Elephant's Skorman pushes the envelope

Chain Drug Review, Dec 20, 2004 by David Pinto

Amid all the happenings crowding in on each other in this hectic chain drug year, a case could be made that the No. 1 story has been the success of an independent drug store, Elephant Pharmacy of Berkeley, Calif., and of its entrepreneurial proprietor, the redoubtable Stuart Skorman.

The hybrid drug/natural products store Skorman opened two years ago in Berkeley has become an unqualified success. Sales in the year that ends this month will be in the neighborhood of $10 million, with less than 25% coming from pharmacy. The store's pharmacy is expected to generate nearly $5 million in sales in its fifth year of operation, while front-end sales are expected to exceed $10 million.

Sales aside, the store, offering an unequaled array of merchandise and services, has become a magnet for local residents, while Skorman's calculated focus on value and community welfare has succeeded in winning over Berkeley's young, liberal population. Indeed, at 56, Skorman, after a lifetime as a retailing entrepreneur (he is known for his early work as an executive in the natural food industry), has emerged as something of a local celebrity. And his unabashed social conscience, boyish enthusiasm and legendary self-confidence have called attention to both him and his store. Indeed, one of his most appealing qualities is the ease with which he defines himself as a "visionary."

Earlier this fall, Skorman convened Elephant Pharmacy's first vendor summit, a gathering of some 80 senior executives from 50 of the esoteric niche suppliers that, forming the base of the store's merchandise mix, have helped, and in turn been helped by, Elephant's success. The guest speakers included Sandy Gooch, the legendary health food retailer who founded Mrs. Gooch, the southern California health food chain that, in mesmerizing young health food enthusiasts, galvanized the health food movement in the 1960s.

Also on the guest list was a senior executive from the major drug chain that, astutely recognizing an opportunity, has invested in Skorman's fledgling business. The name of the drug chain is an open secret in Berkeley and elsewhere, with each party reluctant to acknowledge the arrangement in the misplaced but sincere belief that the image of the other would suffer should the "secret" get out.

Skorman has other investors as well, most notably the Bay Area Equity Fund, a local unit of a major financial house that commits money only to Bay area companies that contribute to the welfare of the community.

Now, armed with investment funds, confidence, wisdom, knowledge and a successful track record, Skorman is expanding. He will open two new Elephant Pharmacies next year: the first in upmarket Marin County across the Golden Gate Bridge from San Francisco, the second in the Silicon Valley community of Los Altos. Capitalizing on the lessons he's learned from the Berkeley store, Skorman has determined that the new outlets will be larger than the existing unit and will be located to draw from a larger trading area.

At the same time, Skorman has reached an agreement with the Saks Group, wherein the department store retailer has begun adding 3,500-SKU Elephant Pharmacy boutiques and 400-SKU kiosks within Saks Group stores, depending on traffic and space considerations. Thus far, two of the former and 10 of the latter have been opened, and Skorman sees the possibility of an ultimate Elephant Pharmacy presence in all 160 Saks Group stores in the U.S.

"It's a branding issue," he patiently explains. "We have a brand that appeals to the baby boomers who form a core Saks customer group."

Finally, Skorman, recognizing his limitations as well as his considerable strengths, hopes to name a new CEO soon. He has no doubt about his ability to work for the new man. "I'm better at creating than at managing," he says simply, "so my future role will be one of finding real estate, developing marketing programs and testing new ideas and concepts."

If you doubt the veracity of his self-professed abilities, you have only to go to Berkeley to resolve those doubts forever--and to put to rest any notion that the drug store concept has gone as far as it can go.