Hi-School Pharmacy

Drug Store News, Feb 12, 1996 by Allene Symons

Hi-School Pharmacy's 38 drug stores ring up well over $63 million in sales per year, not counting the company's separate businesses in nursing home pharmacies and home infusion.

Currently approximately 40 percent of its volume comes from pharmacy, and the chain is aggressively pursuing managed care contracts. (See box at right.)

The chain's survival strategy of embracing a variety of pharmacy formats and offering convenience merchandise has paid off. Hi-School's retail market is concentrated in Vancouver, Wash., and Clark County, Ore., and in othe small communities in Oregon and Washington. An exception is one store in Northern California's Crescent City.

Its strength is in smaller towns in the northwest, where it caters to the convenience needs of its customers--whether they need a prescription filled in a small medical center pharmacy, or a prescription plus do-it-yourself plumbing item in one of Hi-School's 22,000-squarefoot stores.

Hi-School's formats range from apothecary only (around 20 percent of the 38 stores), combination stores that include an Ace or True Value franchise occupying up to 5,000 square feet, and other combinations that include a Ben Franklin franchise devoted to fabric and crafts. (The company also operates two freestanding Ben Franklin stores.)

Metal marriage

"Convenience hardware has worked as a good marriage for us," explained 22-year veteran buyer Byron Henry. "We're located strategically throughout the metro area, and it's easy for customers to come in for small project items. They come in and buy an item and are home before they could even drive to a mega store."

Another plus is that Hi-School Pharmacy stores, with their hardware offering, give male shoppers more reason to come in. The drug stores also offer selection of electronics and small appliances, mainly under $100.

Said Henry: "[Consumers] shop us for a convenience deal, and they know if there's a problem they can come back and we'll take care of it. We try to be the small town drug store and people have access to small town service--we hope."

What's in a name?

An unusual approach to a chain name is also part of Hi-School's strategy. In some cases, the Hi-School Pharmacy name is subordinated to another name--like a medical center.

When the Hi-School name is used, it's generally for larger sites that offer general merchandise selections.

The diversity of store names--such as Physician's Clinic Pharmacy, Hillsboro Hi-School Pharmacy and Portland Medical Center Pharmacy--is not intended to mask their affiliation with Hi-School pharmacy, explained Henry, who is a partner with Steven Oliva, the current president and owner of Hi-School Pharmacy, in several of the pharmacies. "We don't hide the fact that it is a Hi-School pharmacybut if we run an ad for toasters, we don't want them to go in one of the smaller stores and expect to find that," he said.

Three decade climb

At Hi-School, buying is done centrally, with the store managers having around 10 percent of buying discretion. The chain runs a lot of promotions from food and paper goods to appliances, household cleaning products and, of course, health and beauty aids. Photo is also heavily promoted, mainly for overnight photo processing although two stores have one-hour labs.

Advertising for the various stores is handled centrally and each store's ad is first set up with the same ads as the other stores (usually excluding the apothecary stores), then the stores adjust the ad to reflect categories they carry or emphasize.

The chain is just on the cusp of capitalizing on current technology. Over half of the stores are on point- of-sale scanning, but as Henry explained, We are just getting into scanning now. We are cutting our teeth-we're doing our own programs, initially by scanning our ads, then moving into categories."

Hi-School is working with vendors to develop its proprietary system, and it expects fo be in full POS scan mode in around a year. It's also developing a replenishment system that is designed to first pull inventory from its Portland warehouse, then go to other sources, such as to Cardinal Health for pharmaceuticals.

Dominating at home

Hi-School Pharrnacy's home base is Vancouver, Wash., where it has been for the last three decades. The chain operates 14 stores in its headquarters city.

The Hi-School chain began as a single pharmacy in 1936. The single site was acquired in 1967 by pharmacist Oliva, who then built the chain by building new stores and acquiring independents.

"We have super pharmacists who are working for us," said Oliva. Six or seven of the pharmacists have an interest in individual stores; buyer Byron Henry is co-owner of a half dozen. In addition, Hi-School owns 85 percent of its sites.

The Portland area, Hi-School Pharmacy's core market, is a fast changing retail environment reflecting dynamic population growth. "Growth has been explosive," said Henry, noting that Wal-mart opened two new stores in adjacent markets last year and one is expected in Hi-School's market this year. Walgreens is also planning to enter the Portland market in 1996.