In uncertain times, hold their own BY JIM FREDERICK United States, and 10 of the top 25. derive “a tremendous halo effect from FMI, “41 percent of [] “ is a major contributor to the pharmacist being there.” shoppers who say their diets could be In times of uncertainty and econom- the supermarket’s bottom line,” the One indication of the growing re- a lot healthier would be very interested ic turmoil, Americans still have to eat Food Marketing Institute noted. cognition by supermarket industry in information related to disease pre- and take their medicines. “Prescription sales make up 9.5 per- leaders of pharmacy’s importance to vention and management.” That essential marketplace truism cent of total store sales.” their long-term survival was the hir- According to the food-store indus- isn’t lost on supermarket pharmacy “Consumers are demanding both ing, one year ago, of pharmacy veteran try’s newest research, contained in the operators. Trading on the enormous nutritional advice,” said FMI president Cathy Polley as FMI’s first vice presi- Supermarket Pharmacy Trends 2008 appeal of one-stop shopping conven- and chief executive officer Tim dent of pharmacy services. Polley, who report released by FMI in July, super- ience, growing demands among con- Hammonds, “and pharmacists who has served in high-level pharmacy market dispensed an aver- sumers for healthier eating alterna- can bridge the gap in the supermarket management positions for the Na- age of 126 prescriptions per day in tives, and their own growing ability to between medicinal counseling and tional Association of Chain Drug 2007, basically the same number dis- merge the health and prevention nutritionally-driven wellness pro- Stores, the American Pharmacists pensed the previous year. The average expertise of their pharmacy staff with grams.” And growing awareness of Association, Kmart Corp. and other food-store pharmacy generated week- the nutritional benefits offered in the nutritional issues, wellness and pre- organizations, has called pharmacies ly prescription sales of $46,000, up food aisles, food-store operators con- ventive health among consumers, he “strategically essential to food - roughly 9 percent over 2006. tinue to elevate the role their pharma- said, has handed the supermarket ers,” adding that food-store pharma- On a broader level, “supermarkets cy departments play in overall store industry a golden opportunity to build cies serve as the anchor for “the health- are managing reasonably well through performance. stronger ties to the U.S. population— and-wellness initiatives that many a challenging macro [retail environ- Indeed, supermarket chains, led by and to strengthen its long-term busi- supermarkets emphasize.” ment] and to a large degree, are faring Co., now account for three of the ness model. What’s more, FMI noted, food-store better than discretionary retail sec- 10 largest pharmacy retailers in the “Health and wellness … is a space pharmacies are “positioned to bring in tors,” according to Goldman Sachs that supermarkets can own,” even more revenue,” with “more than retail analyst John Heinbockel. For the complete Drug Store News Hammonds said. “This is a great half of all supermarket pharmacies Given the current state of the econo- Power50 rankings of the top retail phar- opportunity … connecting the dots [offering] in-store programs to turn my, some price inflation could be macy operators in America, including between health and wellness.” shoppers into pharmacy customers.” expected, however, Heinbockel noted, food, drug, mass and independents, log Supermarkets that contain in-store Those pharmacies have plenty of fears of a dramatic drop in the nation’s onto www.drugstorenews.com pharmacies, Hammonds added, also opportunity to do so. According to supermarket business are overblown. Powerhouse Kroger maintains strong lead in Rx Question: which retail chain wig, retail analyst with Citi Fry’s Marketplace, centered in Headquarters: Cincinnati has risen to become the nation’s Investment Research. Arizona; QFC or Quality Food sixth-largest pharmacy opera- John Heinbockel, a retail Stores in Washington and 2007 sales: $70.2 billion

tor, with nearly 2,000 prescrip- analyst with Goldman Sachs, ; and -based % change vs. 2006: 6.2% Kroger tion centers, coast-to-coast mar- also likes Kroger’s prospects. Jay C Food Stores. No. of stores: 2,486 ket penetration and $7 billion in The company, he noted in a All told, roughly 8-out-of- No. of stores with Rx: 1,940 pharmacy revenues? Sept. 14 report, has “by far the every-10 of Kroger’s roughly The answer, of course, is strongest momentum” among 2,500 supermarkets contain Avg. store size: 2,500, 57,000, 65,000 and 145,000 square feet Kroger Co., one of the indus- its supermarket competitors. pharmacies, and more than try’s most innovative practi- Kroger’s expanding empire 600 of those pharmacies Rx sales: $6.9 billion tioners of pharmacy-based of in-store pharmacies comes include drive-through win- % of sales from Rx: 9.8% patient-care initiatives. Kroger under many retail banners. dows. Its pharmacists will Source: Company reports, Drug Store News truly can be called a national Besides its Cincinnati-based likely dispense some 125 mil- power in food and pharmacy Kroger-brand flagship stores, lion prescriptions this year. programs, such as immuniza- education programs. In addi- retailing, with stores in every the company offers pharmacy Those numbers highlight tions, obesity management, tion, the company noted, region of the United States services through a slew of the company’s commitment diabetic care, cholesterol “Many pharmacists … have except the Northeast and local subsidiaries including: to pharmacy, which account- screening, emergency contra- received various certifications parts of the upper Midwest -based Smith’s Food & ed for 9.8 percent of total store ception and more,” noted one in disease-state management, and Central-West region. Drug Stores; , which revenues of $70.2 billion in fis- company report. including NIPCO certifica- “We believe Kroger will operates in Kansas, , cal 2007. So, too, does Kroger’s Kroger also continues to tion programs, APhA’s continue to benefit due to its Arkansas and Nebraska; ongoing determination to add Kroger Patient Care Cen- Immunization Delivery train- lower prices versus supermar- and in develop and field clinical serv- ters in some stores, and to ing, and Cooper/Clayton ket competitors, strong traffic ; and ices for patients, in-store provide—often through clini- smoking-cessation facilita- trends, sales-driving initia- City Market in ; Fred health outreach offerings and cal pharmacists or pharmacy tor’s training. Current pro- tives … and investments in Meyer, based in Oregon and residency programs through- residents—such mobile serv- grams include smoking-ces- the overall shopping experi- also operating in Washington, out its divisions. “Special ices as screenings, sation, respiratory care and ence,” noted Deborah Weins- Idaho and Alaska; Fry’s and emphasis is on pharmacy care immunizations and wellness- adult immunizations.”

Drug Store News www.drugstorenews.com October 2008 • 1 Safeway: New healthcare division not a PBM BY MIKE DUFF Beyond that assertion, Sachs conference that design- Safeway is keeping a lid on its ing a healthcare plan based on Safeway made a splash a plans, and the entire dimen- providing incentives for be- Headquarters: Pleasanton, Calif. month ago when Steve Burd, sion of the effort might not be havioral change could win 2007 sales: $42.3 billion Safeway chairman, president and fully conceived. “There’s real- positive participant response. % change vs. 2006: 5.2% chief executive officer, told ly nothing much more we can Burd asserted that the Safe- No. of stores: 1,738 the Goldman Sachs Global say because we’re in the plan- way program could cut a com- Retailing Conference that ning stages,” Massingill said. pany’s pharmacy costs by 30 No. of stores with Rx: 1,300 the company would launch The healthcare division’s percent in 12 weeks. Avg. store size: 45,000 square feet a healthcare services con- roots originate from In the company’s second- Rx sales: $3.7 billion sulting division. While some Safeway’s efforts to rational- quarter conference call, Burd % of sales from Rx: 8.7% indications are that he made ize costs in healthcare for its said, “One of the things that Source: Drug Store News the announcement a bit own non-union employees we are focused on is health before the company was pre- and provide incentives for care. When you look at the pared to respond to the workers to better manage benefits side of the equation, among the 10 largest in the the generics shift,” Burd said. storm of questions that fol- their health and select there are huge benefits there. United States with more “It is also challenged, as I am lowed, the company has said cheaper options for care. In We’ve embedded in our con- than $3 billion in sales, has sure you know, by a shift in one thing in no uncertain recent negotiations between tract and in our approach here been hit by the shift to mail order. It remains a good terms: Safeway isn’t plan- major supermarket opera- the notion of personal respon- generics, but it is increas- business for us and some of ning to become a pharmacy tors and union workers in sibility and making lifestyle ing services, including the the sales building strategies benefit manager. California, Burd and changes, and that affects costs. addition of in-store vacci- that we’ve put in place are in “We’re in the beginning Safeway took the lead, rais- Had we not taken a leadership nations for seasonal ail- fact focused on pharmacy. phases of this healthcare divi- ing pay levels in return for position in health care, we ments including shingles. We’ve done some other phar- sion,” said Safeway spokes- changes in health care that would not be achieving those Safeway also is testing loy- macy programs that are woman Teena Massingill, “but included an employee-man- kinds of benefits.” alty tie-ins to pharmacy. focused on loyalty in select it’s not going to be a pharma- aged healthcare approach. Safeway’s own pharma- “Pharmacy is challenged markets where we’ve had an cy benefit manager.” Burd told the Goldman cy operation, which is on the sales line, obviously by opportunity to be first.” Supervalu store tours focus on nutrition, diabetes When Supervalu acquired offer free Eating Healthy Pharmacy, in addition to major parts of - with Diabetes educational -Osco, now will offer Headquarters: Eden Prairie, Minn. Sav-On, and a passel of food programming that will aid the Eating Healthy with Dia-

2007 sales: $44 billion* Supervalu and drug combination stores, consumers in setting diabetes betes program. Supervalu it suddenly became a major health goals. To help con- intends the program to be di- % change vs. 2006: 18% pharmacy player––the ninth- sumers put theory into prac- verse in its service to cus- No. of stores: 2,450 biggest in the United tice, the program will feature tomers with diabetes, and the No. of stores with Rx: 920 States––a role that it has a 90-minute supermarket only significant limitation is Rx sales: $3.3 billion embraced and made central tour to teach participants available personnel. to its go-to-market strategy. how to read food labels, “Our eating healthy with % of sales from Rx: 7.5% *Retail represents about 78 percent of total sales, As it continues renovating understand carbohydrates diabetes program is one or approximately $34.3 billion, remaining sales supermarkets according to its and make more healthful example of the many special are from distribution/wholesale business. Source: Drug Store News, Company report Premium Fresh & Healthy food choices. services available in our dia- prototype, Supervalu is look- “Eating healthy with dia- betes care pharmacies to help ing at new ways to link food betes originated in our Jewel- people with diabetes manage strategy of providing the most care pharmacist.” with pharmacy/OTC to help Osco pharmacies more than their condition,” Dimos said. health-focused shopping ex- Ultimately, Eating Healthy consumers maintain wellness 10 years ago. We are expand- “Tours are planned and perience available,” Dimos with Diabetes is designed to and manage disease states. ing the program to other mar- implemented in areas where said. “The two-hour program establish bonds with cus- In September, Supervalu kets where our patients have our specially trained pharma- begins at the pharmacy where tomers. announced an expansion of a need for education on nutri- cists are in place.” our specially-trained diabetes “Our goal is to provide our its eating healthy with dia- tion as it relates to diabetes,” As it rolls out Premium care pharmacist provides a patients and store customers betes initiative beyond its Chris Dimos, president of Fresh & Healthy, Supervalu brief snapshot of the impor- with the tools and information Chicago market Jewel-Osco Supervalu pharmacies, told intends to differentiate itself tance of maintaining heart they will need to enjoy the pharmacies to include in- Drug Store News. based on its wellness posi- health in diabetes. The next 90 best quality of life possible. ... store pharmacy locations in Acme Sav-on Pharmacy, tioning by emphasizing the minutes of the program are At the same time, they can rely 16 additional states. Albertsons Sav-on Pharmacy, substance of its programs. spent in interactive store on our stores to provide quali- Through November, select Cub Pharmacy, Shaw’s Osco “The expansion of this pro- tours, led by both a registered ty food choices to maximize Supervalu pharmacies will Pharmacy and Shoppers gram supports our corporate dietician and our diabetes health,” Dimos said.

2 • October 2008 www.drugstorenews.com Drug Store News bets grocery coupons boost Rx biz BY ALARIC DEARMENT scriptions filled at Giant- & Shop, Giant-Landover Headquarters: Braintree, Mass. Landover using their Giant and Giant-Carlisle—and The new branding scheme BonusCard, offering an tried to reinvigorate the 2007 sales: $21 billion* that Dutch supermarket unlimited number of cou- three chains with a value- % change vs. 2006: –6.2%* operator Royal Ahold un- pons customers can earn. improvement program. To- No. of stores: 709* Ahold veiled for its Stop & Shop Starting in late June, shop- gether, the three banners No. of stores with Rx: 562 and Giant Foods banners in pers at Stop & Shop stores comprise 709 supermarkets August has accompanied a began seeing ads for Vytorin, in the Northeast and mid- Avg. store size: 55,000 square feet host of new health-and-well- Merck and Schering- Atlantic, including 562 that Rx sales: $2.0 billion ness efforts. Plough’s cardiovascular operate pharmacies. % of sales from Rx: 9.4% est. Ahold announced the new drug. The new services and Earnings figures, howev- *Following divestment of Tops Markets and U.S. Foodservice, and acquisition of Clements Markets by Giant of Carlisle. branding on Aug. 22 for change in branding are part er, don’t conclusively indi- Source: Drug Store News, Company reports Giant-Landover and Stop & of some big changes that cate whether the consolida- Shop, which it treats as a sin- Ahold has undergone since tion has paid off. During gle chain, featuring a new last year. the second quarter of this while decreasing by 1.5 the year before. logo, shopping technology Ahold USA, the compa- year, Stop & Shop and percent at Giant-Landover. Meanwhile, net sales at and customer Web sites. ny’s U.S. subsidiary, sold Giant-Landover had net Net sales for the two ban- Giant-Carlisle were $1.1 bil- of Landover, 46 of its Tops stores to sales of $4 billion, marking ners increased by 1.5 per- lion, an increase of 11.5 per- Md., started a program last Morgan Stanley Private a 1.7 percent increase over cent for the first half of the cent over the year before, month to entice consumers Equity for $310 million last the same period the year year over the same period and identical sales were up to fill their prescriptions at December, thereby con- before, according to an the year before. But oper- by 7 percent; on the other its stores, shaving 5 percent densing its supermarket Aug. 28 earnings release. ating income for the two hand, operating income off their next grocery order and pharmacy operations Identical sales increased by chains was $125 million, a was down by $10 million, to whenever they get five pre- under three banners—Stop 2.2 percent at Stop & Shop $36 million decrease from $51 million. Online shopping lists link health, food for BY MIKE DUFF locations will reopen with a otic program was launched in Publix pharmacy,” said August 2007. Headquarters: Lakeland, Fla. Publix has built a reputation Maria Brous, the company’s More recently, under its 2007 sales: $23 billion for providing good service in spokeswoman. Wellness & Pharmacy online % change vs. 2006: 6.3% good stores at a good price. Publix, as have several initiative, Publix filled out a Publix And by remaining consistent other pharmacy operators series of shopping lists No. of stores: 951 in all three areas, the company across channel lines, has designed to help customers No. of stores with Rx: 708 not only has thrived in looked at consumer concerns with particular dietary Avg. store size: 27,000 sq. ft. , but managed to ex- and developed programs to needs eat right. Customers to 61,000 sq. ft. pand throughout the South- address them directly. Clearly, need only click on the lists, east. The company’s latest lit- health care and the associated under the headings gluten- Rx sales: $1.220 billion tle growth jag will make it a costs are among those con- free, low sodium, low fat, % of sales from Rx: 5.3% Source: Drug Store News more important pharmacy cerns, so Publix, like other 100 calorie and four grams of player in the Sunshine State. supermarket pharmacy oper- sugar, to obtain extensive In June, Publix announced ators––perhaps as an answer compilations of products service we offer our cus- supermarket operator char- that it would purchase 49 to the $4 generic furor Wal- that fit the profile. tomers,” Brous said. “We ges $15 for an ultrasound of Florida stores from Albertsons Mart created––offer free 14- “The first two shopping understand that our cus- the heel bone, while it LLC, the company that split day supplies of to lists were published last tomers rely on Publix to pro- charges $25 or $30 for cho- the former Alberstons chain customers with valid pre- December, and then we vide them high-quality lesterol screenings, depend- with Supervalu. The acquisi- scriptions. Early this year, added three more in the products, but they also rely ing on whether customers tion includes 30 stores in the Publix filled its 1 millionth spring of ’08,” Brous said. on us to provide them help- want a total lipid profile or a state’s central region, 15 loca- free prescription The gluten-free list alone ful information in making total cholesterol and HDL tions in and four and celebrated by adding goes to 10 pages and is the best decisions for them screening. Simple click-ons locations in . doxycycline hyclate capsules divided into several sections and their families.” give customers access to The acquisition will allow to a program that already including dairy, fresh, frozen The pharmacy page of the screening locations and Publix to enter Escambia included , cepha- foods, grocery and health Publix Web site Health & schedules. Cholesterol and County, a new market for the lexin, sulfamethoxazole/tri- and beauty. Notably, Publix Wellness section lately has osteoporosis checks are company. It also will provide methoprim, ciprofloxacin, private-label products are alerted customers to the available at Publix stores in an opportunity to serve more penicillin VK, and extremely well-represented addition of osteoporosis Florida and . users. erythromycin, among popu- on the list. checks to the list of screen- Free blood pressure screen- “All 49 former Albertsons lar antibiotics. The free antibi- “This is a continuation of ings Publix offers. The ings are available chainwide.

Drug Store News www.drugstorenews.com October 2008 • 3