Will whole health fortify supermarket pharmacy?

Drug Store News, March 15, 1999 by Al Heller

Massive changes are under way in the pharmacy operations in the food store trade class. They bode well for pharmacy's future as part of an integrated strategy to win customer loyalties, raise incremental sales of high-margin nonfood departments, and even go so far as to position supermarkets as complete wellness destination centers, offering everything from smoking cessation clinics to nutritional instruction for diabetics.

Similar to how drug stores are finally embracing natural care as a way to broaden their wellness portfolio, supermarkets are now facing a fresh concept on their own table called whole health.

Predicted to be one of the driving forces in reshaping the supermarket channel in the new millennium, whole health is such a new concept that the jury is still out: Will supermarkets wrap their arms around whole health and plant their unique identity on it? Or will they shun the concept as so foreign to the way they've historically done business that it could never succeed?

Whole health, in its simplest sense, positions supermarkets as the single source for pharmaceutical, over-the-counter, natural care, diet and lifestyle wellness solutions. It leverages the unique ability of supermarkets to offer the bounty of organic produce, fresh perishables and nutritional guidance, along with pharmacy and traditional drug store categories, all under one roof.

At its extreme, consumers would visit whole health supermarkets to fill all their wellness needs. Pharmacists would act as healthcare ambassadors for the entire store, working with nutritionists and natural care specialists to counsel customers and guide them to organic, low-fat, low-sodium and low cholesterol food choices in every aisle.

Today, one supermarket chain is a veritable test kitchen for the whole health concept. Nine-store Pratt Foods in Oklahoma has transformed four of its stores into novel whole health-oriented supermarkets.

"Whole health is all about choices. We're not telling people, 'Don't eat meat.' We're saying to people, 'Here are other nutritional choices for you to reach your wellness objectives,'" said chief executive officer J.B. Pratt Jr.

For the past decade, Pratt's stores have forged a reputation for organic produce, fresh perishables, and lifestyle and nutrition education. But, with whole health, the chain has come full circle. Little wonder, since Pratt himself was trained as a medical doctor specializing in pathology. "I learned about normal and disease states when I went to medical school," said Pratt. "But, we do have to think about diet, lifestyle and supplementation as part of the journey toward wellness. Pharmacists should be the gatekeepers for whole health solutions, and blending allopathic pharmacies with herbs/natural care will be the strongest."

The four corporate-owned pharmacies are dubbed whole health pharmacies in newspaper ads and in-store signs, and rely heavily on extensive training of pharmacists in nutrition and lifestyle issues. "We also prime the pump with a Sunday evening radio show with licensed M.D.s, who tell call-in viewers that pharmacists should guide their natural care selections. This gives us more legitimacy than health food stores, and gets people coming in to ask about herbs and supplements," Pratt explained.

Pratt brought pharmacy to the front of the store wherever possible, and moved the high-profile five-a-day produce program adjacent, so it is "the central focal point for people to enact lifestyle changes. Whole health is as strong a customer advocacy position as anyone could ever take--and they can make money at it, too. The concept ties the whole store together."

Yet, he acknowledges that "eliminating turf battles is the hardest part for chains. What we're doing is a lesson for the large combos. Whole health can't be culturally set apart from the rest of the store, and senior management must foster interdepartmental cooperation," said Pratt. "The effort will be worth it because even a Rite Aid with GNC can't execute this without produce, meat and other categories.

"Whole health could be the savior of supermarket pharmacies, which are struggling," added Pratt. "Gross margins are down on scripts. If we can add supplements and get pharmacists involved in the total store, it works." Indeed it does. His total store operates at 22 percent margins, while natural and organic foods yield 25 percent to 33 percent, and supplements 35 percent to 50 percent.

Still, whole health was only implemented as a coheisve concept in late 1998, and is too new for formal investment and payback measurements. But, will it work?

Despite the undeniable logic of whole health, to implement it well requires some fresh thinking by supermarket executives because it calls for the coordination of several product groupings that enhance health but aren't typically controlled by the same buyers/category managers within a supermarket's structure.

Moreover, the approach is so new that economic models don't yet exist for it, and the pioneers venturing forth do so because they have an intense personal interest and are nimble enough to enact such an effort.