Kmart Offers $1 PL OTC Products

WENDY TOTH

HOFFMAN ESTATES, Ill. — In the latest salvo in medication discounting, Kmart Pharmacy is offering private-label over-the-counter products for $1 with a prescription purchase.

Kmart, a wholly owned subsidiary of Sears Holdings Corp. here, launched the new program this month in Florida and said it will be available in all stores with pharmacies by April.

The American Fare Dollar Program gives customers a choice of 10 OTC medications from Kmart's proprietary American Fare brand.

“Not only does this program allow us to reward our customers for filling prescriptions with us, it also allows them to try out our great American Fare over-the-counter medications,” Mark Doerr, vice president of Kmart Pharmacy, told SN.

OTC medications in the program include aspirin, ibuprofen, children's pain reliever, baby aspirin, nasal decongestant, cough suppressant, anti-diarrhea medication, and cold and allergy tablets.

“This is a way to get customers to try the private-label products,” Frank Dell, president and chief executive officer of retail consultancy Dellmart & Co., Stamford, Conn., told SN. “It is very critical to encourage trial, and although it's unlikely to happen, if a customer decides they don't like the private-label product, they will think, ‘Oh well, it was only a buck.’”

Another driver for such a program is a shrinking gross margin on prescription products, Dell said. “This is the same issue facing chain drug. They must get the sales and profits out of the front of the store and make that retail space pay.”

An increase in transaction size, even a small one, will also help increase same-store sales from last year, he said. “Now, if a customer spends $21 rather than the usual $20 for their copay, that is a 5% increase in revenue for that part of the store.”

“We believe the cost effectiveness of the program and breadth of products, all high-volume items from top health care categories, will resonate with our customers,” Doerr said. “Our pharmacists are always ready to assist our customers with any of their health care needs, and we hope this program drives even more pharmacist interaction.”

All of the $1 American Fare products, which are specially labeled, will be available behind the pharmacy counter. Regular-priced versions of the 10 American Fare products in the program will continue to be available on store shelves.

“This program will also bring attention to Kmart Pharmacy in general,” Dell said. “Pharmacy is a small part of the total store, and their private label is not a huge share of market for them. This will bring visibility to the American Fare products.”

Kmart also offers customers a 90-day generics program, which provides a three-month supply of many common maintenance medications for $15; the GoldK program, which offers discounts of up to 20% on every prescription for uninsured customers over the age of 50; the Caregiver's Marketplace program, which offers special savings on many products that family caregivers need to purchase regularly; and PetK, which is an exclusive pet medication discount program for pet owners.