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Medical Forum / General / Pharmacy / February 2005Supermarket pharmacy
How do they do it? Here in the Minneapolis area, there is one supermarket chain, Cub, that has been in the field for many years. They have built up a patient base, and when I shop there, they usually seem to have some work. Another chain, Rainbow, got into the field about 3 years ago. Those guys usually seem to be sitting around. Recently another smaller chain, Lunds entered the market, and of course, they are doing very little. In late 2004 CVS began building here, to take on the 100 or so Walgreens in the area. How do those slow grocery pharmacies make it? I've never been close to the numbers, but I bet that 50 prescriptions a day won't pay the over head, and I don't think some of those places do 50 a day. I suppose it's a loss leader. >How do they do it? Here in the Minneapolis area, there is one >supermarket chain, Cub, that has been in the field for many years. They [quoted text clipped - 11 lines] >head, and I don't think some of those places do 50 a day. I suppose it's >a loss leader. ============================================ I have no idea of how these chains opperate...BUT I retired in 1998 after spending many years in a Food/Drug enviroment.. in which only 30 percent of the stores had Pharmacies when I started and almost 100 percent had them when I retired.... 1st of all OTC sales go way up ..(Pharamacy Manager managed the entire OTC & HBA areas withing the store plus of course the Rx counter)... 2nd...You have customers who have to eat...thus they are in the store every week...just so much easier for Mrs Smith to have her BC's filled while she shops... Years ago the "Net profit margin" in the grocery industry was well under 5 percent... 2 to 3 percent was good..very good....Where a Pharmacy department hit 20 percent without any problems... that is 10 times the Profit ....Pharmacy department sales usually ran about 20 to 25 percent of the total store... so for every 100 dollars in total sales The Grocery side of the operation may generate 2 bucks profit but the Pharmacy side was generating twice that with only 20 percent of the sales volume... Then you have to realize that The Grapes, Tomatoes, absolutely had to be "worked" by an employee many times during the day...while a bottle of Tylenol once put on the shelve only required "fronting" etc once a day... Much much lower Labor costs... And speaking of labor costs....Most Grocery chains are Union... which meant that my floor people, cashiers techs etc were making close to 30 percent more then the Drug Chain empyoyes...that is not a bad thing mainly because we hired and kept the absolute best empolyees period... No High school kids to call out every Friday night because they had a hot date etc... they came to work to work...and did... Today things are different the mnain thing I have noticed is that the Pharmacists in Grocery cahins (including the one I retired from) no are locked into the Rx Counter....Personally I think that is a major mistake...Damn I made a hell of a lot more money from selling kitty litter then I did filling a dozen BC RX's...but what does an old fart like me know.... ? The formula worked well in the past....but things change... Bob Griffiths . (tongue firmly in cheek) They make it up on volume - in the rest of the store. I always laff at the "make it up on volume" thang. What that really means is somebody is working a lot harder for less money. But I suppose they keep the pharmacy door open as a draw for customers. Probably cheaper than advertising. But if I was the GM of the store I'd get the pharmacy staff off their duffs and out there pushing the OTCs while the volume is low. Brad >(tongue firmly in cheek) >They make it up on volume - in the rest of the store. [quoted text clipped - 7 lines] > >Brad =============================== Brad... I have told you before that I honestly respect your opinion...and I do... and yes I did notice the tongue in cheek comment... You should also know (from some of my other posts) that I have always looked at Phamacy as a business 1st and as a profession second The GM of Grocery stores are a special breed...believe me...very few I have worked with (NOT FOR because they were not My boss nor the boss of any of "my" employees) over the years had the ability to manage (run) anyother type of retail business.. Strange but the grocery business is not really comparable... very high volume, massive invertory turns, very labor intensive...and pretty low margins.... Bob Griffiths > =============================== > Brad... I have told you before that I honestly respect your [quoted text clipped - 14 lines] > > Bob Griffiths Yer right its business 1st. If I wasn't runnin this business, I'm sure I'd have to be runnin some other cuz I'm the only person that would hire me - LOL. I did work for a grocery store chain for about 6 weeks - GM and I didn't mesh but it wasn't cuz he needed more work from me. It was cuz - like you said - I didn't feel I worked FOR him and he didn't want to work WITH me. Grocery pharmacy jobs can be rewarding but can really stink with the wrong GM. Brad |
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