Inside This Issue - Opinion
Loblaws shows agility in building business
August 2nd, 2010
One of the characteristics that distinguishes the elite retailers from the also-rans is the ability to recognize an opportunity and turn it to advantage.
Loblaw Cos., Canada’s No. 1 supermarket and food/drug combination store operator, is currently doing just that with its prescription drug business. The company has gone on the offensive, taking aggressive steps to enhance its standing in community pharmacy at a time when many others in the field have adopted a defensive posture.
The catalyst for the move was a drastic reduction in reimbursement for medications by the Ontario provincial government. Allan Leighton, Loblaws president and deputy chairman, and his colleagues immediately recognized how a major problem for independent pharmacies and drug chains created an opening for a retailer far less dependent on pharmacy for its financial well-being than members of those trade classes.
The executives’ perspicacity was quickly acted upon. Since the Ontario government made its intentions known in April, Loblaws has extended the hours of its pharmacy departments, beefed up staffing, implemented new technology, altered its fee structure for professional services and taken steps to allow pharmacists to spend more time with patients.
The latest innovation, dubbed a small model in-store pharmacy, opened last month at an outlet in Ontario that operates under the nofrills banner. The significance of the format, which encompasses about 400 square feet and includes a counseling room and high-density shelving and advanced technology to foster efficiency, lies in the flexibility it gives Loblaws in putting prescription counters in stores of various sizes. Prior to the small model department, the company needed a store of about 45,000 square feet to accommodate a pharmacy; now it can include one in outlets of less than 30,000 square feet.
Loblaws will seek to use the new format, which a spokesman says will be rolled out under the company’s various banners throughout the year, to gain a competitive edge. By complementing its core food offerings with pharmacy service at stores that do not now offer it, Loblaws should increase customer traffic and generate incremental sales.
The company’s willingness to play the breaks and the skill with which it has done so are worthy of emulation.