CHICAGO -- Supermarkets were given a prescription to improve the health of their over-the-counter switch drug business during a presentation here on May 3 at the Food Marketing Institute's annual convention.
During a workshop session, a study co-sponsored by FMI and the General Merchandise Distributors Council was unveiled identifying a series of prescription-to-OTC best merchandising practices successfully being utilized by some supermarkets.
The session, chaired by Neil Golub, president and chief operation officer of Price Chopper Supermarkets, Schenectady, N.Y., also included the following participants: Willard Bishop, president of Willard Bishop Consulting, Barrington, Ill.; Ron Turner, vice president of member affairs and education at General Merchandise Distributors Council, Colorado Springs, Colo.; Duane Nizinski, manager of general merchandise purchasing and sales at Spartan Stores, Grand Rapids, Mich.; Neill Crowley, executive vice president of store support at Vons Cos., Arcadia, Calif., and Brad Trucksis, food industry development manager at Procter & Gamble Co., Cincinnati.
Findings from the study have been integrated into an action plan to help supermarkets capitalize on what the industry views as a huge profit opportunity that until now has been lost to the drug class of trade.
"Remember we are competing in the most competitive general merchandise-HBC retail environment
in our supermarket history. As we in the supermarket industry are still developing our strategies to increase our over-the-counter drug sales, our drug store competitors are featuring, promoting and selling many traditional supermarket items like milk, eggs, beer and pop," said Nizinski of Spartan Stores. "At Spartan we are implementing our Rx-to-OTC marketing plans as we speak."
The study, titled "The ABC's of Rx to OTC Merchandising," conducted by Willard Bishop Consulting, documents three case studies of supermarkets that are capturing a significant share of the prescription-to-OTC market.
The strategies used by retailers include achieving timely delivery of products by placing advanced orders and picking up shipments direct from the manufacturer. Trucksis of Procter & Gamble said the report "provides real examples of how to win and specific action from others.
"From the manufacturing perspective, it provides a clear understanding of what role manufacturers have, and should take, in helping retailers be first and best in new products," he said.
Said Crowley of Vons, "Supermarkets the focus on being first in Rx-to-OTC can significantly increase share in a category that's long been the domain of other formats."
The final report will be released on May 20, Turner said.
This latest study is the second phase of an earlier project sponsored by the GMDC that examined the implications of prescription-to-OTC merchandising at supermarkets. That study, which was completed in 1993, concluded that supermarkets were not getting their fair share of the prescription-to-OTC switch business, which is expected to grow to $14 billion by 1996.
In comparison with drug stores, supermarkets' share of the prescription-to-OTC market is just 20% while drug stores enjoy a 60% share of market.
Said Golub of Price Chopper, "FMI recognizes the importance of this opportunity to the supermarket industry and has given it high priority on this year's agenda."
The industry is closely eying Aleve from Procter & Gamble, which is expected to go OTC shortly. It will be the first analgesic to go OTC since 1984. Said Turner, "We'll have an opportunity to prove a point, and prove supermarkets can be the first source to OTC products."