Niche chain holds its own on retail giant's home turf

Drug Store News, April 20, 2009 by Jim Frederick

If drug store chains had individual personalities, USA Drug would resemble the small but scrappy kid everyone remembers on the high school football team. Running a broadly merchandised drug store with a big front end in Bentonville, Ark.--hometown to Walmart--is scrappy. USA Drug even has a store in nearby Rogers, Ark., the birthplace of Sam Walton's retail empire.

It takes confidence to pull that off, not to mention a nimble, value-oriented marketing strategy, a sure handle on operating expenses and an intimate knowledge of what consumers in the South and the midsection of the United States want in a drug store. USA Drug lacks for none of the above.

Based in Pine Bluff, Ark., the chain operates through a variety of banners, including the flagship USA Drug brand and other labels well known to residents in adjoining states. Most of those other logos were acquired in the years since company founder Stephen LaFrance opened the first USA Drug outlet in 1984.

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The company's acquisitions have included a steady stream of independent drug store buyouts, which bring with them a core group of loyal prescription customers and, often, the veteran pharmacy owner/operator who built the business. But LaFrance's operation also has grown through a series of bold and dramatic steps: first with the acquisition in 1997 of Super D Drugs and Ike's in Tennessee, and in 2004 with the purchase of May's Drug and Med-X Drug in Oklahoma.

The company's flagship USA Drug unit operates some 40 USA Drug and Super D full-line and "Express" drug stores in Arkansas. The company also owns more than 50 May's and Med-X drug stores in Oklahoma and southwest Missouri; nine Super D stores in Missouri; more than 30 Super D stores and three Ike's deep-discount stores in Tennessee; and 16 Super D stores in Mississippi.

USA/Super D also offers a full-service franchise to independent pharmacy owners, as well as in-store clinics under a partnership with MedBasics Family Health Centers.

The company prides itself on its ability to connect with a large and fiercely loyal customer base in its operating region. "USA Drug pharmacies were designed to handle large numbers of customers while providing a down home, friendly atmosphere," the company maintains, adding that its leaders strive to create "a continuously evolving retail format to better provide our customers the best products and services at the lowest prices."

The company draws on a sophisticated array of data-driven systems for replenishment, demand forecasting and inventory control to help it stay ahead of customer expectations. Last fall, it deepened its commitment to advanced technology by contracting with IBM to design a new point-of-sale system and roll it into all the drug stores.

USA operates through two formats: a 16,500-sq.-ft. prototype store with room for a wide range of front-end departments and clinical care centers adjoining the pharmacy, called Healthy Living Centers; and a 3,500-sq.-ft. "Express" format that features a full-service pharmacy and a tight selection of OTC products and convenience-store items.

The company also operates drive-through pharmacies in roughly half its locations. "We add drive-through windows when we build, remodel or relocate," said an executive.

USA Drug

Headquarters: Pine Bluff, Ark.

2008 sales: $685 million

% change vs. 2007: 7:8%

No. of stores: 159

No. of stores with Rx: 159

Avg. store size: 16,500 sq. ft. / 3,500 sq. ft. *

Rx sales: $398 million

% of sales from Rx: 58%

Sales per store: $4.3 million

* Healthy Living Centers/Express stores

Source: Drug Store News