Supervalu pushing pharmacies to front of stores

Drug Store News,  April 21, 2008  by Doug Desjardins

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Supervalu isn't a name most people associate with pharmacy, but that's changing now that it ranks as the ninth-largest retailer in the country, with more than $3 billion in annual sales. And it plans on making pharmacies a more integral part of its stores this year by continuing an ambitious remodeling program.

Since its June 2006 acquisition of Albertsons--av-on, which added more than 720 pharmacies to its portfolio and made it a major player in the business, Supervalu has focused on renovating its store base and uniting a far-flung network of pharmacies, which operate under banners that include Jewel-Osco, Cub Food and Sav-on.

And now it's managed to tie together its 920 pharmacies under a new software network. In late February, Supervalu completed a long process of integrating all its pharmacies into its new ARx software system. The system, which replaced four separate ones, provided a single platform for insurance claims and pharmacy workflow management and added such new technologies as electronic prescribing.

"By equipping our pharmacies with the innovative technologies included in ARx, we're providing our pharmacists with greater opportunity to apply their expertise as medication experts and develop creative solutions to common health conditions," said Chris Dimos, Supervalu vice president of pharmacy.

The new system also makes it easier for customers to reorder prescriptions and check their refill status using the ARx 24-hour telephone refill system.

Supervalu also is testing a new store format that highlights its pharmacies. Some of its new stores and remodels now feature the pharmacy counter and OTC sections at the front of the store near the entrance, a departure from its traditional place near the back of the store.

"Pharmacies at Supervalu and in supermarkets in general tend to be buried in the back of the store. So a lot of people never even see them," said Supervalu Retail Midwest president Kevin Tripp at a recent investors conference. "But pharmacies are a key element in our Fresh & Healthy format and we want everyone to know that they're there."

Tripp said the new format is now in place at several Jewel-Osco stores in the Chicago area and at a handful of Cub Foods and Albertsons-Sav-on stores. And he said the new location reflects the fact that pharmacy is considered a key element in the chain's new Premium Fresh & Healthy format, which is the focus of its remodeling effort.

He noted that Supervalu ranks among the top 10 pharmacy retailers in the nation in terms of revenues and storefronts, and it's something the company want customers to know about. Placing the pharmacies closer to the entrance should make a statement about Supervalu's place in the industry and the key role pharmacy plays in supermarkets.

"We want them to be a billboard that tells people we're in the business," Tripp said. Enhancing that message is the education that pharmacies are providing this year, with programs that inform customers about such long-term health problems as diabetes and blood pressure.

Supervalu is adding new screenings and preventive treatments, as well. The screenings include one type that can detect diabetes in its earliest stages, being offered at pharmacies within six Supervalu banners in 10 states since November.

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Those screenings are conducted by certified pharmacists and designed to detect both diabetes and pre-diabetic conditions that can develop into more serious problems.

Screenings are available by appointment during regular pharmacy hours; results are provided at the time of the test.

Supervalu doesn't expect to add many pharmacies this year. Instead, chief executive officer Jeff Noddle said the 2,450-store chain plans to remodel up to 165 stores to its Premium Fresh & Healthy format compared with just 125 in 2007.

"We're pleased with our early remodel performance and plan to maintain our commitment to the remodel program," Noddle said. He also said that remodeled stores are expanding their offering of fresh foods and prepared meals to serve consumers on the go.

Supervalu also is putting less emphasis on testing new formats as it works to revamp its existing stores. It closed its two-year-old Sunflower Markets chain in February, shuttering five stores located in three states. "Ultimately, the format did not meet our goals," said Supervalu spokeswoman Haley Meyer.

The smaller-format stores emphasized organic foods and all-natural products and were seen as an alternative to such grocers as Whole Foods and Trader Joe's. The first store opened in early 2006. Supervalu had planned to open up to 50 stores if the format proved successful.

And, unlike its rival Safeway, Supervalu doesn't plan to launch a new format in reaction to Tesco's move into California and the Southwest, home to hundreds of Albertsons-Sav-on stores. Tesco plans to have up to 200 small-format Fresh & Easy Neighborhood Markets open in California, Arizona and Nevada by the end of 2009.