Happy Harry's

Drug Store News, Feb 12, 1996 by Barbara White

While price is an issue Happy Harry's doesn't ignore, it's not the main focus at the 31-store Newark, Del.-based chain. "Only a small percentage of customers shop based on price alone," said Alan Levin, the chain's president and chief executive officer. "You can't keep the price shopper anyway; they're going to leave you at some point. The other 90 percent of shoppers are looking for a home."

It's that 90 percent of loyal customers desperate for a little respect and a smile that the chain considers its target market. At Happy Harry's, salespeople won't point a customer in the vague direction of aisle four when she asks, "Where's the hair spray?" Corporate policy mandates that they escort the customer there. Personally. Employees are also instructed to never pass customers without greeting them.

The chain's concern with its customers extends to its enlarged pharmacy waiting areas that include not only seating, but thoughtful touches like the daily newspaper and some news magazines. "When you're sick and you have to walt, standing on your feet for five minutes can seem like an hour. If patients have to wait, it should be in a comfortable environment," said Levin.

That customer-driven philosophy pays off. Last year, the chain's sales increased by 5 percent. In the next two years, Happy Harry's will open six new stores. Three to five stores a year are planned after 1997. The expansion strategy calls for more stores in existing markets. "I don't believe in leapfrogging," said Levin. "Before we invest in inventory and improvements, we need to have customer recognition."

And if the chain's success is any indication, to know Happy Harry's is to love it. Levin attributes the chain's strength in its markets to a service orientation. "Our biggest edge against all our competition is service," he said. But that's only part of the chain's formula for success.

Happy Harry's lean (but never mean) structure is another advantage that allows key executives to react quickly to trends. That "turn-on-a-dime" mindset will really pay off once the chain fully harnesses the power of the POS system it finished installing in November.

Front end gets focus

While over 50 percent of the chain's business is done in the pharmacy department, which fills about 50,000 prescriptions chainwide per week, the chain still has a big stake in the front end of the store. Originally an average of 8,500 square feet, Happy Harry's prototype size has been expanded another 1,000 square feet to include more front-end merchandise.

Grocery will benefit greatly by that expansion. A category that generates 10 percent of the chain's front-end volume, grocery is one of Happy Harry's strongest growth areas. The category is being promoted aggressively and has gotten a big boost from offshelf displays, an increased refrigeration department and a greater focus on convenience foods.

Price, of course, is an important issue. But while the chain doesn't ignore the importance of hitting key price points, it places pricing in the context of an overall strategy.

"The ad customer is more responsive to the sum than the parts," said Jon Ruddin, vice president of merchandising. "They are really looking for a bag of bargains, not a single bargain to justify a shopping trip. That's why convenience remains the key."

And because Ruddin knows that low price only wins certain battles, the chain remains committed to selection in both the OTC section and HBA sections, which account for, respectively, 30 percent and 25 percent of the chain's front-end business. Private label in the OTC section is ever expanding, with 350 SKUs already on the chain's shelves. "We are always trying to expand our private label offerings, since the products have been so well received by our customers and enhance the customer value perception of their overall shopping experience," said Ruddin.

In keeping with its service image, Happy Harry's views new products as the key strategy in its OTC and HBA departments. That means the chain strives to be the first in its operating area to stock the newest, hottest items.

But service doesn't stop there. The chain special orders merchandise for customers. "We don't just drop the ball if we don't have a product that a customer is looking for," said Ruddin. "We make every effort to get it for them. When a customer gives us a chance to assist them with a problem, shame on us as retailers if we don't make an effort to remedy that problem. Sure, it may be a costly and time consuming endeavor, but it's worth it to retain your existing customers since the costs of attracting new ones is so high."

Managing cosmetics

A chain with this kind of commitment to service isn't preoccupied with cutting SKUs in the cosmetics department. The chain devotes 68 feet to the category, which generates 8 percent of front-end sales. "Being a small chain has enabled us to react quickly to required planogram changes," said Ruddin. Those changes in turn help to keep our departments fresh and up to date. And as part of its focus on service, cosmeticians are present in all stores as required to best assist customers. Cosmetician hours will continue to be reviewed as POS data determines clearer shopping patterns.