Bartell Drugs: striving for new look, right mix

Drug Store News, April 28, 2003 by Liz Parks

Bartell Drugs, which opened two new stores last year to take its store count up to 51, is continuing to cluster in existing markets and will open one more new store this May in Snohomish County where Bartell currently has eight stores.

Bartell, which closed one store last year, will spend the bulk of its budgeted capital dollars this year on remodeling older stores, in the process expanding several new and existing front-end departments, such as one-hour digital photo labs, digital photo accessories, professional hair care, gift items and toys.

But looking to the future, Bartell is in the early phases of implementing a strategic planning process that will help its management team determine what the future Bartell Drugs store will look like.

George Bartell, president and chief executive officer of Bartell Drugs, said the company is trying to determine "the extent to which we want to be in certain categories like photo processing; where we should physically locate certain core categories like convenience foods [currently to the rear of most stores]; and what new categories or departments might make sense for or us to test."

The process, he said, began last year, and the information gathering and planning phases will continue at least through this year.

But even as the company continues to plan for the future, management is moving forward with merchandising and marketing initiatives designed to drive sales and profits now.

At its checkouts, to enhance customer service, Bartell Drugs will be adding a debit functionality to its cash registers this year.

"Customers want that," said Bartell. "They like it, and when we get it in, it will open up the possibility for us to sell electronic gift cards."

In pharmacy, Bartell said the chain will test one or two of ScriptPro's automated prescription dispensers this year and also is looking at some of the new automated dispensers coming out from McKessonAPS. The chain already has some of McKessonAPS' Baker prescription counting cells and cassettes in about six of its high-volume stores.

Putting in automated dispensers, Bartell said, "may postpone the need to add additional help as our prescription volume continues to grow. And it should improve our quality assurance."

Photo focus

In terms of capital expenditures, Bartell Drugs will remodel nine stores this year, replace one, and George Bartell said that even though only one new store is on the drawing board, "We're looking really hard right now."

Bartell Drugs has been remodeling an a refurbishing its stores regularly, to the point that Bartell estimates that the average store in the 113-year-old chain "is about five years old."

The new 15,000-square-foot store, which will open in May in Edmonds, Wash., will have a one-hour digital photo lab, making it just the second store in the chain to operate one.

"We've been seeing growth in photofinishing, but not a lot of growth in overnight processing of film. Digital is becoming big," said John Weith, vice president of merchandising.

Bartell put its first one-hour digital lab in last September, and both Bartell and Weith said the new department is "working out very well."

Bartell said that the chain will continue to open digital one-hour labs "as we get to the point where we need to replace an analog." Some of the older analog labs, he said, will be moved into our lower-volume photo departments that currently are without a one-hour lab.

Both executives said having digital labs will give the chain an opportunity to do some new things in photofinishing this year, including getting into digital accessories, CDs and Christmas cards.

"The new digital machines have quite a few whistles and bells that the old analog machines don't have," said Weith, "and the difference in price between the old analog machines and the new digitals has been coming down, so it should be a fairly quick payback."

Customers, said Weith, are responding well to the digital departments. "My district managers are telling me that there is a lot of interest out there at the store level."

Weith said the company this year also plans to expand its private label program, to test some new GM departments like fresh flowers, and to continue to fine-tune its product mix to ensure that slow-turning items are eliminated, opening up space for innovative new items, new categories and new types of services.

In another key front-end initiative, Bartell Drugs is also expanding its private label program. Weith said Bartell now has about 350 store brand products compared with approximately 300 last year.

This year, they will be rounding out the collection with another 100 or so items, and they will be expanding the collection into six new OTC/HBA/GM categories.

"Our company focuses on national brands, but we know there is some real value for consumers out there in store brands, and we want to be sure we offer it to them."

Bartell also is expanding and refining its presence in the toy category, moving away from generic peg toys to give more exposure to popular national brands like Lego's, Barbie and Hot Wheels.