Will food give this pharmacy an edge?

June 28, 2012

ShopRite opens a pharmacy where a Rite Aid vacates, despite Walgreens and CVS at the same intersection.

Three can be a bad number. Moms who make play dates for their young children hope for the best, but often see that one child in a group of three is left out or left behind. As the kids grow up, they decide on their own whom they want to be with.

The same is true of retail pharmacy on one busy intersection in suburban Long Island, New York—where a Rite Aid succumbed last Friday after competing for years against a CVS with a traffic edge (it is next door to a Trader Joe’s) and a freestanding Walgreen’s diagonally across the street.

A ShopRite supermarket here saw this coming and opened its first pharmacy ever this month. It finally got its opportunity after operating practically alongside the Rite Aid (and Eckerd and Genovese before that) for an entire generation. 

Why step in where a major retail pharmacy chain didn’t last?

There are three primary reasons, we feel at The Lempert Report, and they serve as lessons for supermarkets that dispense prescriptions:
•    The ShopRite is the only one of these retailers with the full good-for-you food assortments to augment the pharmacy’s medication expertise in a complete wellness environment. Bringing these elements together will require operational changes and cultural shifts that aren’t often present in supermarkets—but the potential is there.
•    The timing is right with many popular brand-name drugs losing their patent protection over the next few years. Dispensing generics is better for pharmacies (higher margins) and consumers (lower co-pays), and retailers get the credit for delivering value. “Lipitor just came off patent. Singulair will happen later this year, and Nexium will be the next big one,” Harvey Staub, R.Ph., supervising pharmacist and owner, Diamond Drugs, a nearby independent in Plainview, NY, told TLR. 
•    The convenience of a prescription drop-off and pick-up on a food-shopping trip appeals to many customers.

Staub also said many prescription patients are in play here, even though Walgreens acquired an estimated “thousands” of patient files from the Rite Aid. Typically, more than 50% of transferred patients do stick with the file acquirer when a store closes—but since Walgreen’s no longer works with Express Scripts, “more people are looking for another drug store,” he added.

To attract shopping families to the ShopRite pharmacy, it will need to be more than a convenient prescription outpost. In our view, it should relocate OTCs to be closer and more convenient to the new pharmacy department. Pharmacy should collaborate with a chain dietitian to help keep customer-patients with specific conditions on the right wellness path. And it should keep up its offers of free prenatal vitamins and free select generic antibiotics to appeal to younger, growing families whose purchases over time will mean a lot to the store.