Philly prepares for major chain reaction

Drug Store News, Oct 10, 1994 by Marie Griffin

"So, what makes all these chains think Philadelphia needs more drug stores?" asked Francesca Chapman, a writer for the Philadelphia Daily News. She knew CVS, Rite Aid and Thrift Drug had plans to build and/or renovate stores in downtown Philadelphia, and she'd heard something about Walgreen moving in.

Well, I answered, it's not because Philadelphians have an unusually high consumption of shampoo, pain relievers or prescription drugs, it's just that the City of Brotherly Love is becoming the site of a fraternal market share battle.

Within a year from now, Walgreen plans to have more than a dozen units in metropolitan Philadelphia, the nation's fourth-largest drug store market. The No. 1 drug chain says it could eventually have as many as 100 stores there. This announcement has prompted a literal "chain reaction."

More than ever in today's competitive, consolidating, third-party-driven marketplace, no chain can afford to lose market share. So, it's no surprise that the chains that have established themselves in the market are making moves to protect their turf.

Rite Aid will open 20 more stores in the Philadelphia market, according to a spokesperson. It has leased a former McCrory's right in the city center in which it will open a 12,000-square-foot drug store. The Philadelphia Daily News reported that CVS is remodeling a former movie theater to create a 10,000-square-foot store in the heart of the city and that Thrift Drug may also be seeking additional Philadelphia locations.

Chapman voiced a "concern" among local people that having drug stores take the place of such businesses as "movie theaters and department stores" was a disturbing trend. I was quick to make the point--which didn't make it into the paper--that consumers will benefit from all this activity. They'll have several new, clean, bright, well-stocked drug stores, with expanded services, and they will probably enjoy lower prices, at least in the short term.

While positive for shoppers, the changes aren't as auspicious for the average Philadelphia independent. Indys will face increased pressure to compete in pricing, decor and promotions, and for access to patients involved in managed-care plans.

On the other hand, I predicted in the Philadelphia paper, all the chains will do fine, perhaps even better than before, because increased competition will cause all the chains to market and promote more aggressively and to find more ways to get consumers to shop drug stores.

To answer Francesca's original question, I'm not sure Philadelphia will end up with too many more drug stores in the long run. But I'm willing to bet that there will be different names on the doors of those drug stores.