It's far more than a drugstore - Phar-Mor Inc.'s 300th store, Ashtabula, Ohio - Editorial

Discount Store News, August 3, 1992 by Tony Lisanti

I have attended hundreds of new store openings over the years, but few have been as revealing as the latest one--Phar-Mor's 300th store in Ashtabula, Ohio, about 55 miles northwest of Cleveland (see story, page 1). It reinforced several beliefs (or in some instances misconceptions) that both industry gurus and consumers have. But one fact is clear, the blurring of retail concepts continues. * Phar-Mor, as the name indicates, is far more than just a "drug" store. In fact, the company eliminated the word "drug" from its tagline and description of the concept. Youngstown, Ohio-based Phar-Mor now refers to itself as "the nation's fastest growing chain of large volume, deep discount stores." Its grand opening circular proclaims, "Far more than a drugstore."

Said vice president Carol Robinson, the elimination of the word |drug' "better reflects the composition of the store. We're much bigger and feature many more products than the conventional drugstore.

"The consumer didn't perceive Phar-Mor strictly as a drugstore," Robinson added. "The word drug was misleading to the consumer."

Furthermore, Warren, Mich.-based F&M also altered its description of its concept. The 107-store chain now describes itself as a "deep discount, health and beauty care and household supply store."

This subtle change delivers a powerful competitive message to other retailers, particularly discount department stores.

Based on a breakdown of sales, the change is justified. According to industry sources, F&M pharmacy sales account for only 8% of total sales compared to an industry average of 34% for chain drugstores. Toiletries/OTC account for 38% of sales compared to the industry average of 25%; consumables/candy 15% vs. 8%; cosmetics/fragrances 7% vs. 5%; general merchandise/housewares 17% vs. 11%.

While privately held Phar-Mor does not disclose any financial information whatsoever, it's safe to assume that based on its merchandise mix, sales breakdowns are probably consistent with F&M, if not more heavily skewed towards food/grocery and general merchandise. * Phar-Mor is on a growth track that significantly outpaces Wal-Mart's first 10 years of operation. In 1972, Wal-Mart had 64 stores with sales of $125 million compared to Phar-Mor, which will have 340 stores in 33 states by year-end generating over $3 billion in sales. Plans are to add about 60 stores per year. * Phar-Mor boasts state-of-the-art technology and satellite capabilities that rival the nation's top retail chains. Like Wal-Mart and Kmart, Phar-Mor transmits sales data and now is involved in a variety of programming including training, continuing education for pharmacists, merchandising and spots featuring corporate and executive meetings. * Phar-Mor is a bona fide everyday low price retailer. A quick survey of customers at the recent opening revealed that most customers believe that Phar-Mor does, in fact, have the lowest prices around. The chain heavily advertises and promotes its "Power Buying" strategy: "You get a great deal at Phar-Mor, because Phar-Mor only buys great deals." * Phar-Mor has already and will continue to impact the future of retailing far more than many observers believe. The chain currently operates 14 stores as mall anchors. Although Phar-Mor executives would not disclose how many more stores would anchor malls, this is obviously a strategy that has been successful and will likely continue. Based on its projections, Phar-Mor will double in size in five years and likely become a national deep discount retailer.