OVER-THE-COUNTER TRANSACTIONS

DAVID VACZEK

The launch of Procter-Syntex's Aleve last year illustrates what can be achieved when a supermarket pharmacy works in harmony with the health and beauty care department.

In this case, the pharmacist's expertise in promoting a new over-the-counter version of a product formerly sold only by prescription was combined with the HBC buyer's sales and merchandising acumen. As a result, supermarkets were able to outpace the competition during the first weeks of Aleve's introduction.

Future OTC launches also can help bring pharmacists out from behind the counter to interact more closely with the HBC department.

"With more and more of the prescription products going into over-the-counter formulations, we feel it is increasingly important to cooperate [with the HBC side] to provide proper information to our customers," says Barrett Moravec, director of pharmacy at Abco Foods, Phoenix. "And we are seeing greater cooperation. The common goal is to offer the Abco shopper the largest amount of variety possible." Adds the pharmacy director from an East Coast supermarket chain: "There is no question that Rx-to-OTC switches are the most important part of your business. To not have the support of the pharmacy community would be a terrible error."

In their success with Aleve, supermarkets showed their capacity to sell over-the-counter remedies. Indeed, food stores reportedly outsold other distribution channels in the crucial first four weeks, when retailers can impress upon consumers that they have a new product and retain repeat business.

In addition to ensuring that supermarkets had Aleve from day one, Aleve's marketer, Cincinnati-based Procter & Gamble, was careful to involve the pharmacy departments in the product's promotion and sale, so many customers learned about the new analgesic formulation through the pharmacy.

Pharmacists' recommendations strongly influence consumers in their OTC purchases, and their advice on Aleve was a key element in moving the product, pharmacy directors say. The launch also heightened the image of the pharmacy as a full-service department where the pharmacist is available to counsel, and where the latest OTC remedies are offered.

But was the Aleve example really a turning point in pharmacy-HBC relations, where a barrier has long existed between the two departments?

Many pharmacy directors say communication between pharmacy and HBC is improving. That's partly, they say, because HBC buyers have grown more knowledgeable about the potential for sales and profits from top-selling prescription drugs going over the counter.

Prescription-to-OTC switches will peak in the next two years, when as many as 50 drugs face patent loss, and manufacturers will seek approval of OTC formulations to help hold on to market share.

Yet, pharmacy, a relative newcomer at many chains, remains misunderstood, others say.

And lack of coordination between the two departments can be fatal to both departments, which still suffer from a lack of consumer awareness.

According to SN's third State of the Industry survey, published in this issue, more than a third of the pharmacists surveyed report that they never meet with their HBC counterparts.

Yet, supermarket pharmacy directors say vendors and HBC buyers applied the lessons learned from the launch of Aleve in planning strategy for the debut of Johnson & Johnson/Merck Consumer Pharmaceuticals' Pepcid AC, and the coming launch of an OTC version of SmithKline Beecham's blockbuster ulcer medication, Tagamet.

Johnson & Johnson/Merck pulled pharmacy directors into planning meetings with HBC buyers to plot strategy for Pepcid AC's June debut. Supermarkets made sure they had appropriate inventory and that Pepcid AC was on the shelves at the launch date.

"We were first on our block with Pepcid, and we will probably repeat that performance with Tagamet when it comes out this week. Our HBC buyers are more aware today. They know what's going on," says Wally Hayes, director of pharmacy at Winn-Dixie Stores, Jacksonville, Fla.

At Buttrey Food & Drug Stores, Great Falls, Mont., shelf tags and displays in the pharmacy helped guide customers when Pepcid AC appeared.

"We had a ton of product and we had it on the day it was supposed to be in stores. The HBC side took it upon itself to get pharmacy involved," says Mike Roberts, the chain's new director of pharmacy.

There is no better way to burnish the image of the food store pharmacy than by having new OTC switch products on hand for customers in the first weeks. The long-term success of pharmacies in supermarkets, though, requires a broader commitment, one that not all chains have been prepared to make.

Food stores must maintain fully assorted pharmacy departments, with competitive prices. In addition, store pharmacists must be involved in recommending the OTC remedies and counseling patients on their use.

What happens when a food store allows customers to overlook the pharmacy department? One chain new to pharmacy several years ago found that shoppers "literally stopped" and swerved away when they reached the HBC shelves. A study conducted two years ago for the Food Marketing Institute, Washington, found that only 38% of shoppers went down the HBC aisle in supermarkets.

Success requires cooperation between pharmacy and HBC. But too often they are working on separate agendas.

"The grocery business has always been a competitive departmental situation, with each department vying for a percent of store sales, a percent of margin. My department did better than your department," says Dave Meador, director of pharmacy at Dierbergs Markets, a Chesterfield, Mo.-based supermarket chain that operates 11 pharmacies.

"The grocery side is more mass merchant-oriented. If it doesn't move, take it out," Meador says. "Even though supermarket pharmacy has made huge inroads in prescription market share, it is still very much misunderstood."

Pharmacies need to stock the products that doctors recommend for their patients as well as products that patients may be looking for on their own, including specialty items with slow turn rates and small margins. Otherwise, the patient is forced to go somewhere else, and is lost to the pharmacy.

Indeed, many chains today have set up store-in-a-store pharmacy departments of 5,000 to 6,000 square feet, with capacity to rival a small chain drug store. But assortment is only half the battle. Pharmacists must be involved if HBC is going to thrive because consumers want professional help on these products.

Roberts of Buttrey said pharmacist involvement is "a difficult and complex issue" because pharmacists are "both under- and overutilized."

On the one hand, they are in a time crunch filling prescriptions. On the other hand, "they are tremendously underutilized as an educational resource. That is where we have to put our focus. People can and will come to the pharmacy for advice" if the pharmacist is available, Roberts says.

Pharmacists must be encouraged to "look at the big picture," says the pharmacy director from the East Coast supermarket chain, where there is "little communication between the pharmacy and HBC departments."

Chains have to rethink how they measure pharmacists' productivity, the pharmacy director points out. There is little incentive to counsel if the pharmacist is being measured by prescriptions filled, and OTC sales are credited to HBC, "You can't have pharmacists resent that they are losing business to the OTC side. If someone asks them for a recommendation for an antacid, you want them out there recommending Tagamet or Pepcid. Quite honestly, those [switch] products are very profitable for us, and they are certainly where the sales are coming from in OTC today.

"We need to convince pharmacists there is value and importance to that side of the business," he says.

Pharmacists' personalities may be at least as important as company policies in creating pharmacy-HBC synergy. "We have some really good people working in our pharmacies," says Moravec of at Abco.

"Several have said to me, 'Look, bring the person to me. Once they come to my prescription counter, I've got them.' " Once the pharmacist enters in a dialogue with the patient, there is a better chance that the patient will become a regular customer, shopping all areas of the pharmacy department, Moravec says.

Abco is among food store chains that have made progress in pharmacy-HBC relations. The chain has launched a shelf-talker program in which new OTC releases in stores with pharmacies will have signs telling customers they should not hesitate to talk to the pharmacist if they have any questions.

The program, which Moravec suggested to his HBC counterparts, will alert customers to the fact that there is a pharmacy in store, which many are not aware of. In addition, it encourages patients to get pharmacist counseling on new OTC medications, which can easily be misused.

"My No. 1 concern is when cimetidine comes out. Tagamet has a lot of known drug-drug interactions. Pharmacists can determine which products people are taking and pick up on contraindications," Moravec says.

At Dierbergs, Meador is meeting more often with his HBC colleagues.

"We've done a lot in the last two years to work more closely," says Meador.

Meador was called in to participate with the HBC buyers on how to handle Tagamet. Also, he has been working with HBC on a new private label program that he proposed.

"I convinced our wholesaler to allow us to carry a private label line. We had been advertising brand names for less, but we didn't have a lot of private label, especially in HBC. I said, 'you're making a big mistake.' "

As manager of purchasing and sales/general merchandise, Spartan Stores, Grand Rapids, Mich., Duane Nizinski is in charge of the chain's 50 pharmacies, though he isn't a pharmacist. For the past two years, Nizinski has met monthly with a pharmacy advisory board comprised of store pharmacists for their input on HBC merchandising.

At Kash 'n Karry Food Stores, Tampa, Fla., if customers request a product that isn't available, pharmacists send a recommendation form to the HBC buyers. "HBC then determines the extent of the demand. If it's a single store, they might have the pharmacist bring that into the one store," says Pharmacy Director Dana Greenhoe.

Limited space for HBC in food stores is an obstacle. Dierbergs is among chains that hold specialty or less-requested items behind the counters or in alcoves by the pharmacy. Stores have shelf talkers telling patients, "If you don't see it, ask the pharmacist," says Meador.

"We will order anything special we feel a patient may need or want," drawing on "up to 20,000 items" carried by the wholesaler, says Charles Weiss Sr., director of pharmacy at Fred W. Albrecht Grocery Co., Akron, Ohio, which operates stores under the Acme banner.

At some food chains, pharmacy remains a misunderstood entity. But at others, often those where the pharmacy business grew up alongside the grocery business, pharmacy-HBC relations is almost a nonissue. At Acme the management philosophy is that "HBC should be integrally related to pharmacy," says Weiss. "We want to have a complete drug store, where the pharmacist can counsel on any health care products the patient may be interested in." Raley's Supermarkets, West Sacramento, Calif., ran freestanding drug stores adjacent to its first supermarkets. Today departments of 6,000 to 7,000 square feet are featured in the food stores. "We carry a much more varied HBC inventory than a typical supermarket," says Flint Pendergraft, co-director of pharmacy.

Planning the Tagamet launch recently with merchandisers from SmithKline and Raley's HBC buyers, the pharmacy department collected information it will publish in the chain's newsletter to advise pharmacists on the product's launch date and how it will be promoted in the stores.