Hi-School succeeds with balanced approach to front-end and pharmacy strategy

Drug Store News, August 20, 2001 by Michael Johnsen

Hi-School Pharmacy president and chief executive officer Steve Oliva has been taking copious notes of late, as the chain strategically maintains its presence in a market that is a mere stone's throw from Portland, Ore., which Money magazine last year named the "Best Big City to Live In."

And despite the recent softening of the economy nationwide, Oliva contends it hasn't reached this area. "Our economy is still very strong here," he said.

Taxes are one reason behind the area's residential growth of late, Oliva said. Residents of Washington don't pay any income tax, and shoppers in Oregon, just across the Columbia River, don't pay any sales tax.

Oliva doesn't cite the larger, national drug chains, such as Walgreens or Rite Aid, as Hi-School's chief competition. Rather, he points to mass retailers and supermarket chains that are in better position to erode Hi-School's front-end sales.

This is because even though pharmacy is growing and is projected to grow further--15 percent to 16 percent in this market Oliva estimated--he hinted that focusing solely on the back-end could back-fire as a corporate strategy. Rather, the ABCs of operating a chain drug store here require a more balanced approach--the front-end mix matters almost as much as the pharmacy.

Oliva cited the current pharmacist shortage as HiSchool's biggest challenge in growing the bottom line. "The challenge is being able to control the difference between gross profit and labor, [and] to make pharmacists more productive as the gross profit in the pharmacy area continues to drop," he explained. Hi-School staffs its 37 pharmacies with 109 pharmacists, many of them part-timers.

To create a point of difference in consumers' minds, Oliva has stressed convenience. "In order to compete, [we must] add drive-through windows and more convenience items [upfront]," he said. The chain has installed two drive-through pharmacy windows this year, with plans for one more. At the end of the year, as many as 25 percent of Hi-School Pharmacy's will have drive-through windows.

Hi-School Pharmacy

915 W. 11th St.

Vancouver, Wash. 98660

Phone: (360) 693-5879

Web site: www.hi-schoolpharmacy.com

Number of stores: 37

Number of pharmacies: 37

Annual Rx sales in 2000: $103 million

Percentage change: 13.2 percent

Number of pharmacists: 109

Average No. of Rx filled per day, per store: 190

Automated operating system: Renlar Head of Rx operations:

Byron Henry, vice president of pharmacy operations