Suburban sprawl promotes competition in Twin Cities: No. 1 ranked Target and the area's third-largest company, Best Buy, have set their sites on expanding in the world of pharmacy and health-related retailing

Drug Store News, June 6, 2005 by Laura Heller

The health care/technology hybrid concept store opened in January in suburban Richfield. The company isn't releasing sales figures, but management claims to be pleased with the initial results and has plans for a second location in St. Paul.

Park Nicollet was tapped for its expertise in patient care and will have representatives available for in-store consultations and seminars. Meanwhile, pharmacy services at eq-life are being provided by PrairieStone Pharmacy, a local chain with 11 locations in the Twin Cities primarily in upscale grocery locations inside Byerly's and Lunds supermarkets.

Another small regional player that refuses to cede share to the big chains is Fairview Pharmacy, which operates 19 retail drug stores in the area. Anchored by a strong specialty pharmacy/home infusion business, the retail pharmacy division of Fairview Health Services--the region's largest health care provider--controls 6 percent of the local pharmacy market, a tribute to the chain's service-focused model. A major selling point: free delivery within five miles.

One to beat

Walgreens reigns supreme in the Twin Cities and shows no signs of quitting. With 77 locations currently in the market, the company has continued to boost its presence here with new stores and continues to grow its overall business, thanks to strong front-end sales--no easy accomplishment in a market dominated by discount department stores, one of which calls Minneapolis home.

When asked which drug chain rules the market, locals here typically respond with, "There's a Wal-greens on nearly every corner."

One to watch

Target may call Minneapolis home, but its strong presence and high customer loyalty in this market may have just lit a fire under competitor Wal-Mart, which has come into the Twin Cities with guns a blazing.

The discounter increased its store count here to 24 from 16 a year ago, taking advantage of the region's growing suburban sprawl. As a result, the retailer's prescription market share now totals 7.6 percent, up from 4.5 percent the year before. By comparison, Target's prescription market share growth was flat this year, measuring just 5.6 percent compared with 5.5 percent the year before. But Target's recent initiatives in the pharmacy category are clearly aimed at capturing a bigger share of the region's young, well-educated and high-earning population. It's a classic battle between the nation's top two discounters playing out on Target's home turf, with convenience and low prices versus style and added value.

One for the books

PrairieStone Pharmacy is staking out new territory in the drug channel. By implementing new technology, partnering with local retailers outside the drug trade and boasting of more consumer-friendly services, the chain's initiatives are garnering attention both from within and outside the drug store industry.

At just 400 square feet, compared with a typical pharmacy department of about 1,000-square feet, PrairieStone can fit conveniently into most existing store formats, thanks to the chain's high-tech drug storage and dispensing system. The system also allows prescriptions to be filled or overseen by technicians, freeing up the pharmacists for customer interaction and allowing them to come out from behind the counter to walk the aisles with consumers as they try to make sense of the many OTC choices.