Giant to open new expansion front with rollout of stand-alone drug stores

Drug Store News, July 14, 1997 by James Frederick

LANDOVER, Md. -- Fifteen years after launching its first modest test of their viability, Giant Food Inc. is laying plans for its first major rollout of stand-alone drug stores. Buoyed by the success of the three stand-alone units in Maryland and Virginia it has opened--the most recent opening came in 1991--the food-drug combo store chain will open as many as 20 free-standing drug stores over the next three years.

The stores, which Giant called a natural extension of its current business, will be targeted to both urban and suburban areas, according to the company. No firm opening dates have been set, but a company source indicated that the stores would be used to fill in existing Giant markets, such as Baltimore and suburban Washington, D.C.

Giant is now fine-tuning a new, smaller store design for the rollout. That design--which calls for stores ranging from about 8,000 square feet to 12,000 square feet-will feature a more traditional mix of basic drug store merchandise than the three older drug stores, said Russ Fair, vice president of pharmacy operations for Giant. The new units will also offer improved sight lines and department visibility through the use of lower gondolas, and at least some are likely to include drive-through pharmacies.

By contrast, the three original Giant Discount Drugs units range in size from 15,000 square feet to 25,000 square feet and feature a wide array of hybrid offerings, Fair told Drug Store News Chain Pharmacy. Two of the original stores offer bulk foods, he said; the third also features a salad bar and a bakery.

Reasons for growth

Prompting the expansion plan are several factors, according to Fair. One big one, he said, was the success Giant has had with the original free-standers. "From a business point of view, it made sense," he said. "We feel very comfortable with the format."

Giant was also convinced the stand-alones could serve as a viable expansion vehicle, despite the strong presence of rival drug chains, such as Rite Aid and CVS, in its trade area of Maryland and northern Virginia. With 131 of its 172 supermarkets already operating as food-drug combos, the chain has built a powerful pharmacy network and strong name recognition for its Giant Discount Drugs division. According to market research firm Metro Market Studies, Giant's pharmacy operations also rank second in drug store market share behind Rite Aid in both Washington, D.C. and Baltimore.

Underlying that market strength has been a concerted effort to expand professional services and patient care at Giant pharmacies. The chain has partnered with pharmaceutical manufacturers to improve patient compliance through phone follow-ups, patient education efforts and other means. It has also launched a pharmacy care center in one test store in partnership with the University of Maryland School of Pharmacy. And, it has exploited its own resources as a major supermarket provider by offering nutritional education tours of its food stores for diabetics.

Giant has also built its healthcare reputation through innovative prescription container labeling, widely attended flu shot programs in its stores and active participation in local health fairs.

Despite the obvious drawing power of Giant's combo format, "it was difficult getting sites for combo stores in some areas, and I felt it was important for us to be in those areas from a strategic standpoint," Fair said. What's more, he noted, "We can trade on our existing infrastructure, and we can piggyback on our existing advertising umbrella."

Fair said the Giant Discount Drugs division has already established plenty of market presence with its own ad circulars, which have been combined with the larger Giant Food inserts since January. "We already had our own drug store advertising and professional messages," he told Drug Store News Chain Pharmacy.