LOUISVILLE, Ky. — When faced with highly publicized discount drug plans from big-time competitors, family-owned ValuMarket found a novel way to respond and maintain its business.
ValuMarket's president and vice president, brothers Greg and James Neumann, watched as Wal-Mart Stores, Bentonville, Ark., launched its drug program last September, making about 300 generic prescription drugs available at $4 for a 30-day supply.
By November a number of supermarkets had started drug discount programs, including Meijer, Grand Rapids, Mich., which began offering seven commonly prescribed oral antibiotics free of charge.
“We did not want either company [Wal-Mart or Meijer] to have a competitive advantage,” James Neumann said. All of ValuMarket's five stores are in the Louis-ville area, and three have pharmacies.
In November, ValuMarket announced its in-store pharmacies would match the value of Wal-Mart Stores' and Meijer's programs as well as the value of any future discount program that competitors may offer, by giving customers a ValuMarket gift card for the difference between their prescription co-pay and the competitor's advertised promotion.
The card can be used anywhere in the store. “This program gives us the ability to tie in with the rest of the store as opposed to just debasing pharmacy pricing,” Neumann said.
Wal-Mart and Meijer are nearby competitors, “depending on the location,” he said. “Wal-Mart is unfortunately omnipresent, and with all of the media attention the $4 scrips were getting, anything anyone in town did to compete became newsworthy. Therefore, regardless of proximity, many customers knew of both Meijer's and Wal-Mart's programs.”
An Internet search found at least 12 Wal-Mart pharmacies and six Meijer pharmacies within 20 miles of the three ValuMarket pharmacies.
“We heard some early numbers of some of the Florida competitors' loss of sales to the Wal-Mart program and did not want to see that dramatic of a sales loss in our stores,” Neumann said.
Wal-Mart first started the program in Tampa Bay, Fla. Upon announcing a later expansion of the program, Bill Simon, executive vice president of the Professional Services Division for Wal-Mart, said 36,000 new prescriptions were filled in Tampa Bay in the first 10 days after the launch.
The gift card program was a result of a brainstorming session between the two brothers and ValuMarket's merchandising manager, Darrell Franklin. “We thought it would be better to offer a promotional gimmick to make sure the customers were shopping the rest of the store, as opposed to just lowering prices to match Wal-Mart and getting no overall potential sales gain out of it,” Neumann said.
Meanwhile, gift card popularity is on the rise. A recently released gift card survey of 545 U.S. consumers from consulting firm Accenture, New York, found that 72% of those surveyed have given or received gift cards.
While Neumann found the survey “very encouraging,” ValuMarket pharmacies primarily take pride in service. “We have some of the best pharmacists in the region, with three of our nine pharmacists having been either state or local Pharmacists of the Year,” he said.
The pharmacies also offer free delivery citywide or free mail service. “Wal-Mart is now treating pharmaceuticals just like everything else they do, and taking out the human element and dignity of a trusted profession and trying to turn it into nothing more than a price,” Neumann said.
It was too early in the promotion for ValuMarket to report its results, Neumann said.
ValuMarket has owned and operated its first pharmacy, in Louisville's Outer Loop Plaza, since 1997. The second, in Mount Washington, Ky., was purchased as part of a former Buehler's, Wooster, Ohio, in 2005. Its newest pharmacy, located in Whittington Parkway in Louisville, was opened in February 2006.