TOTOWA, N.J. -- Supermarket pharmacies grew impressively last year, according to new data released last week by IMS America here.
The growth came in both prescription sales volume, up 18% to $4.98 billion, and the number of outlets, up 7.3% from 6,274 to 6,731 units. At the same time, supermarkets are showing strength in the retail over-the-counter market. The food channel captured a 33.3% share, or $5.3 billion, of the OTC retail market -- a 2.4% increase for supermarkets with pharmacies and a 3.6% increase for supermarkets without pharmacies. This puts supermarkets' market share nearly even with that of chain drug stores, which had a 34% share. Mass merchandisers, meanwhile, had a 27.2% share, while independents had 5.5%.
The data are included in an IMS report on the 1995 U.S. pharmaceuticals market that is updated every six months. Preliminary data in the report were presented by Doug Long, vice president of field services at IMS, at the annual meeting of the National Council for Prescription Drug Programs, Phoenix, held in Scottsdale, Ariz., last month.
Long pointed out that about 40% of food store growth last year was due to new stores being built. "Food stores have been aggressively opening new stores with pharmacies in them," he said.
Several supermarket pharmacy executives who attended the conference agreed that supermarket pharmacy is a high-growth area. "Pharmacy presence in supermarkets
will continue to escalate, at least over the next three to five years, as far as we're concerned," James Cordes, director of professional services at Schnuck Markets, St. Louis, told SN. "It becomes more and more important to include those departments in our stores." Since acquiring the National Tea Co. stores, St. Louis, from Loblaws, Toronto, in June 1995, Schnuck has increased its pharmacy presence in the St. Louis market by about 60%, according to Cordes. And the retailer plans more growth in pharmacy.
"As we continue to update existing stores, we are adding pharmacy departments to stores that don't have them," he said. "Also, any new store that we're now building has a pharmacy."
Other conference attendees are taking similar steps.
"We emphasize the whole drug center concept, pharmacy along with a larger HBA section," said Flint Pendergraft,, director of pharmacy administration at Raley's, West Sacramento, Calif.
Meanwhile, prescription sales in other channels of distribution rose last year as well. Chain drug stores saw a 15.6% growth; mail order, 14.4%; mass, 13.6%, and independent pharmacy, 2.6%. In OTC retail sales, chains increased 5.4% to $5.4 billion; mass merchandisers, were up 10% to $4.4 billion, while independents went down 8.2% to $881 million. In terms of stores, chain drug stores increased 3.4%, from 17,270 to 17,855, in 1995; mass merchandisers were up 2.6%, from 4,837 to 4,965. Independent drug store outlets, meanwhile, fell 3.2% from 24,862 to 24,064.
Total sales (prescription, over-the-counter and diagnostic) in the entire pharmacy market, which includes mail order and hospitals, increased 9%, or $7 billion, to $89.7 billion in 1995. Of this, prescription sales for the total market increased 10% to $69.2 billion; over-the-counter went up 5% to $18.7 billion, and diagnostic grew 10% to $1.8 billion.
Food stores and mass merchandisers each had an 11% share of the overall market, coming after chain drug stores, 27%; independent pharmacy, 18%, and hospitals, 14%. Other channels had a combined 19% share.
Food stores had a 7% share of the overall prescription sales market, while chain drug stores had 27%; independents, 22%; hospitals, 15%; mass merchandisers, 8%; mail order, 8%, and other, 13%. Long said OTC will be a promising area for supermarkets for several reasons. One is that the average consumer goes into a food store 88 times a year, significantly more than a discount store, which is shopped about 33 times a year; a drug store, 18 times a year, or a military base, 19. And consumers usually spend about $21 per trip per grocery store, the highest of all channels, according to IMS data.
"Grocery has a huge advantage in shopping frequency. Successful grocery retailers will exploit this advantage," the IMS report states.
"[Food stores] have 88 opportunities to sell an OTC product to a consumer," Long said during the NCPDP presentation. "This is why their OTC business is so strong."
Dennis Beauchene, pharmacy director at Hannaford Bros., Scarborough, Maine, said consumers have begun to realize that they now can fill most of their pharmacy and health and beauty care needs at the supermarket. "In the past, there was some concern that supermarket pharmacies didn't have the professionalism that regular pharmacies had," he said. "That outlook has changed." Long predicted that the greatest opportunities for retail pharmacies will be in counseling. An IMS survey showed that 81% of consumers want pharmacy counseling as part of the services offered at the pharmacy.