedicated to years. Larry Gatta filled Vasos’ No. of stores: 510 two stores in Arizona last year, specialized care for patients position as senior vice presi- No. of stores with Rx: 510 a state it doesn’t typically do with long-term needs. The dent and chief merchandising Avg. store size: 20,911 square feet business in, to take care of a stores range in size from 1,500 officer, and Linda Voracek new client. “We added two square feet to 2,000 square feet moved up to vice president of Rx sales: $2.7 billion stores in Arizona to service and are located primarily in marketing and is now respon- % of sales from Rx: 51.4% that contract,” said Bryant, medical buildings. And it’s sible for all front-end cate- Sales per store: $10.16 million noting that Longs does not making drive-through phar- gories. No reason has been Source: Company reports have plans to expand its store macies a priority. It currently given for Stout’s departure.

DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• • 12928 DRSN_042108_p130.qxd 4/7/08 8:17 PM Page 130

08 ANNUALREPORT MTM services, diabetes centers keeps customers loyal BY DREW BUONO offered MTM ser- vices achieved an Headquarters: St. Louis edicine Shoppe approximate 20 2007 sales: $2.5 billion

has focused on percent increase Medicine

% change vs. 2006: -0.4% Shoppe developing suc- in their perform- No. of stores: 1,397 cessful disease ance from 2006 to Mmanagement programs to 2007. No. of stores with Rx: 1,397 keep its loyal customers “Increasing Avg. store size: 1,800 square feet healthy. pressures on Rx sales: $2.375 billion To start, Medicine Shoppe pharmacy mar- % of sales from Rx: 95% and Medicap Pharmacy gins are forcing franchisees have embraced the retail phar- Sales per store: $2.8 million Sales figures do not include international store sales; MTM services at the retail macy industry to More than 225 pharmacists at MSI are cer- Store count includes international stores Source: Company reports pharmacy level, providing recreate its iden- tified to offer advanced diabetes services. one-on-one counseling to tity,” said senior sent to their physician free of demand for this service and help improve patient health vice president of sales and drugs and DME. At the dia- charge; training on blood the passion our stores have outcomes and catch poten- marketing Scott Glover. betes centers, pharmacists glucose monitors and for meeting the needs of cus- tially harmful medication “The way most pharmacies offer education and counsel- insulin pens; and informa- tomers with diabetes,” said interactions. are doing this is by focus- ing. The centers also provide tional materials from phar- Keith Cook, vice president of In 2007, Medicine Shoppe ing on revenue streams out- a special selection of prod- maceutical manufacturers. pharmacy solutions. and Medicap Pharmacy stores side of just dispensing ucts for people with dia- “Our pharmacies place a “We’re seeing tremendous completed the largest number medications.” betes; quarterly educational high value on personalized growth in the area of dia- and percentage of cases in the The retailer’s specialized programs or support groups; attention and customer care, betes care, where we cur- Community CCRx MTM pro- care centers focus on such monthly downloads of and we are experiencing rently have more than 225 gram, compared with other areas as diabetes, immuniza- blood glucose meter re- tremendous momentum pharmacists certified to offer pharmacy providers in their tion, MTM, long-term care, ports—consenting custom- with our specialized care advanced diabetes services,” category. The stores that compounding, specialty ers also can have the report centers, demonstrating the Glover said. Target adheres to core strategy in midst of tough economy BY JIM FREDERICK Headquarters: Minneapolis hey call it “phar- 2007 sales: $63.4 billion macy rethought % change vs. 2006: 6.5% from the bottle Target up.” And, nearly No. of stores: 1,613 Tthree years after its intro- No. of stores with Rx: 1,404 duction, Target’s pharmacy Avg. store size: 129,000 square feet marketing gurus are still Rx sales: $2.7 billion promoting the benefits of ClearRx, an innovation in % of sales from Rx: 4.2% prescription packaging Sales per store: $39.3 million designed to make it easier Source: Company reports, Drug Store News for patients to stay compli- ant with their drug dosage stores consolidate. tiatives in 2008, beyond regimen and avoid drug- As of March 2008, the touting its growing immu- safety issues. The system chain operated 1,613 stores nization programs—includ- incorporates an upside- in every state but Alaska, ing a recent $29 flu vaccina- down, wide-mouthed bot- Target’s ClearRx pharmacy program offers innovatively Hawaii and Vermont, tion program, in which tle with a personalized, designed prescription bottles to promote patient compliance. including 210 Super Target Target allied with Northstar color-coded ID ring system stores in 22 states. And with Partnering Group to pro- for each member of the “innovative merchandis- seek upscale offerings more than 1,400 of those vide “on-site, certified family, which fits beneath ing” with at least the per- along with value. One stores now offering full-scale healthcare professionals to the bottle cap, as well as an ception of consistent value, example is the growing pharmacies bounded by administer each flu shot … easy-to-read label with in-stock reliability and appearance in Target stores large-scale selections of drug on a first-come, first-served larger type and clear “devotion to clean, inviting, of prestige, limited-distri- store merchandise within basis.” While pharmacy still instructions. convenient stores.” bution brands of luxury their massive interiors, represents less than 5 per- ClearRx is part of what As it navigates a choppy beauty products from Estée Target now ranks among the cent of Target’s total sales, Target calls the “guest expe- economy and tries to main- Lauder and other makers, top 12 prescription retailers Target pharmacy customers rience” offered by its tain its appeal to a worried and the growing availabili- in the United States. spend three to five times stores—an experience that consumer base, Target con- ty of high-end gray-market The company revealed lit- more than customers who packages what it calls tinues to lure shoppers who inventory as department tle about its pharmacy ini- don’t stop at the pharmacy.

130Drug Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store2008 •News 29 DRSN_042108_p132.qxd 4/8/08 3:08 PM Page 130

08 ANNUALREPORT Kmart sharpens value appeal with initiatives, remodel BY JIM FREDERICK Headquarters: Hoffman Estates, Ill. f Kmart’s most recent push 2007 sales: $50.7 billion* to regain its momentum as % change vs. 2006: -4.3% a pharmacy heavyweight No. of stores: 3,800** Kmart sputters amid the danger- No. of stores with Rx: 1,112 Ious seas of retailing in 2008, it won’t be for lack of trying. The Avg. store size: 100,000 to 200,000 square feet company is doing a lot of Rx sales: $2.8 billion things right to lure fickle pre- % of sales from Rx: 5.3% scription customers back to its Sales per store: $13.3 million* 1,112 in-store pharmacies. *Kmart and Sears combined. ** Combined U.S. and Canadian operations. Kmart Pharmacy has un- Source: Company reports leashed a torrent of initia- tives to build loyalty, offering for our customers.” the perspective of transferring customers both convenience That value proposition, he prescriptions, being able to see and additional clinical and added in an interview April a patient’s profile from any pharmacy care services. The Kmart’s pharmacies began offering American Fare 2, means providing “efficient pharmacy in the chain. most recent is a new loyalty OTC medications for $1 with a prescription purchase. healthcare solutions that “Once we have that capa- program that allows phar- patient information, as well as hanced directional and bilin- improve our customers’ bility,” he added, “we should macy customers to choose more brochures and other gual signage, added the phar- quality of life, at an excep- be able to build out our any 1-of-10 OTC medications patient information resources. macy executive. tional value. online portfolio, and allow from Kmart’s proprietary “We’ve done a lot of tweaking Kmart will “start to roll that Another major focus this our customers to see more of American Fare brand for a to our drug store model,” said out,” he added, “as we look at year will be completion of a their own profiles. It will cost of $1 with every pre- Mark Doerr, vice president of stores to remodel.” centralized patient database make the online refill process scription purchase. pharmacy and general mer- The focus chainwide, he by the fall. easier for them. Kmart also has quietly chandise manager. added, will be on internal Centralized patient records “We’re already fully e-pre- unveiled a new design for the The St. Louis store features efforts to recharge the phar- “will really help us with scribing-enabled,” Doerr pharmacy and drug store set a better integration of the macy. “We’re going to contin- chainwide [drug utilization continued. “We’re trying to in St. Louis. The pharmacy pharmacy and drug store area, ue to maintain our pharmacy reviews],” noted the pharma- get that message out to the features a large, comfortable a lower gondola profile in count, and we’re going to cy executive. “It’s really about physicians … via faxes to waiting lounge with two inter- front of the pharmacy to continue to position our- quality assurance for the cus- them, and through our refill active computer terminals for improve visibility and en- selves as a value opportunity tomer and ease of use, from request process.” A leaner Ahold expands nutrition, wellness efforts

BY JIM FREDERICK Headquarters: Braintree, Mass. 2007 sales: $21 billion* aving shed its Tops supermarket divi- % change vs. 2006: –6.2%* sion through its sale No. of stores: 709* Ahold in December to No. of stores with Rx: 560** HMorgan Stanley Private Equi- Avg. store size: 55,000 square feet ty for $310 million, Ahold USA has condensed its super- Rx sales: $2.0 billion est. market and pharmacy opera- % of sales from Rx: 9.4% est. tions to a smaller, but stronger Sales per store: $29.6 million and perhaps more focused, *Following divestment of Tops Markets and U.S. Foodservice, and acquisition of Clements Markets by Giant of Carlisle. retail enterprise. The U.S. sub- **Including 282 Stop & Shop pharmacies, 166 Giant-Landover pharmacies sidiary of Dutch-based Royal and 112 Giant-Carlisle pharmacies. Source: Company reports Ahold, Ahold USA now con- sists of the three crown jewels Landover, a shakeup in man- 100 Giant Food stores in of the company’s former list of Ahold USA began rolling out a “Value Improvement agement to streamline de- Delaware, Maryland, Vir- Program” in Stop & Shop and Giant-Landover stores. holdings: Braintree, Mass.- cision-making and focus on ginia and Washington, D.C., based Stop & Shop; Landover, some 560 of which contain pharmacies within the local market opportunities marking what Stop & Md.-based Giant and Giant of pharmacies. That total Giant-Carlisle sphere. and the opening of the com- Shop/Giant-Landover pres- Carlisle, Pa. includes roughly 450 in- Efforts to reinvigorate all pany’s largest food/drug ident and chief executive What remains are 709 store pharmacies within the three chains have sharpened. combo store last month under officer Jose Alvarez said supermarkets in the North- Stop & Shop and Giant of Among the recent highlights: the Giant-Carlisle banner, was “Ahold’s largest invest- east and mid-Atlantic Landover division, which the rollout of the “Value Im- outside Philadelphia. ment in the Giant Food region under the Stop & Ahold groups as a single provement Program,” or VIP, Last October, Ahold also stores since acquiring the Shop and Giant banners, operating entity, and 112 at Stop & Shop and Giant- revealed plans to renovate CONTINUED ON PAGE 17048

Drug132 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 30 DRSN_042108_p134.qxd 4/7/08 8:13 PM Page 130

08 ANNUALREPORT Albertsons moves ahead with strongest performers BY ANTOINETTE ALEXANDER Headquarters: Boise, Idaho hile some time has passed 2007 sales: $4.7 billion Albertsons since the 2006 % change vs. 2006: 14.18% acquisition of No. of stores: 310 moreW than 600 Albertsons No. of stores with Rx: 305 stores by hedge fund Cerberus Capital Management L.P., the Avg. store size: 55,000 square feet dust continued to settle on the Rx sales: $1.18 billion deal in 2007. % of sales from Rx: 25% The past year or so has been Sales per store: $15.2 million riddled with a string of Source: Drug Store News divestitures and store closures as the company has worked to weed out the underper- McCall noted that during but McCall said it is a concept forming units. Among the 2007, it implemented with the company is monitoring. Albertsons has converted to daily delivery of pharmaceuticals most recent was the compa- to its stores chainwide, but is taking a wait-and-see attitude McKesson Corp. a chain-wide “At this point, we are not ny’s decision, revealed in June toward in-store clinics while monitoring the industry. conversion to daily delivery of planning to open clinics in our 2007, to exit Oklahoma by pharmaceuticals to its stores. stores,” McCall said. selling 23 of its stores in the tions that support its acquisition of 10 Raley’s The company operates 310 “However, [we] will continue state to four Associated Dallas–Fort Worth division to stores in New Mexico. stores in seven states, of to watch this concept evolve Wholesale Grocers member AWG, to which Albertsons “Our priority has been, which 305 have pharmacies. and consider its potential retailers—Homeland, Reasor’s, sold its Fort Worth distribu- and will remain, investing in The in-store pharmacies are return on investment.” RPCS and Williams Discount tion center. The two compa- and improving the perform- operated under the Sav-on In other company news, Foods—and shuttering the nies entered a five-year sup- ance of our stores through- Pharmacy and Osco Phar- Albertsons has shut down remaining three units. ply agreement. out the country,” said macy banners. its “Preferred Card” pro- Albertsons also announced Also during the past year Raymond McCall, Albert- The company does not gram and instead is offering that it would outsource the or so, the grocer added seven sons LLC’s vice president of have a partnership with any discounted items to all shop- grocery distribution opera- in-store pharmacies with the pharmacy operations. in-store retail clinic operators, pers via “Bonus Buys.” Health Mart gains franchise converts at stunning pace

BY JIM FREDERICK Headquarters: San Francisco

2007 sales: $3.1 billion Mart Health ithin the retail pharmacy % change vs. 2006: 80% arena, few No. of stores: 1,850* store banners No. of stores with Rx: 1,850* haveW emerged in recent Avg. store size: 1,000 to 10,000 square feet decades with the breathtaking speed or nationwide reach of Rx sales: $2.4 billion McKesson Corp.’s franchise % of sales from Rx: 77% pharmacy division, Health Sales per store: $1.7 million Mart. The chain—really a *Reflects sales for calendar year ended Dec. 31, 2007. diverse but distinct collection Independents struggling to compete with the megachains find Source: Drug Store News of independently owned drug economies of scale and other advantages with Health Mart. against which they compete. The reason is that “that con- stores under a unified banner said former Health Mart’s preferred expansion and The franchise network is fers so many benefits—from and marketing system—has president Stefan Linn, in an service vehicle for Mc- backed by a suite of sophisti- working with managed care, mushroomed over the past interview earlier this year, Kesson’s independent phar- cated merchandising and to working with manufac- two years from a quiet, 350- just prior to his departure. macy customers. marketing services offered turers, to branding and store enterprise into a 1,900- Tim Canning, McKesson’s One big factor fueling by McKesson, which can advertising. There are a lot store, national pharmacy vice president of franchise Health Mart’s explosive apply information technolo- of benefits to having deep powerhouse. marketing, said Health growth is its potential to gy to every aspect of opera- penetration in a number of The franchise chain contin- Mart’s rapid development help hard-pressed inde- tions, from market pricing local markets.” ues to sign up 30 or more has given many beleaguered pendent pharmacy owners analysis to demand-based Already, Health Mart independent retail converts independent pharmacy ow- narrow the technology, mer- supply-chain management. accounts for more than 25 per- every month, McKesson ners a new lease on life in a chandising and marketing “You want to have a cent of the remaining inde- reported recently. “We have cutthroat market. The goal is gaps between their single- or national presence,” Linn pendent drug stores in Rhode critical mass, we have a good to turn Health Mart into a multi-store operations and said, “but at the same time, Island, Maryland, Wisconsin, group of owners and we’re 3,000-store franchise phar- the huge, highly efficient you’ve got to have key areas Colorado and Idaho, accord- coast-to-coast in 48 states,” macy chain by using it as the chain store operations where you are really strong.” ing to the company.

Drug134 Store • April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 31 DRSN_042108_p136 4/7/08 8:29 PM Page 1

08 ANNUALREPORT Costco reaching out to uninsured with prescription plan

BY DOUG DESJARDINS Headquarters: Issaquah, Wash. he growing number 2007 sales: $61 billion of branded drugs

% change vs. 2006: 7.5% Costco going generic is tak- ing a toll on pharma- No. of stores (U.S.): 391 Tcy retailers, and Costco is no No. of stores with Rx: 385 exception. But the company Avg. store size: 140,000 sq. ft. is still posting healthy sales 2006 Rx sales: $1.34 billion and developing innovative programs, including a new % of sales from Rx: 5% prescription plan for people Sales per store: $130 million without insurance. Source: Company report For the first six-and-a-half months of Costco’s current to offer members a discount open a second central-fill fiscal year—from Sept. 3 to through savings passed on center this year, in Corona, March 14—sales increased 3.4 either from the manufactur- Calif., about 40 miles east of percent to $1.55 billion. At Costco, pharmacy has become more than just a counter with er or from within our own Los Angeles. It will service Prescription sales increased a pharmacist behind it—most stores have consultation areas. margins.” Internet orders and pharmacies 1.4 percent during that time, To qualify for the pro- in the area. “We’re going to be to $748 million, while OTC Costco has a pharmacy in Program, which gives unin- gram, people need to be cur- working with Amerisource- sales jumped 5.2 percent, to nearly every one of its ware- sured members deep dis- rent Costco members and fill Bergen, and we hope to have $803 million. house stores in the United counts on hundreds of dif- out a registration form con- it up and running by “Like everyone else, we’re States. And they’ve become ferent prescription drugs. firming they don’t have September,” said Costco sen- feeling the impact of the more than just a counter with The program was given a insurance. Costco has 70,000 ior vice president of pharma- switchover to generic drugs,” a pharmacist behind it. Most soft launch last July and is members in the program cy Charles Burnett. said Costco vice president of pharmacies now have patient now available at all of and is enrolling thousands The center will serve up to pharmacy Vic Curtis. “And in consultation rooms where Costco’s pharmacies. of new members each 40 warehouses, including addition to that, we’re not see- customers can meet with a “It’s kind of a unique pro- month. “Our goal is to even- some as far away as Las ing the top of the funnel get- pharmacist or view educa- gram for our members who tually have 250,000 to Vegas. Costco currently oper- ting filled with new brand- tional videos or pamphlets. don’t have insurance,” Cur- 300,000 members enrolled,” ates a fill center in Everett, name prescription drugs to The newest offering is the tis said. “We work with our Curtis said. Wash., with McKesson Corp. replace them.” Costco Member Prescription manufacturers and are able The company also plans to that opened in 2006.

Publix achieves record expansion, stays No. 1 in service

BY MIKE TROY Headquarters: Lakeland, Fla. ublix Supermarkets 2007 sales: $23 billion operations are con- % change vs. 2006: 6.3% fined to the South- Publix eastern United States, No. of stores: 926 Pbut that hasn’t stopped the No. of stores with Rx: 708 company from achieving a Avg. store size: 45,680 sq. ft. national reputation as a pre- Rx sales: $1.220 billion mier food retailer. Its 929 stores are clean, % of sales from Rx: 5.3% merchandise is in stock, Sales per store: $24.8 million prices are fair and check- Source: Drug Store News outs are fast. Employees bag shoppers’ groceries and and the consulting firm CFI tor for Publix. even offer to help customers Group. This was the 14th year That dedication to service to their vehicles. The same Publix staffs its pharmacies at a level designed to keep the in a row that Publix placed helped Publix achieve record company’s promise to fill prescriptions within 15 minutes. philosophy extends to the No. 1. growth last year, and phar- pharmacy, which commits to be more labor intensive the supermarket chain ranked “Excellent customer serv- macy played a key role. Total to having prescriptions than some competitors’, but highest for customer service, ice is something we pride company sales increased 6.3 filled 15 minutes after they service is an investment that according to the American ourselves in. It's gratifying percent to $23 billion, while are dropped off; the phar- pays off for the company in Customer Satisfaction Index to know customers are earnings grew at an even macy is staffed at levels sales growth and customer compiled by the University of pleased with our service,” faster pace, advancing near- intended to keep that prom- satisfaction. Michigan Business School, the said Maria Brous, media and ly 8 percent to $1.2 billion. ise. Publix operations tend In late February, Publix was American Society for Quality community relations direc- CONTINUED ON PAGE 17048

Drug136 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store •News 32 DRSN_042108_p139.qxd 4/8/08 4:36 PM Page 130

ANNUALREPORT08 H-E-B builds Texas base with health services, value BY JIM FREDERICK Headquarters: San Antonio he king of home- 2007 sales: $12.8 billion grown Texas super- % change vs. 2006: 4%

market chains is No. of stores: 305 H-E-B making it easier No. of stores with Rx: 206 Tthan ever for consumers to fill their prescription and Avg. store size: 65,000 square feet wellness needs. Rx sales: $1.0 billion To pry consumers away % of sales from Rx: 7.8% from their drug store shop- Sales per store: $42 million ping habit and into one of its Source: Drug Store News more than 200 supermarket pharmacies, San Antonio- based H-E-B is offering them Rx Rewards card is one cen- selected pet medications. a slew of new and ongoing terpiece of that effort. For a On a broader scale, H-E-B services and promotions. one-time enrollment fee of $5, also has burnished its image Those incentives range from H-E-B’s generics discounts, loyalty program, and in-store customers 18 years and older as a supermarket chain by cheap generic drugs and $25 clinics have helped it defend against Wal-Mart competiton. can upgrade to the premium addressing issues of concern flu shots to easy refill options Platinum card program, to its customers. Along those and an improved member- H-E-B Rx Rewards and screenings for diabetes and which qualifies them for addi- lines, the company promotes ship card program for loyal played host to a variety of in- cholesterol, and “competi- tional discounts and services. a rigorous testing program prescription customers. store clinical-care and immu- tive pricing, especially for Among those discounts: to screen pesticides in its The company has fended nization programs on a rotat- our customers who do not access to any of 500 generic produce. It also has unveiled off an assault on the generic ing or seasonal basis. have access to a prescription drugs for $5; 500 branded an insurance program for drug market by rival Wal- The goal, according to one benefit insurance program or medications for $50 or less; a pets, branded as the H-E-B Mart Stores with its own pharmacy leader at the com- are limited in the amount of 90-day supply of generic MAX Pet Insurance pro- generic discount offer, cap- pany, is “to provide value governmental assistance medications for $9.99, no- gram, and continues to par- tured loyal customers with a through a variety of health they can receive.” cost health screenings at H-E-B ticipate in health fairs and loyalty program called My services,” including free The expanded, two-tiered pharmacies and discounts on other community activities. Pharmacy is key contributor to Sam’s Club sales success BY MIKE TROY Headquarters: Bentonville, Ark. hen Sam’s

2007 sales: $44.4 billion Sam’sClub Club refreshed % change vs. 2006: 6.7% and expanded a store in Win- No. of stores: 591 terville,W N.C., earlier this No. of stores with Rx: 494 year, the key component of Avg. store size: 132,000 square feet the project was the addition Rx sales: $1.1 million of a pharmacy. Sam’s Club has been opening new clubs % of sales from Rx: 2.4% with pharmacies and adding Sales per store: $75.1 million pharmacies to existing clubs Source: Drug Store News for the past five years, and by the end of the most recent fis- Sam’s Club posted an suitable for an expansion cal year, 494 of Sam’s Club’s operating profit last year of that would include the addi- 591 domestic units contained $1.6 billion, a 9.3 percent tion of a pharmacy have had a pharmacy. In the prior year, increase from the prior year. the service added; the 482 of 579 units contained a In so doing, Sam’s Club was remaining units will see a pharmacy. Sam’s Club is adding pharmacies to remodeled stores. Other the only one of Wal-Mart’s prescription department clubs will get pharmacies when they relocate. The addition of pharmacies three divisions where the when they relocate. Twenty- and the offering of an exten- of small businesses. Total strength in such categories as company achieved its fre- five new clubs are planned sive list of generics for $4 has sales last year increased 6.7 food, pharmacy and other quently stated goal of grow- for 2008 and 2009 (half of contributed to solid sales and percent to $44.4 billion, consumables, and in electron- ing profits faster than sales. them relocations of existing profit growth in recent years, thanks to a net increase of 12 ics. Beyond the sales benefit, Overall, Sam’s Club has clubs), so the percentage of as Sam’s Club—the ware- clubs and a robust 4.9 percent pharmacy has also been sin- charted a fairly steady clubs with pharmacies house club division of Wal- same-store sales increase. The gled out as a key contributor course with its pharmacy should continue to increase Mart Stores—has executed a company attributes the same- to gross margin improve- and health and beauty care during the next two years. strategy of serving the needs store sales increase to ments the past two years. business. Most of the clubs CONTINUED ON PAGE 17048

0DrugDrug Store Store News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •139 33 DRSN_042108_p140 4/4/08 5:55 PM Page 140

08 ANNUALREPORT Giant Eagle caters to all with its latest store concept BY MICHAEL JOHNSEN Headquarters: Pittsburgh

iant Eagle last 2007 sales: $7.1 billion* Eagle Giant summer launched % change vs. 2006: 1.5% its latest retail con- cept, Giant Eagle No. of stores: 224 GExpress, a 14,000-square-foot No. of stores with Rx: 210 mini-grocer replete with a Avg. store size: 80,000 square feet drive-through pharmacy and Rx sales: $945 million gas pumps as a sort of über- convenience store for con- % of sales from Rx: 13.3% sumers in markets where a Sales per store: $31.7 million full-scale, 80,000-square-foot *Fiscal year ended June 30, 2007 Source: Drug Store News grocer wouldn’t make sense, such as in urban environ- generic prescription pro- with a major price reduction on ments where real estate con- gram to include more than hundreds of drug store items straints can’t accommodate a In the fall, Giant Eagle expanded its $4 generic prescription 400 medications across 20 in our health and beauty care full-blown supermarket. program to include more than 400 drugs across 20 categories. therapeutic categories, an aisles, ensures that we con- “The smaller footprint of initiative designed to posi- tinue to deliver the best over- the Giant Eagle Express con- tured on an endcap. the chain’s 135 GetGo gas tion its pharmacy and adja- all value to our customers.” cept potentially provides an It’s a strategic initiative stations. It’s also an amalga- cent health and beauty offer- Approximately 20 percent opportunity to enter more that adds incremental cus- mation of all of those for- ings as value propositions of prescriptions filled at Giant urban settings,” reported Dan tomers to its varied store for- mats—providing pantry-fill- for the consumer. Eagle are included in the pro- Donovan, Giant Eagle mats, including a store base ing opportunities with its “The Giant Eagle generic gram. The company com- spokesman. “To successfully of 224 Giant Eagles dotted scaled-down grocery offer- drug program allows us to bined its generic drug savings offer a full array of items, we across western Pennsylvania, ings, along with the conven- help our customers fight the with an 8 percent drop in will evaluate utilizing space- Ohio, north-central West ience of fast grab-and-go, rising costs associated with prices across more than 275 saving kiosks for certain ser- Virginia and Maryland; two fare all wrapped around a health care,” stated Randy health and beauty offerings. vices, such as photo and Market District stores cater- drive-through pharmacy. Heiser, Giant Eagle vice presi- Giant Eagle launched the $4 video.” To help save space, ing to more upscale clientele And the Steel Town grocer dent of pharmacy. “The pro- generic drug program in 2006 greeting cards also are fea- located in Pittsburgh; and last fall expanded its $4 gram’s expansion, coupled with more than 300 drugs. New leadership drives Duane Reade’s updated model BY ANTOINETTE ALEXANDER Headquarters: New York Duane Reade Duane hanges are afoot at 2007 sales: $1.69 billion Duane Reade as the % change vs. 2006: 6.4% Manhattan-based No. of stores: 242 retailer recently Cbrought on board former No. of stores with Rx: 240 Loblaw Cos. president John Avg. store size: 6,813 square feet Lederer to serve as its new Rx sales: $776.4 million chairman and chief executive % of sales from Rx: 46% officer. The hiring comes as Duane Reade designs a new Sales per store: $6.7 million* urban prototype and contin- * Based on retail sales and total stores Source: Company reports ues on its path as a provider of health and wellness. 242-store pharmacy retailer. annual sales from $20 billion Lederer succeeds Rick D’Arezzo, who most recent- (Canadian) in 2000 to more Dreiling, who left Duane ly served as interim chief exec- than $28 billion (Canadian) in Reade in late January to steer Duane Reade plans to test a second location for its Express utive officer, will continue his 2006. Immediately prior to his the ship at discount store concept, which aims to meet front-end convenience needs. responsibilities as senior vice appointment as president in chain Dollar General. president and chief marketing 2001, Lederer was executive Dreiling left in place a six- share and enhance the cus- ing officer David D’Arezzo officer under Lederer. vice president, responsible for point turnaround plan he tomer’s shopping experience. and Alan Lacy, senior adviser From 2001 to 2006, Lederer the merchandising, operations implemented in March 2006. The success is reflected in the to Oak Hill Capital served as president of Loblaw, and profit performance of all To date, the no-frills turn- numbers, especially at the Partners—perhaps best a Canadian supermarket Loblaw businesses in eastern around plan, dubbed Duane front end. known for his former role as chain with more than 1,000 Canada. Reade Full Potential, has Since Dreiling’s departure, chairman and chief executive stores under various operat- As Lederer settles into his helped the chain improve Duane Reade senior vice officer of Sears Holdings— ing banners. Under his leader- new role at Duane Reade, the operations, increase market president and chief market- had taken the reins of the ship, Loblaw grew its reported CONTINUED ON PAGE 16847

140Drug Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store2008 •News 34 DRSN_042108_p142.qxd 4/8/08 5:56 PM Page 142

08 ANNUALREPORT USA Drug combines folksy appeal with savvy marketing BY JIM FREDERICK Headquarters: Pine Bluff, Ark. espite its sizeable 2007 sales: $635 million USA Drug USA presence and broad % change vs. 2006: 6% geographic reach, with 150 stores No. of stores: 150 Dspread over the Midwest and No. of stores with Rx: 150 South under a plethora of dif- Avg. store size: 6,000 square feet ferent banners, Pine Bluff, Rx sales: $368.3 million Ark.-based USA Drug gets lit- tle national attention. Its % of sales from Rx: 58% founder and majority owner, Sales per store: $4.2 million Stephen LaFrance, seems to Source: Drug Store News like it that way. So, too, does its small cadre of top man- 30 Super D stores and three and other services. agers, who prefer to fly under Ike’s deep-discount stores in Among the services USA the radar so they can focus on The neighborly attitude and personalized service of USA Tennessee; and 16 Super D Drug brings to market, either building customer loyalty in Drug has enabled it to gain a strong foothold in the stores in Mississippi. within its stores or online, are each of the markets where the Midwest and South. USA/Super D also offers a Web-based prescription refills, company has taken root. work to convey a neighborly inventory control. full-service franchise to in- contact lenses and digital And taken root it has. The connection with shoppers, The company’s flagship is dependent pharmacy ow- photo processing done either company is a grouping of with counseling encouraged USA Drugs, which operates ners, charging an initial fee in stores or ordered through regional chains acquired since at the pharmacy counter some 40 USA Drug and of $12,000 for a full-line store the company’s Web site. LaFrance founded USA Drug and a front end that more Super D full-line and “Ex- and $7,500 for an Express Last summer, the chain in 1984, each of them deeply resembles a variety store or press” drug stores in Ar- format. In return, franchi- also began opening in-store embedded within their com- small-scale discount store. kansas. The company also sees get a leg up with inven- clinics under a partnership munities through the careful But behind the folksy, small- owns more than 50 May’s tory management and mer- with MedBasics Family cultivation of local demand. town charm is a sophisticat- and Med-X drug stores in chandising systems, pricing Health Centers. Plans call for Company leaders put a ed array of data-driven sys- Oklahoma and southwest analyses, rapid replenish- as many as 60 walk-in care premium on personalized tems for replenishment, Missouri; nine Super D ment, volume-based dis- centers in its stores over the service, and store employees demand forecasting and stores in Missouri; more than counts, marketing support next three years. A&P snatches Pathmark, wine retailer in expansion push BY ANTOINETTE ALEXANDER Headquarters: Montvale, N.J. he Great Atlantic & 2006 sales: $9.4 billion* Pacific Tea Co. % change vs. 2005: 8% closed out a busy

No. of stores: 456 A&P 2007 as it snapped Tup rival grocer Pathmark No. of stores with Rx: 134 late in the year and wine Avg. store size: 40,700 square feet retailer Best Cellars. Looking Rx sales: $656.1 million ahead, executives remain % of sales from Rx: 6.98% optimistic as they work to realize synergies, bolster Sales per store: $20.6 million *For fiscal year 2006 ended Feb. 24, 2007; Includes Pathmark pharmacy and take the beer, Source: Drug Store News wine and spirits operation to the next level. key programs revealed in level, A&P in late 2007 As previously reported by late 2007 will come to acquired New York City- Drug Store News, A&P is fruition, including the A&P based Best Cellars, which is looking to realize synergies Pharmacy and Health Care known for merchandising by totaling $150 million within centers in certain A&P loca- flavor rather than by origin 18 to 24 months, and to date, tions. In addition to pharma- and operates five retail loca- the integration of the 141 cy services and clinical coun- tions. A&P already has oper- Pathmark stores has “gone Looking ahead, company executives want to boost pharmacy seling, the centers carry a ated 19 freestanding wine sales, and have launched pharmacy and healthcare centers well,” according to A&P. in late 2007 in select locations. wide assortment of health and liquor stores, as well as “Retaining the Pathmark and beauty care products, 12 in-store departments brand and its high-volume, count and gourmet opera- N.J., will be closing with including A&P’s own Health across its retail operations in price-impact operating for- tions,” the company stated. employees moving to the Pride products. the greater New York/New mat was a considerable com- In May, Pathmark’s head- Montvale, N.J., office. In an effort to take its beer, Jersey, Connecticut and mid- plement to A&P’s fresh, dis- quarter office in Carteret, Also in 2008, many of the wine and spirits to the next Atlantic markets.

Drug142 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 35 DRSN_042108_p144.qxd 4/4/08 4:33 PM Page 144

08 ANNUALREPORT Wegmans keeps eye on heightened role in health care BY DREW BUONO AND MICHAEL JOHNSEN Headquarters: Rochester, N.Y.

2007 sales: $4.5 billion Wegmans egmans earlier % change vs. 2006: 9.8% this year an- No. of stores: 71 nounced plans to test a new No. of stores with Rx: 71 radioW frequency identifica- Avg. store size: 125,000 square feet tion-based drug tracking sys- Rx sales: $577 million tem to determine whether % of sales from Rx: 12.8% placing RFID tags on cus- tomers’ prescription orders Sales per store: $64.3 million could make locating and ring- Source: Drug Store News ing up the orders faster and more accurate. At the pharmacies, RFID We respect a person’s right to tag encoders will be in- “ stalled and used to encode smoke, but we also understand the RFID labels on prescrip- tions as they are filled. A destructive role smoking plays serialized global trade item Wegmans not only prides itself on a health-conscious platform, number will be encoded to but it’s also making strides toward being environmentally friendly. in health. each tag, and also printed ANNY EGMAN ” on a 2-D bar code on the tions, say they’re also explor- discontinued the sale of D W , tag’s adhesive label. ing how the usefulness of tobacco products. “As a com- WEGMANS CHIEF EXECUTIVE OFFICER Mike Merulla, Wegmans’ RFID tags on individual pill pany, we respect a person’s application development bottles or blister packs could right to smoke, but we also declared in making the food, drug and mass outlets manager for pharmacy sys- be extended beyond the understand the destructive announcement. (minus Wal-Mart) for the 52 tems, and Debbie Parker, the point of purchase. role smoking plays in Sales of tobacco products weeks ending Feb. 23 retail chain’s director of On a separate healthcare health,” Wegmans chief exec- generated $8.1 billion in according to Nielsen Group pharmacy business solu- front, Wegmans in January utive officer Danny Wegman sales, up 1.1 percent, across data. Fred’s moves forward with focus on pharmacy services BY MICHAEL JOHNSEN Headquarters: Memphis, Tenn. red’s, a deep dis- 2007 sales: $1.8 billion* counter with loca- % change vs. 2006: 1% tions throughout the No. of stores: 716 Fred’s deep South, is cur- No. of stores with Rx: 296 Frently undergoing a trans- formation of sorts, closing Avg. store size: 18,300 square feet underperforming opera- Rx sales: $573.2 million tions, retooling its store mix % of sales from Rx: 32.2% and focusing on pharmacy Sales per store: $2.5 million services going forward in an * Fiscal year ended Feb. 2 Source: Company reports effort to bolster its sales. Helping to engineer that turnaround is Fred’s presi- track in growing our phar- without. Currently, 41 per- dent Bruce Efird, who macy business,” Efird added. cent of Fred’s stores contain joined the retailer in August Fred’s this year plans to a pharmacy. from Meijer, where he was open 18 stores, all but three Earlier this year, Fred’s executive vice president of with pharmacies. More new was named the preferred merchandising. All but three of Fred’s 18 planned new stores this year will have Fred’s going forward will pharmacy for the Mississippi “We have a focus on in- pharmacies, reflecting its commitment to the backbench. be coupled with a pharmacy Drug Card Program, a pro- stocks, primarily in-stocks on operation, Chambers, exec- gram launched Dec. 12 that our consumables, and have ing most of its marketing comparable program that utive vice president of phar- allows residents to save up to targeted focus on 776 items against the company’s top 50 Rick Chambers and his team macy operations, told ana- 75 percent at more than that make up approximately stores, which is helping to put in place in the pharmacy lysts last month, as the 50,000 national and regional 46 percent of our sales,” Efird produce comp sales at about to focus on driving sales in chain looks to get closer to a pharmacies, including Rite told analysts last month. He 3 percent higher than the our top-performing pharma- 50-50 split between stores Aid, Walgreens, Winn-Dixie also noted that Fred’s is plac- chain average. “We have a cy stores, as well. We are on with a pharmacy and stores and Kmart.

Drug144 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 36 DRSN_042108_p146.qxd 4/7/08 8:07 PM Page 146

08 ANNUALREPORT Fred Meyer promotes health with strong virtual presence

BY AMANDA BALTAZAR Headquarters: Portland, Ore.

espite modern and 2007 sales: $8.24 billion Meyer Fred spacious pharma- % change vs. 2006: 6.7% cies and expanded No. of stores: 129 beauty depart- Dments, Fred Meyer, one of the No. of stores with Rx: 128 original mass merchandisers Avg. store size: 65,000 to 200,000 square feet of the Pacific Northwest, is Rx sales: $529 million making full use of its Web site % of sales from Rx: 6.4% to lure pharmacy customers. With online categories Sales per store: $63.8 million ranging from disease condi- Source: Drug Store News tions to drug information, as well as surgeries and proce- of brochures and spacious the Fred Meyer name, how- dures, this 129-store chain— waiting rooms. ever, because of the strong all stores but one have a phar- Being a mass merchandiser following in Oregon, Wash- macy—is making managing with between 65,000 square ington and Alaska. diseases easy and convenient. feet and 200,000 square feet One of the oldest Fred The Web site concentrates also has its advantages in the Meyer stores, a 40,000- strongly on disease preven- stores themselves. Beauty is square-foot location in Clark tion, offering prevention all contained in one section, County, Ore., whose opening guidelines by age; healthy close to the doorways, and in 1968 was attended by recipes; and the latest health Many of Fred Meyer’s spacious pharmacies offer in-store the several aisles of OTC and Meyer himself, closed on blood pressure tests, cholesterol checks and immunizations. news, ranging from clinical health products include a April 15. It was replaced a trial information to genomic Meyer launched a $4 generic ber of other retailers and pio- DME section with walkers, day later by a 141,000- profiling. Prescriptions also drug program, offering more neered by Wal-Mart in early canes and bath seats. square-foot store in a retail can be ordered online, and than 300 generic pharmaceu- 2007. Pharmacies offer in- Founded in 1922 by Fred complex nearby, which most information is available ticals for a 30-day supply. store blood pressure testing G. Meyer, the company employs around 200 peo- in Spanish. This springboards onto the and cholesterol checks, as merged with Kroger in 1999. ple—almost double that of Early this month, Fred low prices offered by a num- well as immunizations, racks Many stores have retained the previous store. Winn Dixie rebuilds with remodels, private-label program BY MICHAEL JOHNSEN end of June. And Headquarters: Jacksonville, Fla. by June 2010, the 2007 sales: $7.2 billion

n 2006, Winn Dixie was re- company plans to Dixie Winn organized under Chapter have half of its % change vs. 2006: 1.1% 11. In 2007, under the tute- store base sport- No. of stores: 520 lage of Winn Dixie chair- ing the new Winn No. of stores with Rx: 403 Iman, chief executive officer Dixie look and and president Peter Lynch, feel at a pace of 75 Avg. store size: 46,800 square feet the Sunshine State-based remodels per year. Rx sales: $716 million company was refocused. In addition to % of sales from Rx: 8% And now the company is the store remod- Sales per store: $13.8 million ready to be reinvigorated— els, Winn Dixie Winn Dixie plans to have 50 percent of its store base remodeled by 2010. Trailing 12 months for the period ended Jan. 9 with a focus on refreshing its has introduced a Source: Drug Store News store base with a series of $2 three-tiered pri- million remodels that, on vate-label program that has whether we’re in a reces- average, generate an approx- netted the company a 20.6 sion or going to be in a imate 12 percent lift in sales percent penetration, up 1.6 recession or whatever— During tough times ... people are per remodeled store. percent from a year ago, in people are looking for “ After jettisoning more store brand—Thrifty brand value, and they’re trading looking for value, and they’re trading than 400 underperforming as the national equivalent, down,” Lynch said. “We stores in 2006, Winn Dixie is the company’s own Winn now have already changed down. We now have already re-establishing its brand Dixie label that meets or the labeling on somewhere image across five sunbelt exceeds the manufacturer between 700 to 1,000 prod- changed the labeling on somewhere states—Louisiana, Mississ- product and, new for the ucts. We’ll have 1,500 SKUs ippi, Alabama, Georgia and company, an upper tier pri- completed by June. We’ve between 700 to 1,000 products. Florida. Almost 1-in-5 Winn- vate label under the Prestige got 3,000 in the total catego- ETER YNCH ” Dixies will have been remod- or Winn-&-Lovett brands. ry to be completed by the P L , eled in the past year by the “During tough times— end of next year.” WINN DIXIE CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT

Drug146 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 37 DRSN_042108_p149 4/4/08 4:52 PM Page 1

ANNUALREPORT08 Meijer banks on free prescriptions, whole-health approach

BY MIKE DUFF Headquarters: Grand Rapids, Mich. eijer always has 2007 sales: $14.42 billion been a communi- % change vs. 2006: 2% ty-oriented retail- Meijer er, and its phar- No. of stores: 181 Mmacy operations reflect its No. of stores with Rx: 181 desire to remain relevant to Avg. store size: 100,000 square feet the health concerns of the Rx sales: $427 million communities it serves. Meijer has been a leader in % of sales from Rx: 3% helping customers afford basic Sales per store: $2.4 million prescription drugs, often by Source: Drug Store News giving many away for free, and has added health clinics than 70 percent of generic, expanded organic foods, for to its operations. The drug pediatric antibiotic prescrip- example, in an effort that program continues to go tions filled by the retailer. included the launch of its own gangbusters, but the clinic Pharmacy is and has been a organic label. In February, Meijer pharmacies filled more than 1 million free antibiotic operations ran into a snag. prescriptions in the program’s first year, ended October 2007. major consideration for Meijer, Meijer announced that its tra- Meijer itself has never oper- and in its latest prototypes, ditional private-label milk ated any of the retail clinics in and Indiana all left the busi- needs through its own stores. developed over the past five would be free of the synthetic its stores. The company leased ness and shuttered their units. Meijer filled more than 1 mil- years, the retailer moved the growth hormone rBST. space to four different The Normal clinic is operat- lion free antibiotic prescrip- department up to the front of Meijer is linking food with providers that operated inde- ed by Family Quick Care and, tions during the first year of its its units, adjacent to one of pharmacy, HBA and OTC on pendently. Now, three of the according to a Meijer source, free antibiotic program, which two major entrances, making its Web site in a section four have withdrawn from seems to be doing well. The launched in October 2006. them more accessible to dubbed Healthy Living and is the market, and, as a result, defunct clinics were operated The free antibiotic pro- customers. Meijer also has looking at how to do more of Meijer has gone from having by Physicians Organization of gram—which covers amoxi- emphasized good lighting that in stores. Among the top- 39 clinics operating in its Western Michigan, Early cillin, cephalexin, SMZ-TMP, and open aisles to make the ics Meijer is helping its shop- stores to having one, in Solutions and Medical Mart. ciprofloxacin, penicillin VK, pharmacy, HBA and OTC pers explore through a Normal, Ill. Clinic operators Despite problems with the ampicillin and erythromy- shopping experience inviting. Monthly Featured Strategy who had opened units in clinic operators, Meijer cin—includes at least one Increasingly, Meijer is tak- section are diabetes preven- Meijer stores in upper remains aggressive in serving from each of the major antibi- ing a whole-health approach tion and how to read food Michigan, the Detroit area other customer health care otic classifications and more to its overall business and has labels to promote heart health. Screenings, education and new look key for local favorite

BY ANTOINETTE ALEXANDER Headquarters: Gouverneur, N.Y. Kinney Drugs Kinney egional player Kin- 2007 sales: $666.9 million ney Drugs is looking % change vs. 2006: 10% to 2008 with opti- No. of stores: 86 mism as it continues Rto focus on being the local No. of stores with Rx: 86 choice for its customers and Avg. store size: 10,200 square feet efficiently meet their health- Rx sales: $502.2 million care needs. % of sales from Rx: 75% As part of this effort, the 104-year-old company has Sales per store: $7.75 million partnered with local area Source: Company reports healthcare professionals and provides health provide cash discount cards area and has added a consul- screenings and patient and is currently serving tation room. According to awareness programs in vir- more than 1.3 million people. the retailer, it is continuing tually all of its 86 stores. Meanwhile, at the front to implement the new look In most of its stores, Kinney Drugs offers patient awareness The focuses: heart health, programs and screenings, focusing on matters such as heart end, the company has, with- in its new stores, but has no diabetes, bone density and health, diabetes, bone density and colorectal diseases. in the past few years, intro- immediate plans to retrofit colorectal screenings. The duced a new graphics existing locations. retailer also is “exploring no clinics within its stores. ny, ProAct, the company design package, an expand- In 2007, Kinney Drugs the feasibility” of in-store Through its prescription works with organizations ed food offering, a re- opened four new stores and clinics, but currently has benefit management compa- and county governments to vamped pharmacy seating relocated five locations.

Drug StoreStore News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008• •149 38 DRSN_042108_p150.qxd 4/9/08 12:44 PM Page 1

08 ANNUALREPORT Kerr pursues dual strategy: clinical care and retail flair BY JIM FREDERICK Headquarters: Raleigh, N.C. err’s managers 2007 sales: $650 million Kerr Drug Kerr demonstrated a % change vs. 2006: 3.6% keen grasp of mar- No. of stores: 102 ket essentials last No. of stores with Rx: 102 KNovember, when the 102- store, North Carolina–based Avg. store size: 8,400 square feet chain unveiled its first Rx sales: $422.5 million “hybrid” store in Sanford, % of sales from Rx: 65% N.C. Kerr’s new prototype Kerr’s new combination of full-scale drug store, clinical care Sales per store: $6.4 million brings together all the ele- and café advances care acknowledges market realities. Source: Drug Store News ments the company has edge clinical care concepts as realities of the marketplace. been pursuing over the past diagnostic services and com- “We have to sell all this ber. “But our focus is on Kerr continues to win decade. munity outreach programs [front-end] product to pay chronic disease manage- recognition for its efforts, In one of the most appeal- with a full-scale drug store the bills,” said Kerr chair- ment. The profession of including an award last ing drug store formats to and café. It’s both another man and chief executive pharmacy has to have a month as the 2008 American appear in years, the Sanford advance in reimbursed phar- officer Tony Civello at the much bigger stake in man- Diabetes Association Provider store combines such leading- macy care and a nod to the grand opening in Novem- aging chronic disease.” of the Year for North Carolina. ShopKo remodels highlight jewelry and apparel BY DREW BUONO Headquarters: Green Bay, Wis. hopKo is updating 2007 sales: $2.2 billion stores with a new look % change vs. 2006: 0% ShopKo that highlights key departments, and it No. of stores: 132 Splans to debut new stores at a No. of stores with Rx: 131 steady clip into 2009. Avg. store size: 80,000 square feet “The palette will be warm, Rx sales: $610 million but updated with more mod- ern colors and design details,” % of sales from Rx: 27.7% said Jane VanAuken, Shopko Sales per store: $16.6 million vice president of store plan- Shopko’s new prototype includes upgraded lighting and Source: Drug Store News wide aisles for easy navigation with strollers and carts. ning. “We are also completely rearranging our merchandise remodeled ShopKo stores are S.D.; and Logan, Utah. in jewelry, accessories, apparel with new fixtures, furniture for better flow and ease of located in Great Falls, Mont., Customers’ attention will and home. The pharmacy and and optical rod walls. shopping.” The most recently Twin Falls, Idaho; Rapid City, be drawn to new key fixtures optical areas will be updated CONTINUED ON PAGE 17048 Raley’s pumps up pharmacy services at combo stores

BY DOUG DESJARDINS Pharmacies are a standard part of Raley’s new store Headquarters: Sacramento, Calif. aley’s Supermarkets openings, and they continue 2007 sales: $3.4 billion was one of the first to offer new screenings and

% change vs. 2006: 4% Raley’s chains to establish a classes for customers. In grocery-drug store March, pharmacies in the No. of stores: 129 Rcombo, opening its first chain’s central California No. of stores with Rx: 105 “super store” in 1973, and that stores provided customers Avg. store size: 50,000 square feet focus on pharmacy remains. with free Test for Life Kits that Pharmacies are standard Rx sales: $306 million The 73-year-old chain oper- provide a quick and easy in Raley’s new stores. ates 129 stores in California screening for early detection % of sales from Rx: 9% and Nevada under its own of colon cancer. Pendergraft, Raley’s vice Sales per store: $26.5 million name, along with the banners “By providing these tests president of pharmacy and Source: Drug Store News of Nob Hill and Bel-Air — at no cost, we hope to healthy lifestyle initiatives. small chains it acquired in the increase awareness of colon Raley’s also teamed with As part of the program, duct classes teaching diabet- 1990s—as well as Food cancer among our customers supplier Organic Bistro this Raley’s corporate dietitian, ics how to better manage Source, a five-store warehouse in the many communities spring to provide classes for Earline Griffith, is visiting their condition and lead a format it launched in 1994. our stores serve,” said Flint people living with diabetes. many Raley’s stores to con- healthier life.

Drug150 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 39 DRSN_042108_p152.qxd 4/7/08 8:38 PM Page 152

08 ANNUALREPORT Customer health, nutrition drive Hy-Vee’s initiatives BY DREW BUONO Hy-Vee stores will be rated for their nutri- Headquarters: Des Moines, Iowa y-Vee has recently tional value and 2007 sales: $5.6 billion launched a spate of given a score from

% change vs. 2006: 5.35% Hy-Vee new initiatives that one to 100. The infor- No. of stores: 223 focus on helping mation will be avail- Hcustomers make good nutri- able to customers be- No. of stores with Rx: 197 tional choices. It also is look- ginning in early fall, Avg. store size: 70,000 square feet ing to win over customers and products will Rx sales: $341.6 million with a new, smaller format continue to be scored % of sales from Rx: 6.1% rolling out later this year. and added to the list Hy-Vee will test a new, smaller store Sales per store: $25.1 million In 2008, Hy-Vee pharma- after the program is format this year in Lincoln, Neb. cists and in-store, registered launched. Source: Company reports, Drug Store News dietitians will have a new Hy-Vee rolled out its $4 on the list include antibiotics tool they can use to educate generic prescriptions early and drugs that treat such ail- new, smaller format in and canned goods, the store customers in purchasing this year. The program offers ments as allergies, asthma, Lincoln, Neb., in 2008. The will include produce, dairy healthy food. Based on the a 30-day supply of 400 gener- arthritis, diabetes, high cho- store will be about 20,000 and meat departments. The Overall Nutritional Quality ic drugs at a cost of $4 per lesterol and digestive issues. square feet to 25,000 square name of the store has not yet Index, about 50,000 foods in prescription. The medicines Hy-Vee also will test a feet. In addition to packaged been decided. Hannaford starts year containing credit breach BY DREW BUONO process. No personal informa- Group plans on building tion, such as names or seven new Hannaford stores Headquarters: Scarborough, Maine annaford recently addresses, was accessed or ob- in the coming year, the same 2007 sales: $2.1 billion Hannaford found itself in the tained, the company reported. number as last year. % change vs. 2006: 6% midst of a major Hannaford became aware of The company also is finding No. of stores: 156 security breach that the breach Feb. 27. Invest- success in its healthy saver Hhas affected all 165 stores it igators later determined that program. The program offers No. of stores with Rx: 120 operates in the Northeast, 106 the breach began on Dec. 7 discount savings on more Avg. store size: 48,500 square feet Sweetbay stores in Florida and wasn’t put under control than 400 brand and generic Rx sales: $344.4 million and a small number of inde- until March 10. prescription items, and pro- % of sales from Rx: 16.4% pendent groceries that sell As of the end of March, six vides savings on health Hannaford products. In all, class-action lawsuits had been screenings, flu shots and dia- Sales per store: $13.5 million more than 4 million debit and filed in federal district court betic supplies. Source: Drug Store News credit card numbers were against both Hannaford Bros. Hannaford is entering its exposed, leading to 1,800 and its parent company, second year of the Guiding nutritious foods in the store. the product packaging. cases of fraud. Delhaize Group, in wake of Stars program, which offers All foods are examined by a Superior nutrient content rais- The numbers were stolen the incident. Hannaford customers a navi- panel of health experts and are es the rating, whereas transfat during the card authorization In other news, the Delhaize gation system to find the most rated using a star system on and gluten content lowers it. With new CEO, Pamida looks to store growth, MTM t seems that Pamida, now position of president and chief the opening of new stores. in its 45th year of busi- executive officer. Paul The focus is to open an even Headquarters: Omaha, Neb. ness, is approaching 2008 Rothamel, who has been serv- mix of newly built Pamida 2007 sales: $860 million with a renewed energy ing as the interim chief execu- stores and to convert the

% change vs. 2006: 2% Pamida Iand determination. tive officer since November stores it bought out into The last 18 months have 2007, officially became the Pamida’s banner. The compa- No. of stores: 213 been a time of significant company’s new president in ny also is looking to give face No. of stores with Rx: 138 change for Pamida. Last late March. Previously, lifts to some older stores. Avg. store size: 24,000 square feet year, the company separated Rothamel was the company’s Pamida is also interested in Rx sales: $315 million from Shopko after eight senior vice president of opera- getting into diabetes educa- years. Sun Capital Partners, tions where he held responsi- tion and community-based % of sales from Rx: 36.6% a private investment firm, bility in such areas as store medication therapy manage- Sales per store: $4 million bought Shopko and decided operations and pharmacy ment to help improve the Source: Company reports, Drug Store News to split the two companies. services. He joined the compa- interaction between cus- Pamida is moving ahead ny in 1999. tomers and the pharmacist. Pamida store communities. youth and assisting people with new leadership at the One of the major moves by In 2007, the Pamida The Pamida Foundation has with disabilities and disad- highest level, recently promot- the company last year and Foundation awarded $386,053 two primary objectives: En- vantages through support of ing a company veteran to the continuing into this year is to organizations in 211 couraging and educating health-related organizations.

• April 21, 2008 Drug Store News Drug152 Store News www.drugstorenews.comwww.drugstorenews.com April 21, 2008 • 40 DRSN_042108_p155.qxd 4/9/08 12:11 PM Page 155

ANNUALREPORT08

Snyders maintains traditional healthy focus on care BY DREW BUONO care screenings and disease Montana to CVS. management programs, in- Toward the end of 2007, Headquarters: Minnetonka, Minn.

nyders Drug Stores is cluding glucose monitoring, Synders teamed up with 2007 sales: $455 million Store Drug

celebrating 80 years blood pressure testing and The Caregivers Market- % change vs. 2006: 7% Snyders in business in 2008, bone density screenings. place to offer consumers No. of stores: 91 and for those eight Snyders weathered some cash back on purchases of Sdecades, this retailer has difficult times five years ago, eligible brand-name health- No. of stores with Rx: 91 kept an unflinching focus on when it escaped Chapter 11 care products. Among the Avg. store size: 10,000 square feet the business of health care. bankruptcy by liquidating products involved in the Rx sales: $327.6 million The mind-set is reflected its Drug Emporium chain. deal were the nutritional % of sales from Rx: 72% within its mission statement The retailer since has supplement Ensure, the dia- on its corporate Web site: “At regained its footing by con- betes management product Sales per store: $5 million Snyders, the pharmacy is the tinually refocusing itself on Glucerna, the fiber supple- Source: Drug Store News focus of the business, not its core markets and paring ment Citrucel, and the vita- next to the produce depart- underperforming units. In min Oscal. egory manager Michael tend to their loved ones, and ment or the tire section.” early March, Snyders sold “Snyders is pleased to part- Dobbe, “We recognize that this cash-back program will The retailer offers a com- four of its Snyders Western ner with The Caregivers family caregivers carry a help us continue to meet their prehensive slate of health- Drug Store locations in Marketplace,” said senior cat- huge responsibility to help unique needs.” Aurora pharmacists train for larger role with patients urora Pharmacy is As part of an inte- Pharmacy Aurora supporting and grated healthcare pro- Headquarters: Milwaukee encouraging its vider, Aurora is ex- 2007 sales: $333 million pharmacists to panding into electronic % change vs. 2006: 6.7% Adevelop and use their clinical medical records, allow- No. of stores: 129 skills. Four Aurora pharma- ing pharmacists access cies are participating as pilot to patients’ medical No. of stores with Rx: 129 sites for the Wisconsin history, lab results and Avg. store size: 2,500 square feet Pharmacy Quality Collab- other pertinent infor- Rx sales: $325 million orative, a program sponsored mation. Pharmacists % of sales from Rx: 97.6% by the Pharmacy Society of will have more direct Hub stores, nurse practitioners and Wisconsin. The program will communication with Sales per store: $2.6 million MTM are part of the growing mix. Source: Company reports expand medication therapy physicians and can management services to cus- document medication and such classes of medications as tomers, and it provides reim- allergy changes using the elec- allergy, asthma, gastrointesti- expanding its home health- pression, orthopedic support, bursement for pharmacists tronic records. In addition, nal and acid reflux disease. care department in 12 loca- diagnostics, personal care who perform medication rec- Aurora pharmacists are enter- Pharmacists will be able to tions—each formally known and comfort care. Aurora onciliation, such as working ing into collaborative agree- document actions directly in as a HHC Hub Store. The established an HHC coordi- with customers who suffer ments with local physicians, the patient’s medical profile. HHC Hub Stores have larger nator to work across the hub from diabetes and take multi- allowing pharmacists to make In the last two years, product assortments for stores, and each location is ple medications. drug product selections within Aurora has been aggressively mobility, bath safety, com- CONTINUED ON PAGE 17048 Sav-Mor continues Web-based training of pharmacists av-Mor is continuing Sav-Mor also is its alliance with committed to its Headquarters: Novi, Mich. www.learnsome- series of webinars, 2007 sales: $ 401.7 million thing.com, a Web site which it uses to roll % change vs. 2006: 3% Sav-Mor Sthat provides customized, out new programs to No. of stores: 85 multimedia training and member pharmacies No. of stores with Rx: 85 learning solutions to its and to disseminate Avg. store size: 8,000 square feet clients’ employees, accord- important news and Rx sales: $333.4 million ing to Sav-Mor president and updates to operators % of sales from Rx: 83% chief executive officer and pharmacists. To- Sav-Mor is commited to increasing Sales per store: $ 4.7 million Richard Grossman. The Web pics include generic generic drug use among its patients. site’s content helps pharma- drug utilization and Source: Drug Store News cists and technicians receive billing Medicare. ic drug use by customers. information about specific One of Sav-Mor’s goals, The company broke 60 per- due to pharmacists’ interac- having a personal pharma- medications, and can track which it has been working cent generic use in 2007, tion with patients. “We are cist who understands people the progress of patients. on for years, is greater gener- which Grossman said was able to market ourselves as and their families.

DrugDrug StoreStore News News www.drugstorenews.comwww.drugstorenews.com AprilApril 21, 21, 2008 2008 • •155 41 DRSN_042108_p156 4/7/08 10:42 AM Page 156

08 ANNUALREPORT Care Pharmacy franchise expands into Vermont BY MICHAEL JOHNSEN addition of these fine community pharma- Headquarters: Alexandria, Va. Pharmacy Care are Pharmacy, based cies, and that a 2007 sales: $200 million just outside the na- respected community % change vs. 2006: 6% tion’s capital, an- pharmacy thought- No. of stores: 53 nounced last month leader like Hochberg Cits entry into the Vermont has determined Care No. of stores with Rx: 53 market by attracting one of is the right environ- Avg. store size: 2,500 square feet that state’s most successful ment for his stores,” Rx sales: $184 million community pharmacy owner- stated Care chief exec- % of sales from Rx: 92% operators, Steve Hochberg, to utive officer Gerry the company’s franchise Crocker. “It is confir- Care Pharmacy works to provide Sales per store: $4 million independent, community pharmacies Source: Company reports model. mation that our model with economies of scale. Hochberg owns and oper- represents access to ates three stores in southern contracts and services critical which collectively generate costs for both products and Care Pharmacy is up close Vermont: Rutland Pharmacy, to keeping stores profitable more than $200 million in services, is becoming more and personal to that battle—as Springfield Pharmacy and a and in a position that enables annual revenue. and more attractive to inde- of February, the chain began newly opened Manchester their growth to continue.” And that model, a conglom- pendents operating under the sharing headquarters space Pharmacy. Currently, Care has some 50 eration of independents that pressure of potential Medicaid with the National Community “We are excited about the independents under its wing, affords scale in negotiating reimbursement reductions. Pharmacy Association. With Albertsons buy, Save Mart triples its store count BY DOUG DESJARDINS were $226.1 million, an conditions as low bone densi- increase of 163 percent due to ty and high cholesterol, and Headquarters: Modesto, Calif. ave Mart moved into the purchase of 78 Albertsons educational seminars and 2007 sales: $5.2 billion Save Mart Save the ranks of Cali- LLC pharmacies,” said screenings for diabetes. % change vs. 2006: 101% fornia’s major super- Michele Snider, senior director Save Mart also resurrected market retailers last of pharmacy for Save Mart the Lucky Supermarkets No. of stores: 252 Syear with its purchase of 132 Supermarkets. The chain name and converted more No. of stores with Rx: 115 Albertsons LLC stores, an plans to open three new stores than 70 Albertsons stores to Avg. store size: 50,000 square feet acquisition that nearly tripled in 2008, all with pharmacies. the Lucky banner. It operates Rx sales: $226.1 million its pharmacy store count. Like many supermarket– stores under the S-Mart and Save Mart now operates 252 drug store combos, Save Mart FoodMaxx banners, as well. % of sales from Rx: 4.4% stores in California and is putting a greater emphasis Last fall, Save Mart’s long- Sales per store: $20.1 million Nevada, as well as 115 in-store on health and wellness pro- time president, Bob Spengler, Source: Company reports pharmacies, the majority of grams for customers. Last year retired after helping the chain those located in stores it ac- as part of its Footsteps to complete the acquisition of agement team that’s in place and Save Mart chief operating quired in the Albertsons deal. Wellness program, it offered Albertsons LLC. “I’m very, now,” he said. Spengler, 67, officer Bob Piccinini continues “Pharmacy sales in 2007 flu shots, screenings for such very confident with the man- wasn’t replaced as president, to head the company. Brookshire and Polk Oil futures share common road

BY MICHAEL JOHNSEN diversifying its grocery store supermarket savvy is applied business in 1991, with the to the 29 Polk Oil gas–conven- Headquarters: Lufkin, Texas rookshire Brothers, opening of its first gas station. ience store combos. 2007 sales: $1.3 billion Brookshire

which operates 72 In 1997, the company opened On top of fresh meat and % change vs. 2006: 18.2% Brothers grocery stores under its first Tobacco Barn—a spe- produce being offered in a No. of stores: 72 the Brookshire cialty store for all things tobac- Texas convenience store envi- BBrothers, Budget Chopper co. The company began ronment, Brookshire Brothers No. of stores with Rx: 67 and B&B Foods banners, adding gas pumps to the also plans to add 24-hour Avg. store size: 32,500 square feet merged last year with Polk Tobacco Barns two years later. pharmacy service to a few of Rx sales: $131 million* Oil, a chain of 29 conven- Conversely, Polk Oil began the locations. Last year, % of sales from Rx: 10.1%* ience stores. as a gas station then added Brookshire Brothers tapped It marks the marriage of convenience stores and gener- Ted Viescht, its vice president Sales per store: $18.1 million *Estimated sales for fiscal year ending April 26 two companies that came to al merchandise to its mix. of pharmacy, to direct phar- Source: Drug Store News the same road along disparate The merger is expected to macy service across its new paths and are now looking to bridge product offerings be- Polk Oil convenience stores. shire Brothers–Polk Oil proto- to a full-service pharmacy and play a bigger role in pharma- tween the two companies, as The company is working on type that will retail everything clinic services, according to cy. Brookshire Brothers began much of Brookshire Brothers’ an 8,700-square-foot Brook- from fresh produce and meat published reports.

156Drug Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, Store2008 •News 42 DRSN_042108_p158 4/7/08 4:50 PM Page 158

08 ANNUALREPORT Discount Drug Mart pursues accreditation and training BY MICHAEL JOHNSEN home healthcare depart- ments in all of its stores. Headquarters: Medina, Ohio iscount Drug Mart The program features 2007 sales: $630 million Drug Mart Drug is one of the few annual validation visits % change vs. 2006: 4.1% Discount drug retail chains and requires scoring of 90 No. of stores: 67 to get accreditation percent or better to achieve Das a provider of durable accredited status. No. of stores with Rx: 67 medical equipment in an This month, the compa- Avg. store size: 24,500 square feet effort to capture Medicare- ny also launched a com- Rx sales: $305.6 million reimbursed DME business. pany-wide customer serv- % of sales from Rx: 48.5% The Ohio chain last year ice program called “We received an Exemplary C.A.R.E.” in which new Sales per store: $9.4 million Provider Certificate of director of advertising Source: Drug Store News Accreditation from the and marketing Anita All stores are accredited to pro- Compliance Team, an Fontana took the lead in vide Medicare PartB- and Exceeding expectations. tinguish Discount Drug accrediting body for the U.S. implementation. covered DME. “The goal of the program Mart,” said Fontana, who Centers for Medicare and C.A.R.E. represents Com- munity, Accurate and accessi- is to create awareness of our was formerly with the J. Medicaid Services, for the mitted to customers and com- ble, Reliable and respectful brand promise and to dis- Joyner Group. Thrifty White maintains its focus on the rural Midwest BY DOUG DESJARDINS One is the tele- pharmacy store, a hrifty White Phar- concept Thrifty Headquarters: Maple Grove, Minn. Thrifty White Thrifty macy is one of the White created in 2007 sales: $352 million Pharmacy oldest regional re- 2003. It allows cer- % change vs. 2006: 5% tailers in the Mid- tified pharmacy Twest, with roots going back to technicians to fill No. of stores: 82 1884, and its rural focus and dispense pre- No. of stores with Rx: 82 reflects that history. The 82- scriptions after a Avg. store size: 5,700 square feet store chain serves rural areas pharmacist verifies Rx sales: $317 million and towns with populations and approves the from 1,000 to 90,000, and it scripts through an % of sales from Rx: 90% emphasizes customer service. audio-video link. In eight rural locations, customers Sales per store: $4.3 million use telepharmacy stores. With stores strung across Thrifty White oper- Source: Drug Store News North Dakota, Iowa, Mon- ates eight telepharmacy there are people who need tana and Wisconsin, the Stores in Minnesota and pharmacy services in these Thrifty White also works the telepharmacy concept remote setting of many of its North Dakota. locations,” said Thrifty closely with North Dakota and other practices designed stores in small towns in “We know it will be less White executive vice presi- State University College of to serve rural communities. sparsely populated states profitable than our tradition- dent of pharmacy Gary Pharmacy through a “Thrifty Thrifty White plans to has led to some interesting al drug stores because the Boehler shortly after the con- White Concept Pharmacy” open about six new stores innovations. volume is much lower, but cept debuted. that introduces students to this year. Weis Markets remodels stores, shuffles management BY MICHAEL JOHNSEN King’s Supermarkets, Cres- the area, at its Millersville sler’s Marketplace, Scot’s Lo- Pike location. Headquarters: Sunbury, Pa. eis Markets, Cost and Save-A-Lot. Weis Markets recently 2007 sales: $2.25 billion* the regional Currently, the chain is reshuffled its management % change vs. 2006: 3.3% operator that focused on upgrading its team, with the appointment Markets No. of stores: 155 has been in store base, having averaged of PriceChopper vet David Weis businessW for almost 100 years, four major remodels in each Hepfinger as the compa- No. of stores with Rx: 117 has its greatest presence of the past five years, most ny’s president and chief Avg. store size: 46,800 square feet throughout rural Pennsyl- recently adding 7,700 square operating officer in Feb- Rx sales: $219.5 million vania, but it fields a total of feet to its Manheim, Pa., ruary and Jeff Maltese as its % of sales from Rx: 9.8% 155 supermarkets in five mid- store. That’s the third addi- vice president of pharmacy Atlantic states (Pennsylvania, tion the company has com- last summer. Sales per store: $14.5 million Sales for fiscal year ended Dec. 29. Maryland, New Jersey, New pleted in the last year in the Prior to joining Weis *Excludes sales at 31 SuperPetz pet supply stores. Source: Company reports York and West Virginia) Lancaster, Pa., area. Later Markets, Maltese was the under six banners—Weis this summer, it expects to regional director of opera- macies and served as the Maryland-based Shoppers Markets, Mr. Z’s Food Mart, complete a fourth addition in tions for Supervalu Phar- director of pharmacy for the Food and Pharmacy.

Drug158 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 43 DRSN_042108_p160.qxd 4/7/08 10:46 AM Page 160

08 ANNUALREPORT Drugstore.com turns profit, revamps beauty category BY MICHAEL JOHNSEN term growth.”

Drugstore.com report- Headquarters: Bellevue, Wash. Drugstore.com or the first time in the ed a net income of 2007 sales: $445.7 million* online retailer’s histo- $156,000 for the fourth % change vs. 2006: 6.7% ry, Drugstore.com, as quarter and a net $9 mil- No. of new customers in 2007: 398,000 the leading click-but- lion loss for the year. Profit Fno-brick site, turned a profit in for next year is projected No. of active customers in 2007: 2.5 million its fourth quarter last year. to be up to $3 million. Rx sales: $156.5 million “As it has been reported, Sales of over-the- Rite Aid in-store pickup: $106.4 million consumer spending in our counter products made Mail-order pharmacy: $50.1 million markets over the holiday sea- up the lion’s share of the son was softer than anticipat- company’s $445.7 million % of sales from Rx: 35.1% *Sales for fiscal year ended Dec. 30, 2007 ed,” noted Drugstore.com in 2007 revenue, account- Drugstore.com’s high-margin Source: Company reports chairman and chief executive ing for 52.6 percent of the prestige beauty is up 57 percent. officer Dawn Lepore in a company’s revenues. industrywide decline of 1 per- approximately 40 percent. February call with analysts. In the coming year, major ber. Prestige beauty is Drug- cent as reported by NPD, Drugstore.com recently “In this environment, we initiatives include the beau- store.com’s highest-margin Lepore said. added three alternative pay- chose to focus on our bottom- ty.com Web portal, which was category, and it grew last quar- Since the beauty.com ment methods, Google Check- line profitability and long- relaunched in early Septem- ter by 57 percent versus an redesign, traffic has increased out, PayPal and Bill Me Later. New green initiative aims to keep drugs out of drink BY DREW BUONO new program called the RxMeds Take Back pro- Headquarters: St. Louis chnucks is trying to gram—an environmen- 2007 sales: $2.4 billion make a name for tally safe option for dis- % change vs. 2006: 4.17% Schnucks itself in pharmacy posing of unwanted and has introduced medications. According No. of stores: 103 Ssome new programs in an to Schnucks director of No. of stores with Rx: 100 effort to boost business. pharmacy Bob Mueller, Avg. store size: 58,000 to 63,000 square feet The company became the the RxMeds program is Rx sales: $200 million first in the Illinois-Missouri one of the first of its region to offer customers kind in the nation. It is % of sales from Rx: 8.3% up to a 21-day supply of funded by a grant from Sales per store: $23 million Schnucks has launched medication Source: Drug Store News any one of more than 54 the Environmental Pro- disposal and earth bag programs. generic oral antibiotics at tection Agency. no charge. “RxMeds gives our com- effects unwanted medica- In another effort to clean Bag Company to offer At the beginning of 2008, munities the opportunity to tions are having on our up the environment, brown “earth” bags for sale some Schnucks pharmacies take corrective action and water supply and on our Schnucks entered into a at 10 for $10, as an option to began offering customers a help reverse some of the ill environment,” he said. partnership with Earthwise paper and plastic. Brookshire marks year with new management, remodel

BY MICHAEL JOHNSEN joined the company in 1972 with more than 2 million as a warehouse man, and total square feet. Headquarters: Tyler, Texas

rookshire Grocery, a has served in various The latest store to join the 2007 sales: $2.1 billion* Brookshire

157-strong grocer capacities before being pro- Brookshire family opened % change vs. 2006: 5% Grocery that operates across moted to director of distri- in December in Bonham, No. of stores: 157 Texas, Louisiana, bution in 1988. Since that Texas, a 36,000-square-foot BArkansas and Mississippi time he has served as vice grocer under the Brook- No. of stores with Rx: 113 under one of four banners— president of distribution, shire’s Food Stores banner. Avg. store size: 36,000 square feet Brookshire’s Food Stores, senior vice president of dis- The store replaces the origi- Rx sales: $218.1 million Super 1 Foods Stores, Olé tribution, executive vice nal Brookshire’s that % of sales from Rx: 10.4% Foods and ALPS—late last president of distribution/ opened in 1978 and con- year named Rick Rayford manufacturing, and execu- tains traditional grocery, Sales per store: $13.4 million president and chief execu- tive vice president of corpo- delicatessen, bakery and *Sales for fiscal year ended Sept. 30, 2007 Source: Drug Store News tive officer of the company, rate development. produce departments, as succeeding Marvin Massey, The company also oper- well as such specialty convenience and a four- organic and natural Health who retired. ates three distribution facil- departments as a floral pump gas station. & Harmony line to meet the Rayford is a 35-year vet- ities—two in Tyler, Texas, shop, a pharmacy with two The new store offers a needs of the ever-growing eran of Brookshire, having and one in Monroe, La.— drive-through lanes for variety of the retailer’s health conscious population.

Drug160 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 44 DRSN_042108_p162 4/8/08 9:57 AM Page 162

08 ANNUALREPORT Bartell Drugs’ growth slow and local, but steady BY DOUG DESJARDINS The retailer now has 56 stores in three coun- Headquarters: Seattle Bartell Drugs Bartell s one of the oldest ties in the Seattle area 2007 sales: $342 million retail pharmacy and is content to grow % change vs. 2006: 3.2% chains in the nation, slowly and steadily in No. of stores: 56 Bartell Drugs is the its home state of ultimateA regional player, Washington. As com- No. of stores with Rx: 56 choosing not to stray far from pany chief executive Avg. store size: 13,000 square feet Seattle since opening its first officer George Bartell Rx sales: $181 million store there in 1890. And that’s told Drug Store News, % of sales from Rx: 53% not likely to change in 2008, or “This is a growing area, anytime soon. and there are plenty of Bartell Drugs plans to open one Sales per store: $6.1 million Source: Company reports “We opened two new stores places for us to go.” store and remodel another in 2008. in 2007, and one was a replace- Bartell has set itself ment store,” said Bartell apart from the competition paid cards for flu shots and medications and vaccinations its older 13,000-square-foot spokesman Barry Bartlett. with some innovative pro- give them as gifts. And this for travelers. model. The larger footprint “And in 2008, we’re looking at grams. In late 2007, it spring, it plans to open two The chain also has been allows stores to offer a wider the same situation, with one launched a Flu-Gram pro- new Travel Clinics in stores, opening larger stores that variety of products, such as new store and one replace- gram with Novartis that increasing the number of clin- now average about 16,000 convenience foods, that ap- ment store.” allowed customers to buy pre- ics to six. The clinics provide square feet, compared with peal to busy consumers. Drug Fair rolls out prototype, sets sites on 100 locations BY ANTOINETTE ALEXANDER shopper in mind, the 16,000- is looking to install in-store Headquarters: Somerset, N.J. square-foot prototype has health clinics and is in dis- 2007 sales: $340 million t has been about two years lower-profile shelving; wid- cussion with several in-store since Tim LaBeau took the er aisles; a more prominent clinic operators. However, as % change vs. 2006: 5% Fair Drug helm at Drug Fair, and beauty department; an up- of press time, no deals had No. of stores: 55 since that time, the compa- graded pharmacy waiting been finalized. No. of stores with Rx: 46 Iny has rolled out a new proto- area with coffee, a flat- In an effort to further grow Avg. store size: 17,000 to 20,000 square feet type and is working to bolster screen television and a the pharmacy business, Drug its pharmacy operations. couch; and new graphics. Fair recently brought in Ed Rx sales: $170 million Looking to further improve Going forward, all of the McGinley, former director of % of sales from Rx: 50% the shopping experience, the new stores will feature the pharmacy services at Path- Sales per store: $6.18 million 55-store chain last summer new prototype. The goal: To mark. McGinley succeeded *Drug Fair stores are smaller than Drug Fair/Cost Cutters Combos unveiled its new store proto- open about five to six stores a Barrie Levine, former vice Source: Company reports type and has since imple- year, with about 100 stores in president of pharmacy, who mented it in five new loca- operation in the next three to now serves as vice president At the front end of the gory management. Pre- tions and about 20 remodels. four years. of pharmacy business devel- store, LaBeau said the com- viously, the stores did not Designed with the female LaBeau said the company opment—a new position. pany recently instituted cate- have planograms. Post acquisition, bigger Navarro gets new leadership BY ANTOINETTE ALEXANDER stores expanded Na- varro’s presence in the Headquarters: Miami eep-rooted Navarro southern Florida mar- 2007 sales: $287 million*

Discount Pharma- ket and complement- Navarro % change vs. 2006: 7% cies entered 2008 as ed its existing foot- a larger regional print. All of the stores No. of stores: 31 Dchain with a new chief execu- are operating under No. of stores with Rx: 31 tive officer at the helm. the Navarro banner. Avg. store size: 20,000 square feet In October, private equity Shortly following Rx sales: $96 million fund MBF Healthcare, which the acquisition, Na- invested in Navarro in early varro opened the first % of sales from Rx: 30% 2007, announced that it had ValuClinic in-store Sales per store: $10.3 million entered an agreement to health clinic in Holly- Navarro opened three in-store *Calendar year includes 40 days of Sedano’s sales. Source: Company reports combine its operations with wood, Fla. There are clinics after it acquired Sedano’s. Hispanic drug retail compa- currently three Valu- cio Cabrera assumed the role ing on the company’s board ny Sedano’s Pharmacy & Clinic locations in operation In January, it was an- of chief executive officer. of directors and assisting Discount Store. within Navarro stores in nounced that MBF Health- Cabrera succeeded Gabriel with the company’s expan- The acquisition of the 11 southern Florida. care Partners executive Mar- Navarro, who is still serv- sion plans.

162Drug Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 45 DRSN_042108_p164.qxd 4/7/08 5:21 PM Page 164

08 ANNUALREPORT Technology a priority for Fruth’s pharmacy programs BY DREW BUONO Headquarters: Point Pleasant, W.Va. Pharmacy Fruth ruth Pharmacy sur- 2007 sales: $135.1 million passed sales of more % change vs. 2006: 0.7% than $100 million for the sixth straight year No. of stores: 25 Fand celebrated its 55th year No. of stores with Rx: 25 in business in 2007. Avg. store size: 10,000 square feet Fruth Pharmacy president Rx sales: $113.2 million Charles Burdette said the company “had a strong bot- % of sales from Rx: 84% tom line last year, and we are Sales per store: $5.41 million on track for the same this Source: Company reports year.” Burdette added that Valentine’s Day sales were especially strong and cited increases in first-quarter We had a strong bottom line front-end volume. “ He noted that “although last year, and we are on track for there was no new store opening in 2007, we recently the same this year. renovated our location in CHARLES BURDETTE, ” Charleston, W.Va., which FRUTH PHARMACY PRESIDENT turned out fabulous, and sales for that store are up.” Fruth plans to upgrade its PDX pharmacy system and to revamp who refill prescriptions Fruth Pharmacy offers its The company has plans to its Web site to make it more interactive for pharmacy customers. online. The Web site will own $4 generic plan called upgrade its PDX pharmacy offer expanded informa- the Generic SaveRx Plan. system with PDX’s elec- multiple pharmacies within Fruth Pharmacy is also tion in a number of areas, The company’s formulary tronic healthcare record sys- the chain without having to working on revamping its including drug interac- consists of more than 125 tem. By upgrading to this give their information to Web site to make it more tions, health conditions drugs and is available for up system, customers can go to each pharmacy. interactive for customers and recipes. to a 30-day supply. Lewis targets diverse needs of shifting customer base BY MICHAEL JOHNSEN Headquarters: Sioux Falls, S.D. ewis Drug celebrated 2007 sales: $142.4 million anniversary No. 65 in % change vs. 2006: 5.0% Drug Lewis February, marking No. of stores: 8 Lewis Drug; 22 Lewis Family Drug more than six decades Lthat the pharmacy retailer has No. of stores with Rx: 30 successfully staved off the Avg. store size: 38,000 square feet (Lewis Drug); likes of Wal-Mart and Wal- 5,000 square feet (Lewis Family Drug) greens in serving the bur- Rx sales: $99.7 million geoning Sioux Falls, S.D., % of sales from Rx: 70.1% market, all through a simple- Sales per store: $10.3 million Lewis Drug; enough formula: deliver any- $2.6 million Lewis Family Drug thing and everything that the Source: Drug Store News consumer wants or needs with a Midwest smile. Lewis Drug had partnered We need to keep reinventing with adjacent doctor’s clinics “ long before retail clinics ourselves and keep our became the latest trend among Lewis Drug’s stores sport a diverse product mix, ranging from pharmacy operators, and its home and garden to soft goods and from electronics to furniture. foundation fresh. stores sport a diverse product MARK GRIFFIN, ” mix, ranging from home and better capitalize on the popu- “We need to keep reinvent- LEWIS DRUG PRESIDENT AND CHIEF EXECUTIVE OFFICER garden to soft goods and from larity of its Sioux Falls base— ing ourselves and keep our electronics to furniture. the locale has been named the foundation fresh,” said Mark search that the influx of iar with national chains like This past fall, Lewis Drug No. 1 best place for business- Griffin, Lewis Drug president younger people into our mar- Walgreens, but not as familiar implemented a fresh adver- es and careers by Forbes mag- and chief executive officer. kets, and in particular young with hometown pharmacies tising campaign in an effort to azine for five years running. “We’ve found through re- mothers with kids, is ... famil- like Lewis.”

Drug164 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 46 DRSN_042108_p168 4/10/08 11:22 AM Page 168

NEWS & ANALYSIS

some time is that we are D’Arezzo stressed that the ience needs of shoppers. It car- “We feel if we can put some Duane Reade starting from the ground up new look is “clearly an urban ries a limited assortment of the additional counseling, pro- CONTINUED FROM PAGE 14034 to see if we need different model,” as more than 90 per- chain’s most frequently pur- grams and classes in place in retailer is continuing on its types of fixtures; do we want cent of Duane Reade’s store chased items in convenience, these same physical spaces, quest to serve as a provider to have a different kind of volume is in an urban setting. general merchandise, and those are opportunities for us of health and wellness, as signing and way finding; However, as the retailer push- health and beauty. that our customers are looking well as to meet the needs of what are the right colors by es further into the suburban The new concept does not for,” said D’Arezzo, who busy, convenience-hungry category; and what are some market over the next few have a pharmacy, but it has added that the company is New Yorkers. of the other adjacencies that years, it will offer a more sub- a pharmacy kiosk, enabling also working with Gay Men’s D’Arezzo said the company maybe consumers would tell urban store footprint. shoppers to request pre- Health Crisis, a not-for-profit, plans to introduce this year a you they would like to have While the chain’s new scriptions they can pick up community-based organiza- new updated-look store in together that we haven’t Express concept is still in test at a nearby Duane Reade or tion committed to the fight Manhattan. As of press time, thought of,” said D’Arezzo, mode, it is looking to test this have delivered to their against AIDS. D’Arezzo declined to disclose who noted that the company spring a second Express loca- home or office. A third diabetes center is set the location of the new store, is currently working with tion in a more traditional busi- The company also is to open at an undisclosed but said it would “be a major several design experts, as ness district. The first Express working to expand the serv- location in the near future. departure” from the current well as using consumer store is located at 52nd Street ice offering at its two Aside from the string of ini- look and will involve new col- feedback. “We are putting a and Broadway in New York. Diabetes Resource Centers, tiatives currently under way, ors, layout and adjacencies. little more science and a lot The 3,000-square-foot unit located in Manhattan and further evidence that the com- The store is expected to be more process behind it to consists of a condensed store Brooklyn, to address such pany is back in growth mode open by Labor Day. ensure that it is a good, format specifically designed other disease states as is the fact that it plans to open “The reason it is taking sound model.” to meet the front-end conven- hypertension and obesity. 15 new stores in 2008.

through [its] integration that CVS and Rite Aid [along was renewed this past year destination center for die- Rite Aid process,” François Coutu, with other retailers] have real- and currently includes 1,358 tary supplements. CONTINUED FROM PAGE 11622 Jean Coutu Group president ly stepped up their game.” stores featuring a GNC store- And Rite Aid last month operations, which suggests and chief executive officer, Rite Aid has other reasons within-a-store, with plans to repositioned its beauty that not only is Fiala sold on told analysts earlier this year. to be bullish on its future. It’s grow to more than 2,300 lo- planogram, which incorpo- Rite Aid’s upside, but he’s “The economy is not ex- well-positioned against the cations by 2014. rated 2,000 new beauty items able to successfully pitch it as tremely strong south of the senior population through its According to data in into the mix. a compelling story, as well. border. But for us, it is still a growing Living More senior GNC’s annual report, the Rite Aid also announced in Also sticking in Rite Aid’s long-term investment.” loyalty program, which specialty channel is project- March plans to bolster its corner is the chain’s largest Finally, Rite Aid was paid boasts more than 3 million ed to grow at a rate of 4 per- beauty offerings with the shareholder, the Jean Coutu the greatest compliment from members who spend twice cent per year over the next addition of a new natural Group, which has dismissed one of its chief competitors— as much as non-members. five years. And the growing organics section in the bath criticisms concerning the Walgreens. In a March confer- The chain also still fields a brand identity of GNC, now and body department of underperformance of Rite ence call with analysts, Wal- significant differentiator under the direction of for- many of its stores, as well as Aid stock from Canadian greens chairman and chief across its dietary supplement mer Rite Aid executive Beth new fragrances under its analysts as premature. “I executive officer Jeff Rein told offerings with its GNC part- Kaplan, will continue to exclusive Pure Spring bath realize that Rite Aid is going analysts, “I’d like to point out nership, an agreement that help establish Rite Aid as a and body collection.

lion in revenue.” success in winning the Prime Wasson calls it “leverag- brand marks another attempt Walgreens Walgreens’ increasing contract to its decision to stay ing the box” inside Wal- to leverage its massive cus- CONTINUED FROM PAGE 11420 leverage as a provider of out of the pharmacy benefit greens stores. The effort tomer traffic—more than Goldman Sachs analyst specialty pharmaceuticals management business. “We involves new services and three million customers a day John Heinbockel also ex- also played out in the man- believe our independence as a partnerships with other visit its stores—and to build pressed satisfaction. “We aged care arena last month. pharmacy services provider major service provider com- additional sales and profits at view these developments On March 24, the company unattached to a major PBM panies, such as Starbucks the front end, which accounts favorably, especially over the revealed it had won an helped us win Prime’s busi- and DHL. Among the other for roughly a third of Wal- longer term,” he noted. He exclusive, multi-year con- ness,” he said. new offerings: DVDs on greens’ sales. cites the market for on-site tract to provide specialized The company’s new initia- demand in the photo In line with that effort, corporate health care as medication services to tives aren’t confined to phar- department, printer car- Walgreens is pushing hard “very fertile ground,” and Prime Therapeutics, a phar- macy and wellness. At the tridge refills, and Red Box to squeeze more sales and predicts that the “combina- macy benefit manager col- front of the store, efforts to video rentals for $1. profit dollars out of pri- tion of corporate clinics and lectively owned by 10 Blue spark sales and profits The new clothing line is vate label. The company pharmacies promises sub- Cross and Blue Shield extend to the launch of something of a stretch for a created an in-house task stantial improvements in plans. Walgreens will serve Casual Gear, the overhaul of drug store chain, but Wal- force last year to pare its service and labor productivi- specialty pharmacy users Walgreens’ private label pro- greens has been tugging at private label line of lesser- ty … and will serve to among more than 20 mil- gram and the expansion of the edges of the casual appar- performing items and bol- strengthen both the Walgreen lion Prime plan members in-store offerings like Café W, el business for years with ster profitability. In Jan- and Take Care brands.” He through its Pittsburgh- a self-contained service cen- periodic front-end displays uary, it also rolled out a also predicted that Take Care based Medmark specialty ter for coffee and fountain dedicated to T-shirts, hood- new line of “W” brand pri- “could ultimately evolve into pharmacy division. drinks already in place in ies, and other low-priced soft vate label items in a wide a business generating $3 bil- Wasson credited Walgreens’ more than 200 locations. goods. The rollout of its own range of categories.

Drug168 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 47 DRSN_042108_p170 4/10/08 11:16 AM Page 170

NEWS & ANALYSIS

overall strategy of providing clinics in 2008 in both existing ing market in our chain,” Ryan Net earnings rose 92.6 percent CVS Caremark more touch points with pa- and new markets. told analysts during the recent to $2.6 billion, or $1.92 per CONTINUED FROM PAGE 115 21 tients, bolstering the stores’ Meanwhile, CVS has contin- quarterly call. diluted share, compared with more than 2 percent of the image as a healthcare pro- ued to focus on its core retail For 2007, total revenue $1.4 billion, or $1.60 per dilut- company’s earnings by vider and offering convenient business, which includes the increased 74.2 percent to a ed share, in 2006. Adler’s estimates. access to care. MinuteClinic, former Osco/Sav-on stores record $76.3 billion. Same- For 2008, CVS Caremark Another critical business which cost about $69 million that, Ryan revealed, on a comp store sales in the company’s expects to grow sales at its segment for CVS Caremark— to roll out in 2007, according basis outpaced core stores dur- CVS/pharmacy division in- retail division by 7 percent to not to mention retail phar- to Adler, is expected to turn ing the fourth quarter. creased 5.3 percent for the 10 percent, driven by 4 percent macy in general—is the profitable in 2009. The compa- “Southern California, which year, while pharmacy same- to 7 percent total comp-store MinuteClinic operation. CVS ny ended 2007 with 462 clinics is the second-largest drug store sales increased 5.2 per- sales growth and square Caremark has stressed that in 25 states and expects to store market in the country, is cent and front-end same-store footage growth of between 3 the clinics are central to its open between 200 and 300 now the largest sales-produc- sales increased 5.3 percent. percent and 3.5 percent.

ures. This year, Publix lion miles,” declared John pharmacy and HBC,” Fagen Publix plans to open 45 new Ahold Fegan, senior vice president told Drug Store News. CONTINUED FROM PAGE 13632 stores and will close and CONTINUED FROM PAGE 13230 of pharmacy for Ahold USA. What will set Ahold’s three In 2007, Publix opened 44 remodel an undisclosed chain in 1998.” “Armed with new CEOs and supermarket divisions apart, stores and closed 10, ending number of other locations. For 2008, said Royal a new executive team in both he added, will be the compa- the year with 926 stores and The growth achieved by Ahold chief executive John organizations … Ahold USA ny’s day-to-day determina- 708 pharmacies; in the prior Publix is impressive under Rishton, “our focus will be has put a team in place that tion “to provide the best serv- year, it operated 901 stores normal circumstances, but on the completion of the VIP will continue to focus on the ice and the best nutritional and 675 pharmacies. To it is even more so consider- program at Stop & Shop and individual markets, but also information that’s available achieve that level of growth ing Publix was at ground Giant-Landover” and “the has a broader team that over- in the marketplace.” meant an increased invest- zero when Wal-Mart intro- start of the remodeling of looks the whole operation to “We have nutritionists in ment in capital expendi- duced its $4 generic drug our Giant-Landover stores.” see where there are local the office … who work direct- tures, which surged last program in Tampa, Fla., in Early results of that refocus opportunities.” ly with our consumer affairs year by 42 percent to $683 late 2006 and then quickly could be seen in the fourth Such executives as Ahold group, with the pharmacy and million, compared to the expanded the program quarter. Excluding gasoline USA chief operating officer HBC sides, and with various prior year, when $481 mil- statewide. sales at both chains, same- Larry Benjamin and recently associations … to help stimu- lion was spent to open 29 Initially, Publix, which store sales were up 1.2 percent installed executive vice pres- late the thought process of stores and close 12 others. operates 665 stores in at Stop & Shop and 3.8 percent ident of strategy Jim Dwyer how these groups can interact Remodeling was also a pri- Florida, and other retailers at Giant-Carlisle. Although are “bridging the cultures” with us at retail,” Fagen said. ority in 2007 as Publix matched the $4 initiative, margins were dented by the among the three operating Ahold also is expanding remodeled 97 stores, com- but then last August Publix value pricing program—and entities, he added. its patient care outreach pared to 58 remodels the went in a different direc- same-store sales actually That leaves the pharmacy efforts, including vaccina- prior year. tion by introducing a free slipped half a percentage management team free to con- tion and disease manage- The combination of re- program for commonly point at Giant-Landover—the centrate on emerging trends in ment programs, and has modeling activity and the prescribed oral antibiotics company appears to have health and wellness. “ brought in a part-time clinical relocation of existing such as amoxicillin and regained its footing and its As we move forward, coordinator to develop proto- stores to new locations, cephalexin. Early this year, local-market customer focus. you’re going to see a very cols for medication therapy typically containing a Publix announced it had “I think we’ve come a mil- strong tie-in with food and management. pharmacy, explains why filled its one millionth free the number of Publix phar- prescription. The anti- The company ‘s first store layout will feature a pharma- macies and the sales they biotics now account for Shopko in Council Bluffs, Iowa, cy and optical center at the generate has outpaced the almost half of the generic CONTINUED FROM PAGE 15039 scheduled for a March 2009 front of the store. overall store count and pediatric prescriptions fil- Customers will be better opening, will be based on In 2008, Shopko will open total company sales fig- led at Publix. able to see Shopko’s mer- Shopko’s new prototype. At five stores in Wisconsin and chandise with upgraded 80,000 square feet, the store one in Minnesota. These easily accessible; unlike lighting and new signage. will be spacious enough for include three new full-line Sam’s Club other areas of the clubs, a Fitting rooms will be updat- easy navigation by customers prototypes and three Shopko CONTINUED FROM PAGE 13933 membership is not required ed and restrooms improved. using strollers and carts. The Express stores. With so many new units to use the pharmacy. The coming on line, Sam’s Club location also is good for in- will have the opportunity club promotions, such as a ning Quick Care clinics. began accepting insurance for to experiment with its phar- major event conducted last Aurora The company now runs 20 patients at the clinics. “About macy and adjacent health September, when Sam’s CONTINUED FROM PAGE 15541 clinics throughout Wis- 70 to 75 percent of our and beauty department in a Club offered health and staffed with a dedicated consin in grocery stores, patients use insurance,” said way that it hasn’t so far. wellness screenings at 300 HHC specialist, who works shopping malls, Wal-Mart Janet Teske, manager of the The company has intro- locations. Customers were one on one with customers stores and its own pharma- Aurora Quick Care system. duced several prototypes provided with complimen- and develops relationships cies. The nurse practition- Teske was surprised by this in recent years, but has tary health screenings for and referrals with providers ers who staff the kiosks number, especially because been content to leave the blood glucose, cholesterol, in the local community. offer diagnosis and, if need- the idea of the clinics was to pharmacy at its front-of- blood pressure, vision and Aurora recently celebrat- ed, prescriptions. offer inexpensive health care store location, where it is body fat. ed its fourth year of run- Back in July, the company to the uninsured.

Drug170 Store• April News 21, 2008 www.drugstorenews.comwww.drugstorenews.com AprilDrug 21, 2008Store • News 48