Inside This Issue - News
Reinvention strategy in process of transforming Rexall
March 18th, 2013
TORONTO – For the past 18 months Rexall Pharma Plus has quietly gone about the business of making itself a serious contender in the competition to reinvent the drug store to better meet the needs of the 21st century consumer.
Operating within the context of the rapidly changing health care and retailing environment in this country, the chain, which is part of Katz Group Canada, has set out to build on the solid foundation of its 109-year history in community pharmacy, finding new ways to help its customers stay on “the path to healthier living.”
Frank Scorpiniti, who succeeded Andy Giancamilli as chief executive officer of Rexall Pharma Plus in February 2012, is the driving force behind the transformation. Four major factors were considered by the management team as they looked to reshape the company’s offerings — extensive regulatory reform in health care, including downward pressure on reimbursement for medications; an acceleration in the expansion of the role of the pharmacists; emerging retail competition, perhaps most notably from Target Stores; and shifts on the part of Canadians in terms of what they expect from a community pharmacy.
“When we put those four things together, especially the fact that consumers told us they wanted easy access to more solutions in health care, it served as a platform for us to create a new brand strategy and reinvent Rexall,” says Scorpiniti. “We’ve taken a fresh look at everything in the store. Even the logo over the doorway is a signal — to our customers, our pharmacists and teams in the stores and home office, and the community at large — that lots of good change is happening at Rexall. We felt that the reinvention was so substantive that it warranted a new look.”
As of February, 12 stores had been converted to the new format, with the retailer’s traditional orange and blue oval logo being supplanted by a banner in mellow teal with stylized letters that subtly emphasizes the “r” and “x” in the drug chain’s name. The top right part of the “x” is shaped like a leaf to symbolize Rexall’s commitment to natural health and well-being.
“In the fall of 2011 we embarked on a research project and found that Canadians essentially want a new kind of drug store, one that makes it easier for them to make better choices to live a healthier life,” Scorpiniti explains. “They want those choices for themselves and their family, and they want them to go beyond just what they put in their bodies. People want better choices for a healthier planet.”
One of the more interesting discoveries made by Rexall Pharma Plus was that 71% of Canadian consumers want more information on natural products.
“We recognized that there is a broadening of what is desired by consumers,” says Scorpiniti, “and we felt we could provide those things. At the same time, we knew we had to do it with people to help guide customers through that broader assortment.”
Fortunately for the retailer, it already had those people in place in its stores. “Our professional pharmacists scored very highly with consumers,” Scorpiniti notes. “Rexall really owns health care in Canada; the brand resonates with health as its foundation.”
Using that insight as a starting point, executives began to rethink the drug chain’s entire range of offerings. Innovations are evident throughout the store, in Rexall Pharma Plus’ marketing efforts and on its website.
“We’ve added new products and new services,” says Scorpiniti about the process, which is ongoing. “We’ve changed the look and feel of the store to create a very inspiring and feel-good experience for our customers. We’ve expanded our health care assortment, especially in the front shop, to address the emerging consumer trend toward more natural and homeopathic products.”
The current embodiment of Rexall Pharma Plus’ vision of a contemporary drug store can be found within First Canadian Place in the heart of Toronto’s financial district. The 10,000-square-foot store, which is situated on a busy pedestrian concourse connecting various buildings and public transportation facilities one floor below street level, has an open facade that invites consumers in and provides clear sight lines to various departments, including the pharmacy counter along the back wall.
The tenor of the design — which was developed by Rexall Pharma Plus staff members in conjunction with Jackman Reinvention Inc., the Toronto-based consulting firm that has worked with Duane Reade and other retailers on rejuvenating their brands — reflects the company’s emphasis on an expansive view of natural well-being. Baffled ceilings, adjustable recessed lighting and decorative elements based on images of flowers and clouds create the desired ambience.
The beauty department in the Rexall at First Canadian Place exemplifies the approach. Offerings in the section, which is staffed by beauty and skin care advisors, include high-end brands not usually sold in drug stores in the United States. The products are merchandised near the front entrance in fixtures reminiscent of those utilized by specialty or department stores. Mass market brands arrayed on in-line displays round out the extensive selection.
“We believe we have a tremendous opportunity to enhance our beauty business,” says Scorpiniti. “By bringing to life what is really a quite aesthetically pleasing store, we’ve been able to significantly expand our relationship with [the prestige makeup, skin care and fragrance maker] Shiseido for this location.
“We’re thrilled to have the partnership with this brand, and we look forward to sharing our new store concept with other suppliers. That’s vital to our mission: Feeling good is not only inside, it’s outside as well.”
The objective throughout the store, as in beauty care, is to give customers as many viable options as possible. The consumables assortment has been bolstered with more healthful food and beverages, many of which are sold near the entrance; standard over-the-counter health care products have been augmented with natural and homeopathic remedies; and pharmacy services are being expanded into such areas as immunizations as fast as provincial regulators will allow. Rexall’s new Be.better private brand line, which encompasses everything from nutritional supplements and snack food to household cleaning products, is central to the project of increasing consumer choice.
Scorpiniti says that, impressive as the new Rexall store at First Canadian Place may be, it’s one step on a journey without end: “We move quickly because the consumer is changing at an ever-accelerating pace. The days of a year and a half of strategy creation, followed by a year of putting a store concept in the ground, are over; our customers are evolving too rapidly for that. We need to continually reinvent ourselves in this business.”
Asked if the Katz Group’s sale of its Drug Trading and Medicine Shoppe Canada businesses in January 2012 gave it the financial resources to fund the rejuvenation of Rexall, Scorpiniti gives a surprising answer: “Katz Group has tremendous financial flexibility to execute its strategy. It did before the divestiture and it does now,” he says.
“A compelling result of the divestiture was creating a laser focus on traditional chain drug retailing, and putting resources behind how we’re going to drive the customer experience in the stores, where we control what goes on within the four walls. That’s a significantly different process than you would have in a franchise banner model.
“The sale left us with a traditional corporate chain drug store model that allows us to hone our execution and drive results. Everything matters in retailing. Now we’re in a position to ensure that everyone in our organization understands that and is aligned, and that’s powerful. There’s much more to come.”