CEO François ­Coutu discusses Canadian chain's growth in changing market

LONGUEUIL, Quebec — Through its ability to forge solid relationships with shoppers, both those in the pharmacy and those at the front end, the Jean Coutu Group has been able to retain loyal customers as well as attract new clientele, according to president and chief executive officer François ­Coutu.

François Coutu

“Our patient profiles and the other systems that we have in place help to assure the customer that she can get a prescription from her local Jean Coutu pharmacy as well as from any of the other pharmacies in our group,” he said.

In addition to store brand products, cosmetics and over-the-counter drugs have turned in strong sales performances, said Coutu, the son of the company’s founder.

By contrast, photo — once a major destination center for Coutu and much of the rest of the chain drug channel — has been sapped by the growing fascination among consumers for cameras that are incorporated into their wireless phones. Still, Coutu has been able to offset those losses from conventional photo with an expanding assortment of related mobile phone products as well as other accessories.

Sales are also up in Jean Coutu pharmacies, particularly with generic drugs, which now represent about 70% of all medications dispensed in Canada.

“This percentage will continue to expand as an increasing number of pharmaceuticals are directed toward a growing base of senior citizens,” commented Coutu. “The demographic trends are in our favor.”

Coutu said he understands the economic challenges that the provincial and federal governments face with health care, but at the same time he stressed that additional cuts in reimbursement to pharmacies are not the answer to the governments’ financial dilemma.

The responsibilities of pharmacists, reflected Coutu, continue to evolve, as exemplified by more and more cases of pharmacists collaborating with physicians to determine the proper drug therapy for patients. Yet Coutu felt that those roles could be expanded even further if more provincial governments would grant pharmacists permission to provide inoculations.

“There is a growing movement among the pharmacists to grant them permission for such authority,” said Coutu.

He described the mood of the consumer as being good and confident, despite fluctuations in the Canadian dollar. He suggested that today’s consumer has come to expect promotions from merchants and that the chain has responded accordingly and has increased sales as a result.

The growth of the chain will hinge mostly on the acquisition of independent pharmacies and new construction. Coutu conceded that the new construction approach would be complicated by the competition for the most ideal locations as sought by other drug chains as well as by big-box retailers.

Earlier this year, Coutu announced the acquisition of four pharmacies located in Target Stores. The Minnesota-based discount retailer decided to vacate the Canadian market in the aftermath of poor sales performance. The patient records from the four Target pharmacies were transferred to pharmacist owners who are affiliated with the Jean Coutu network.

“Continuing our growth in order to maintain our leadership is paramount,” Coutu stated at the time of the February acquisition announcement.

Overall, Jean Coutu Group operates a network of 416 franchised drug stores in Quebec, New Brunswick and Ontario under the banners PJC Jean Coutu, PJC Clinic, PJC Health and PJC Health and Beauty.

The expected growth of the Jean Coutu Group has facilitated the need for construction of a new distribution center and corporate office in a Montreal suburb. Part of this new complex should open later this year, with the rest in 2016. The new facilities will total 883,000 square feet, which is 50% larger than the space currently occupied in Longueuil’s industrial park, site of the current headquarters. The project represents a total investment of $190 million (Canadian).

“It is with a great deal of enthusiasm that we begin the construction of our new headquarters,” Coutu said last June. “The facilities in Varennes will be at the cutting edge of technology, guarantying high standards of productivity while ensuring an enjoyable and safe work environment.”