Maintaining stronghold on southern market

Drug Store News, April 24, 2000 by Bruce Buckley

PINE BLUFF, Ark. -- Asked to describe USA Drug/Super D's major achievements last year, Steve LaFrance, the president and chief executive, said: "Continuing to be profitable and stay in business in a very competitive market."

Competitive indeed. Wal-Mart is practically a next-door neighbor. The Bentonville, Ark.-based retailing giant is a major pharmacy player in many of USA Drug/Super D's core markets in Arkansas, Tennessee, Mississippi and southern Missouri. Free-standing drug stores operated by Wal-greens, Eckerd and Rite Aid and combination stores run by Kroger continue to proliferate in those markets. Still, LaFrance described the progress his chain made last year as very good and added that the company is well positioned for 2000 and beyond.

Last year's major challenge for USA Drug was to assimilate the acquisition of a drug chain, Super D, that was six times its size. This year's greatest challenges, according to LaFrance, are "third party, better financed competitors and site acquisition."

Deep pockets, of course, make a big difference in the heated competition for prime retail space. In 1999 USA Drug/Super D opened no new locations, though it did make 11 acquisitions, LaFrance said, and wound up the year with 117 stores (including franchises), a net gain of four compared with the previous year. Several of those acquisitions were independents that were merged into existing stores, he said.

USA Drug/Super D has had the difficult task of integrating a diverse array of drug store formats and sizes operating under a variety of logos including USA Drug, USA Drug Express, Super D Drug and Super D Express. One accomplishment last year, LaFrance mentioned, was the expansion of the company's planogram department in order to offer more varied merchandise sets for its range of store formats. Also added was a new signage program.

The 1998 acquisition transformed USA Drug from a small Arkansas-based retail operation into a more regional player.

During the year, LaFrance said the company expanded both its vitamins/herbal and gift departments. Although he said that no new pharmacy department innovations were introduced in 1999, he added that "plans are being developed to install prescription-filling equipment in several stores." Last year, the chain tested a Baker APS automated dispensing system in one of its high-volume stores.

What's more, LaFrance said USA Drug is working internally and with established e-commerce companies to develop e-commerce capabilities. Web site refills soon will be available at www.usadrug.com.

USA Drug/Super D

Headquarters: Pine Bluff, Ark.

1999 sales: $300 million [*]

% change vs. 1998: 4.2 percent

No. of units: 117, including franchises

Average store size: 6,500 square feet

Pharmacy sales: $186 million [*]

% of sales from pharmacy: 62 percent

(*.) Total sales and pharmacy sales are estimates.