Wednesday, November 14, 2007

A hard act to follow

This article is a great recap of the battle between the big pharmacy chains in Canada. I also liked the analysis as to why Walgreens or CVS are probably not looking north in the near future.

From the Globe and Mail:
The mundane name aside, Store No. 1206 is not your typical pharmacy.

In fact, at first, second and third blush, the new Burlington, Ont., outlet of Shoppers Drug Mart looks like anything but a suburban drug mart. Right at the door there's the beauty section, lined with glass shelves of facial creams, makeup and a blue-glass jar of Guerlain cream at $435. Just beyond that is the sweet scent of Chanel No. 5 perfume ($126) and the smile of a cosmetician eager to assess your beauty challenges.

Then there's the more predictable line of Christmas decorations and a display of the chain's private label Le Chocolat, a premium line of imported Belgian chocolates selling this week for $16.99 a box. All that before one reaches the store's namesake - the almost forgotten drug counter at the back - and a route to the cash that passes today's most pressing consumer needs, from $3.99 milk to a $229 MP3 player.

For Shoppers Drug Mart Corp., this is all by design. The big drugstore chains have reinvented themselves - again - in order to dominate the middle ground between high-margin convenience stores and high-volume department stores. They have transformed into retail players, and are barely recognizable as the local pharmacies where your grandparents bought medicine and cod liver oil. Today, the big chains focus on cosmetics and private labels, whose gross profit margins are thought to be two or three times that of many prescription medications.

For Fran├žois Jean Coutu, chief executive officer of Jean Coutu Group (PJC) Inc., it comes down to one word: destination. ...more

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