Sponsored By

CVS PLANS EXPANSION IN SUNSHINE STATE

WOONSOCKET, R.I. -- CVS is eyeing expansion into the southern Florida markets of Orlando and Tampa-St. Petersburg where prescription sales are soaring at double-digit rates. It reportedly will open its first Orlando unit next year, according to published reports.The drug chain's plans to march further south into the state include store openings in the Tampa-St. Petersburg area by the end of this year,

Matthew W. Evans

April 17, 2000

4 Min Read
Supermarket News logo in a gray background | Supermarket News

MATTHEW W. EVANS

WOONSOCKET, R.I. -- CVS is eyeing expansion into the southern Florida markets of Orlando and Tampa-St. Petersburg where prescription sales are soaring at double-digit rates. It reportedly will open its first Orlando unit next year, according to published reports.

The drug chain's plans to march further south into the state include store openings in the Tampa-St. Petersburg area by the end of this year, according to a spokesman for the drug chain, based here. CVS presently has 24 units in Florida's Panhandle region.

Food retailers in the area polled by SN, however, did not see the move as a threat. Some reacted to the news by saying that the only course of action was to concentrate on their own businesses, rather than to worry about the new kid on the block.

"We have to focus on what we have to do and that's regardless of who's across the street," said Tawn Earnest, spokeswoman for Tampa, Fla.-based Kash n' Karry. "We've got competitors; we've always had competitors, both in the supermarket and the drug store industry."

"It's competition," Mickey Clerc, vice president, public relations for Winn-Dixie Stores, Jacksonville, Fla. told SN. "There is always competition in this business. We just have to take care of the customers we have."

Earnest said the one-stop-shopping experience works in favor of Kash N' Karry, a division of Delhaize America, Salisbury, N.C. "We're just expanding into Orlando ourselves," she said. "We have drug stores in most of our stores. People like being able to drop off their prescription, do their grocery shopping, and pick up their prescription at the end of their shopping trip in one stop. Going forward, that is going to be a competitive advantage for us."

CVS spokesman Michael DeAngelis would not confirm a local Orlando media report that said the drug chain, with 4,100 stores nationwide, is entering that market. However, citing a press release by a real estate developer, an Orlando newspaper said the retailer plans to build its first pharmacy there in 2001. When contacted by SN, the developer deferred comment to CVS. DeAngelis said only, "We do see southern Florida as an attractive market for us."

In addition to Winn-Dixie, Publix Super Markets and Albertson's are major grocery players in these markets. Albertson's, Boise, Idaho, could not be reached for comment and an official for Publix, Lakeland, Fla., which dominates market share in both areas, declined comment.

Analysts who spoke to SN about the CVS swing into southern Florida saw little for grocery mainstays in both markets to be worried about. Asked how the CVS move might impact supermarkets, Mark Husson, managing director at Merrill Lynch, New York, said, "to be honest, not a whole hell of a lot."

"A CVS opening today might do $6 million in sales -- and half of that would be the front end, their nonpharmaceuticals business," he said. Discounting some of the niche products sold at CVS, about 80% of their nonpharmaceutical business is considered competition by other food and drug stores. Therefore, it represents a small percentage of sales in the larger scheme of retail trade competition, Husson noted.

Said another research analyst, who requested anonymity, "At the moment, I'm not expecting much impact on the supermarket [trade]. Certainly not in Tampa-St. Petersburg."

She cited individual drug store market share sales figures in the Gulf Coast area as examples. Albertson's share of "drug store sales" -- every category sold by a drug store -- was 7% for 1998, the senior analyst said, compared to the 40% registered by Walgreens, Deerfield, Ind., and the 33% held by Eckerds, Largo, Fla. "Frankly, Orlando is not vastly different," she added, saying that Albertson's currently has almost 10% of all drug store sales there.

What makes Florida attractive for a new player in the drug channel is impressive increases in prescription sales. The state has registered double-digit increases over the past few years, according to figures from Scott-Levin, a Newtown, Pa.,-based firm that tracks prescription movement. From 1997 to 1998, prescription dollar sales rose 14.5%. Between 1998 and last year, there was a 16.2% jump to $7.4 billion for 1999.

Analysts said it is this situation that is preventing market saturation.

Husson said, "Florida is where people go to be old. And as the baby boomers increasingly get older and richer, they are moving to Florida in large numbers. So the growth in that market for pharmaceuticals is outstanding, which is why CVS is going there in the first place."

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like