Will whole health fortify supermarket pharmacy?

Drug Store News, March 15, 1999 by Al Heller

Indeed, this trend demonstrates more than anything that the competitive picture isn't food vs. drug vs. mass as pharmacy operators. No one holds an exclusivity on the pharmacy franchise, and "all pharmacy retailers face the same challenge. How do you maintain pharmacy business in a brick-and mortar store rather than in some other fashion?" said the consultant Bishop.

"Consumer options range from mail order to online, and even gas stations. It's a matter of retailers rounding out their value premise to consumers."

                   Supermarket pharmacy vital statistics

                                               1998    1997    1996
FINANCIAL RESULTS
Average gross margin                            22%     23%     24%
% of total store sales                           6       6       6
Average weekly Rx sales per store             $27,700 $23,500 $21,500
% of Rx sales from generic drugs                20%    22.5%    19%
% of Rx volume from generic drugs               45%    43.5%    42%
Salaries as a % of Rx sales                     13%    13.5%    14%
Average annual inventory turns
in a mature store                               10       9       9
THIRD PARTY ISSUES
% of Rx sales from third party                 71.9%   64.3%   58.5%
Average gross margin of third party sales       18%     18%     19%
Average gross margin of non third party sales   29%     29%     29%
GENERAL OPERATIONS
Prescriptions filled per day per pharmacy       139     135     130
Retail prescription price                     $31.12  $28.62  $27.01
Expected % growth in number
of pharmacies in next year                     9.5%    11.5%   13.8%
Pharmacy square footage                         500     500     485
Basis used to add clerk/tech (% of cos.)
 Specific basis used                           72.3%   68.3%   81.3%
 No specific basis used                        27.8%   31.8%   18.7%
Number of prescriptions/week for those using
as basis for adding clerk/tech                  400     500     400


Source: Food Marketing Institute 1998 Supermarket Pharmacy Survey.