Wal-Mart Canada rolls out natural care centers

Drug Store News, Jan 11, 1999 by Tina Kyriakos

MISSISSAUGA. Ontario -- Wal-Mart Canada is pushing its way into the big leagues of the fast-growing nutritionals business this year, with the roll out of about 50 full-line sections in its 150 in-store pharmacies. The new One Source Nutrition Centre departments will boast the broadest assortment of vitamins, herbals and sports supplements in the industry, the company said.

By upping its presentations from between 12 feet to 20 feet to nearly 500 feet, and its line-up to include more than 1,500 products--from basic vitamins, minerals and herbal products to health foods and sports supplements--the company is poised to take advantage of the explosive growth in this market, which has been estimated at anywhere from $450 million (Canadian) for natural products and vitamins alone to as much as $2 billion, including health foods and sports nutritionals.

"Consumers are telling us they want to see these products in our stores," explained John Makepeace, director of pharmacy. A test study earlier this year in seven of its Ontario locations showed consumer response far exceeding the company's initial expectations.

Surprisingly, the new presentations not only boosted sales of relatively new herbal products, but they also had a strong influence on more mature segments, as well. "It breathed some new life into the entire [category], with some of the strongest growth resulting from sales of the standard mix of vitamins, such as C and E, and calcium supplements," he explained.

Indeed, the pilot program confirmed something many had theorized.

"Canadians are becoming extremely health conscious," said Makepeace, pointing to results from the recent Canada Health Monitor study. Sponsored by Price Waterhouse, the study indicates that millions of Canadians are turning to a wide range of complementary medicines as alternatives to conventional drug therapy. Significant, too, said Makepeace, are demographics showing that the trend will continue for some time. "The highest users of complementary medicines--or 60 percent--fall into the age group of 35 to 55 years old, so it's a good investment not only for now, but for a number of years down the road," he added.

And, while the strategy wasn't specifically designed to boost prescription sales, Makepeace suggested that the location of the centers within easy sight of the prescription counter will undoubtedly raise the exposure of the company's pharmacy services. "If we can convert the consumer to shop our store for these types of products, then it's likely they will look to us for their prescription needs," said Makepeace.

In addition, he noted that the company has been encouraging pharmacists to take an active role in discussing these products with consumers. "Given the body of evidence that's building up on the possibility of side effects and drug interactions occurring with these products, it's becoming increasingly important that the pharmacists counsel these customers," said Makepeace. One initiative the company is pursuing in this area involves the use of a satellite broadcasting technology to transmit continuing education seminars to its pharmacy associates.

"It's a quick way of responding to information on a new product or a new indication that hits the public from media sources, such as CNN," he explained. The company has also pushed to improve training of front-store staff-- about 1,800 associates.

The "everyday low prices" strategy that's made Wal-Mart a winner in scores of product categories will be used to propel sales of the new nutrition centers. Focus group studies conducted by Wal-Mart earlier this year found that consumers were looking for value, as well as the lowest prices. "If they saw the same brand and quality for less money, there was clear motivation to buy," said Makepeace in explanation of the company's price structure, which offers savings of 15 percent to 25 percent over the competition.

While the initial roll-out is targeted for its Ontario and British Columbia stores, Wal-Mart plans to continue its nutrition centers beyond 1999.

                   Top-selling herbals inthe mass market

Herbal         Three-outlet
                    $ sales
                in millions
Gingko                 $138
St.John's Wort          121
Ginseng                  98
Garlic                   84
Echinacea                33
Saw Palmetto             27


Source: InformationResources Inc. data for the 52 weeks ended July 12, as
published by Herbal/Gram magazine.