NACDS 2013 Annual Meeting © 2013 Kantar Retail Specific, Relevant, Actionable Insight / Worldclass Speakers / Kantar Retail / Thought Leadership Grounded In Fact Copyright© 2013 Kantar Retail All Rights Reserved. 501 Boylston Street, Suite 6101, Boston, MA 02116 (617) 912- 2828 [email protected] No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording, or any information storage and retrieval system now known or to be invented, without the express written permission of Kantar Retail. The printing of any copies for back up is also strictly prohibited. Disclaimers The analyses and conclusions presented in this seminar represent the opinions of Kan- tar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion. This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides. 2013 Participating Retailers Ahold USA Medicine Shoppe International, Inc. Alliance Boots Meijer, Inc. The Bartell Drug Company Navarro Discount Pharmacies BJ's Wholesale Club, Inc. 99 Cents Only StoresOMNICARE, INC. CARE Pharmacies Cooperative, Inc. Pharmaca Integrative Pharmacy Chain Drug Consortium, LLC Rexall Pharma Plus Costco Wholesale dba Costco Pharmacies Rite Aid Corporation CVS Caremark Corporation Roundy’s Supermarkets, Inc. Dollar General Corp. Safeway Inc. drugstore.com Sam’s Club Family Dollar Stores Sav-On Drugs Farmacia Guadalajara S.A. de C.V. Schnuck Markets, Inc. Farmatodo, C.A. Sears Holdings Corporation Fruth Pharmacy 7-Eleven, Inc. Genoa Healthcare Holdings, LLC Shoppers Drug Mart Corporation Good Neighbor Pharmacy SUPERVALU INC. H-E-B Target Hannaford Bros., Co. Thriftway/Zitomer Drug Health Mart Thrifty White Pharmacy Hi-School Pharmacy Services LLC Topco Associates LLC Hy-Vee Inc. Ulta Beauty Implozia Pharmacy Network Wakefern Food Corp./ShopRite Kerr Drug, Inc. Wal-Mart Stores, Inc. Kinney Drugs, Inc. Walgreen Co. Lewis Drugs, Inc. Walgreens Boots Alliance Development GmbH London Drugs Limited Wegmans Food Markets, Inc. source: NACDS Retail Trends Are you talking to your accounts about these? Do you have a strategy? Retailers are investing in store refurbishment, relocation, and acquisitions: Store portfolios- formats to address multiple shoppers rather than one store answering all needs Retailers are investing in multichannel: Apps, websites, QR codes, mobile Heightened focus on merchandising tactics: Creating and having relevant assortments; designing stores for shoppers rather than operations- enhanced use of elements like lighting, shelving, signage; segmentation of stores, shoppers Loyalty program developments to increase shopper engagement Health and Wellness plays an important role throughout the merchandising and store development process: Assortment implications, opportunities, multichannel opportunies Having a Successful Conference Saturday Must Attend Events Attire • “Meet the Retailer” program Attire for all NACDS events is resort • Strategic Exchange Appointments casual- except for the NACDS Luncheon, dinner, • Inaugural Attendees Orientation and entertainment. Attire for the NACDS lunch- • Opening Celebration eon on Monday is dressy daywear for ladies and Sunday Must Attend Events business for men. Attire for the Board of Direc- • Business Program I tors reception and dinner on Tuesday is cocktail • Strategic Exchange Appointments for ladies and business for men. Monday Must Attend Events • NACDS Chain Members & PAC Breakfast (Chain members, PAC tickets holders, invited guests only) • Strategic Exchange Appointments • NACDS Luncheon (spouses/companions, a ticketed event) Tuesday Must Attend Events • Business Program II • Strategic Exchange Appointments • Board of Directors Reception & Dinner • Board of Directors Awards & Entertainment source: NACDS Having a Successful Conference Start early soliciting appointments – as much as three months in advance Develop a convincing proposition for each company as to why they will benefit from a meeting with you Establish an individually specific agenda for each meeting Make sure you have done your homework on the retailer - Check out their website and learn as much as you can about them Develop a “one pager” summarizing the important points about your company, your key products, your point of difference, and any performance matrices that set you apart from the competition Consider dropping an advance thank you for a planned meeting to remind the person of the appointment or an after-meeting thank you to recap what was accomplished Take notes and follow-up after the meeting – this may be your most critical success factor source: NACDS source: NACDS Participating Drug Retailers Alliance Boots Key Initiatives In Aug 2012: Walgreens acquired 45% stake in Alliance Boots. Merger has created the largest global pharmacy led H&B retailer as well as the largest pharmaceutical wholesaler Targeted procurement synergies amounting to $1 billion by 2016 (up from $100-150 million in 2012) Potential investments towards geo-expansion in continental Europe & emerging markets Best practice sharing from Walgreens around managing large scale supply chain and pharmacy cost optimization Expansion of its wholesale business through acquisitions in Europe and partnerships/joint ventures in Asia and Middle East Key Players Stefano Pessina- Executive Chairman Ornella Barra- Chief Executive, Pharmaceutical Wholesale Division Alex Gourlay- Chief Executive, Health & Beauty Division George Fairweather- Group Finance Director Gregory Wasson- President and Chief Executive Officer, Walgreens Robert Zimmerman- Senior Vice President & Chief Executive Officer, Walgreens Wade Miquelon- Executive Vice President & Chief Financial Officer, Walgreens Stengths Weaknesses Increased negotiating power (procurement Perceived as a costlier (premium priced) brand as savings) as a result of the merger compared to Superdrug No.1 H&B retailer in the UK aided by: Over promotional–complicated/ complex Pharmacy-led business- high margin, footfalls Jaded marketing Multi-format footprint Store design – cramped Strong brand perception – private label Weak online business Synergies driven through wholesale and business manufacturing divisions- vertical integration Loyalty card (Advantage card) Opportunities Threats Availability of more funds that can be channelled Increasing competition from grocers within towards international expansion beauty space Best practice sharing from Walgreens especially Declining average revenue per prescription (due around managing supply chain, big format stores, to lower reimbursement prices on generic drugs) and pharmacy cost optimisation can erode growth & margin Food business Loyalty card challenged by the launch of Super Services such as in-store surgeries drug ,Tesco, H&B range Manufacturing exports to international retailers Crowded UK market - Limited ability to expand (such as Target, Carrefour, etc.) core high margin pharmacy business due to legislative restrictions Alliance Boots Sales & Store Forecasts Sales (current USD millions) Ma rket Format Banner 2007 2012e 2017e Ireland Drug with prescriptions Alliance Boots 368.3 357.7 401.9 Italy Drug with prescriptions Alliance Boots 40.0 44.0 48.4 Netherlands Drug with prescriptions Alliance Boots 294.2 241.6 268.9 Norway Drug with prescriptions Alliance Boots 590.5 646.2 683.5 Russia Drug with prescriptions Alliance Boots 4.0 4.6 5.1 Thailand Drug with prescriptions Alliance Boots 94.1 149.4 186.8 UK Drug no prescriptions Boots 1,001.6 222.3 227.2 UK Drug with prescriptions Boots 10,635.5 7,152.7 7,634.7 UK Drug with prescriptions Your Local Boots Pharmacy 80.0 2,272.3 2,440.7 UK Online Retail boots.com 232.1 415.4 653.1 UK Other Category Specialist Boots Optician 367.1 514.3 625.9 UK Other Category Specialist D&A - 18.5 - Store Forecasts Ma rket Format Banner 2007 2012e 2017e Ireland Drug with prescriptions Alliance Boots 48 73 78 Italy Drug with prescriptions Alliance Boots 21 20 20 Netherlands Drug with prescriptions Alliance Boots 78 73 74 Norway Drug with prescriptions Alliance Boots 148 156 164 Russia Drug with prescriptions Alliance Boots 14 7 8 Thailand Drug with prescriptions Alliance Boots 141 218 264 UK Drug no prescriptions Boots 267 85 86 UK Drug with prescriptions Boots 2301 1410 1431 UK Drug with prescriptions Your Local Boots Pharmacy 50 990 1012 UK Other Category Specialist Boots Optician 142 576 655 UK Other Category Specialist D&A 50 Merchandising & Marketing Analyzing card data In-store advan- drives loyalty and tage card readers frequency through promote prod- price promotions on ucts with reward products linked to loyalty points individual shoppers Bartell Drugs Key Initiatives New, customer-friendly website introduced Convenient in-store health care awareness programs and services State of the art in-store and online digital services Commitment to community Environmental leadership Key Players George D. Bartell - Chairman and CEO Jean Bartell Barber - Vice-Chairman and CFO Retailer At-A-Glance Date Founded: 1890 Number of stores/Operating area: 58 stores located in Washington (King, Snohomish and Pierce counties) Ownership: Privately owned & operated by the Bartell family of Seattle. George D. Bartell, Chairman and CEO; Jean Bartell Barber, Vice-Chairman and CFO. Employees: 1,700 Employee Associates, all located in the Puget Sound region. Notable: The company