Supermarket pharmacies are grabbing the convenience-minded prescription patient.
This is the good news as the Food Marketing Institute holds its 10th Annual Supermarket Pharmacy Conference, April 20 to 22 in New Orleans.
Shoppers are fueling food-store drug sales as pharmacy management emphasizes pharmacists' counseling services and new patient-care programs, which heighten the department's profile and position it for new revenue sources.
In a period of retail-pharmacy consolidation marked by drug store chain megamergers and the continuing erosion of the independent pharmacy base, supermarkets are committing to major additional pharmacy rollouts after a market-pacing 1996.
"Increasing sales is our first priority. And right now we are doing very well in scripts filled and gross sales," said Doug Policastro, pharmacy operations manager for Grand Union Co., Wayne, N.J., which emerged from Chapter 11 bankruptcy last year with a renewed commitment to the pharmacy business.
With 58 pharmacies in 220 stores, Grand Union will be adding pharmacies in new stores and remodels, with patient-consultation rooms in every new pharmacy, said Policastro.
"We are achieving strong double-digit script growth. And we have a tremendous opportunity to expand pharmacy into our [nonpharmacy] food stores," said John Holcomb, pharmacy merchandise manager, Finast Friendly Markets, Maple Heights, Ohio, with pharmacies in 28 of its 45 stores.
With many of its pharmacy stores in otherwise underserved rural locations in the San Joaquin Valley area of California, Save Mart Supermarkets, Modesto, Calif., has sustained brisk script growth by participating in the managed care plans which are capturing a large segment of California's population, including the state's new plan for putting Medicaid patients into health-maintenance organizations. "As more people obtain insurance through their employers, we have seen an increase in utilization of the pharmacies. Our sales are increasing," said Michelle Snider, Save Mart's director of pharmacy.
A&P, Montvale, N.J., with 973 supermarkets, will add 30 pharmacies to its 167 drug departments this year because "pharmacy is a necessary service in the weekly shopping trip which we serve," said a company official.
The pharmacy is the keystone of the food/drug formats emphasized by multiregional chains, such as Kroger Co., Cincinnati, and Safeway, Pleasanton, Calif., where virtually every new store and remodel includes a prescription business, notes Chuck Cerankosky, an analyst with Tucker Anthony Inc., Cleveland.
"It is very clear that the best supermarkets are opening combo food-and-drug stores, with pharmacy fitting into this 'frequently purchased goods-and-services concept," said Cerankosky.
Food-store pharmacies outstripped all other channels in growth of manufacturer prescription sales in 1996 with a 19.6% increase from calendar year 1995. The food-store pharmacies captured the only significant market share growth among retail channels, increasing from 7.3% to 7.7% with $6 billion in sales, according to IMS America, Totawa, N.J.
By comparison, chain drug stores posted 13.7% sales growth, increasing share from 27.8% to 27.9%, or $21.7 billion. Mass merchandisers also increased their prescription sales by 14.3% to $5.9 billion. This channel also advanced market share from 7.5% in 1995 to 7.6% in a total market where 1996 sales were $77.8 billion, 13.4% higher from the previous year, according to IMS.
In building script traffic, the pharmacy has contributed more to total store sales. From 1993 to 1995, the median number of prescriptions filled per day, per pharmacy, grew from 115 to 130; the median percentage of prescription sales to total store sales increased from 4.8% to 6%, according to the FMI Supermarket Pharmacy Survey.
Many pharmacies have the potential to contribute more to offsetting costs within their corporations by increasing script sales even further, says William Marth, product manager, multisource products, Bristol-Myers Squibb, New York, and the former pharmacy director at Price Chopper Supermarkets, Schenectady, N.Y.
"Generally, the average number of prescriptions filled in a supermarket pharmacy is somewhat lower than in a standard chain drug store. We need to raise these levels." As business units with "unfilled capacity," food-store pharmacies can fill more scripts without increasing costs -- such as labor costs by adding more pharmacists -- and thereby allow "immediate gains in [the pharmacy's] contribution to overhead," Marth says.
Prescription drug sales in supermarket pharmacies, for the 12-month period ended Dec. 31, 1996, grew faster than in any other retail-pharmacy segment. Supermarkets achieved a 7.7% share of the total $77.8 billion prescription market with $5.9 billion in sales.