As it approaches its 125th year in business, Bartell Drugs has proven to be a survivor.

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Inside This Issue - News

Bartell Drugs thrives by adjusting to community

November 11th, 2013

SEATTLE – As it approaches its 125th year in business, Bartell Drugs has proven to be a survivor.

Bartell Drugs chairman and CEO George D. Bartell is the grandson of the 125-year-old chain’s founder.

Started in 1890 by George Bartell Sr., a 21-year-old pharmacist who left the family farm in Kansas to pursue fame and fortune in the Northwest, Bartell is the nation’s oldest drug chain.

And unlike so many of the other regional drug chain players that once dominated the industry, the 61-store company has continued to flourish amidst intensifying competition from the largest national chains and the hordes of other retailers vying for a portion of the Puget Sound area’s pharmacy business.

“Being a hometown company has certainly given us some advantages over the years,” George D. Bartell, the grandson of the chain’s founder and the company’s current chairman and chief executive officer says. “But convenience in drug stores is extremely important, so that local aspect only goes so far.

“Still,” he says, “a lot of people are pretty loyal to us.”

Already in head-to-head competition with Walgreen Co. and Rite Aid Corp., Bartell is about to get another megachain in its backyard when CVS/pharmacy opens its first stores in the Seattle market next year.

Bartell, who is only the third person in 123 years to head the company — his grandfather and father ran the drug chain for a combined 100 years — says that while he welcomes CVS’ entry into the market, there is no dearth of drug stores here.

“Is the drug store business not being adequately served by Rite Aid, Walgreens and Bartell?” he asks. “No. But they are doing what they have done in other areas of the country as they continue their quest to become a truly national chain.”

According to recent research by Racher Press, publisher of Chain Drug Review, Bartell is locked in a three-way race for control of the drug store business in the Seattle-Tacoma-Bellevue, Wash. market, the nation’s 15th-largest metropolitan area and the 19th-largest drug store market in the country.

Walgreens holds the top spot in the region with a 25% share, with Rite Aid and Bartell a close second and third with 19% and 17%. respectively.

Bartell says the ongoing evolution of the way insurers pay for prescription drugs has added to the challenge of competing with chains whose store bases number in the thousands and stretch from coast to coast.

“The pharmacy side of the business is really worrisome,” he says. “Even if we do a fabulous job, we can be frozen out of networks.

“I’m happy to compete fairly with anybody,” Bartell says. “But when there is an unfair advantage, and then that unfair advantage is sanctioned by the government, that just makes you mad.”

The rise of limited networks, he notes, is just the latest woe that drug chains have had to deal with on the pharmacy side of the business.

“You have very little control over what you buy drugs for and very little control over what you sell them for,” Bartell says. “That is not a very good business model.”

While the move toward more generic dispensing and the expansion into specialty drugs and other health-related services such as immunizations and medication therapy management have helped revitalize the pharmacy side of its operation, Bartell Drugs has also ensured that it is seen as more than just a community pharmacy.

For instance, the company is the largest seller of confections in the Seattle area and includes a wide selection of candy and snacks in every one of its stores. It also has tapped into the emphasis many consumers in the Northwest put on overall wellness by including a holistic living section in many of its stores.

And from a physical standpoint, Bartell units have a look and feel not seen in most other drug stores. The company employs lower gondolas than other retailers, giving its stores a wide-open feel. The use of brick work and rich-colored wood highlights anchor the stores to their Northwest roots.

“We can be different than the competition to some extent,” Bartell says. “Even with all the data that big companies can crunch today, they can’t really adjust their stores to the neighborhoods the way we do.”

And, he stresses, the company’s long history has allowed it to develop a special relationship with its customers.

“Everybody pays lip service to customer service, but I think deep down we care a little more about that and therefore do a little better job,” Bartell says. “Just as customers are loyal to us, we are loyal to them.”