Pharmaca Integrative Pharmacy's thriving Internet business has been popular in markets far from the chain's western U.S. operating area, laying a "beachhead" for store openings in the East, according to president and chief executive officer Mark Panzer.

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Pharmaca eyes new markets as e-tail sales rise

April 16th, 2012

BOULDER, Colo. – Pharmaca Integrative Pharmacy's thriving Internet business has been popular in markets far from the chain's western U.S. operating area, laying a "beachhead" for store openings in the East, according to president and chief executive officer Mark Panzer.

Offering traditional prescription filling services plus natural and complementary health solutions, Pharmaca operates 24 stores in California, Colorado, New Mexico, Oregon and Washington. The retailer's e-commerce business has been growing 200% to 300% a week from a small base, with customers nationwide discovering through search engines, Panzer said in an interview.

"E-commerce for us is a focus for growth and a complement to the entire model. It starts getting our brand out in markets where we don’t have a brick-and-mortar presence," Panzer said, adding that the website's biggest markets — outside of the regions that already have stores — are in New York, Florida and Texas.

The psychographics and income levels of the e-tailing shoppers will allow Pharmaca to target desirable locations for stores, according to Panzer, who said an East Coast market entry is in the company's five-year plan.

To support the online business, Pharmaca's year-old distribution center in Boulder, Colo., is shipping SKUs nationwide. The warehouse also supplies select items to stores.

Mark Panzer

The chain's integrative pharmacy model has led same-store pharmacy and front-end sales to climb by double digits. "We are very pleased with these results, and our progress," Panzer said.

Pharmaca's pharmacies are differentiated by their ability to offer compounded prescriptions, including customized hormone replacement therapy, and pediatric and veterinary prescriptions. "We have a pretty good book of business from compounding," Panzer says.

Driving business in the front end are natural and organic beauty products, along with practitioner brand vitamins, minerals and supplements. Their appeal helps the front end account for 45% of the chain's total sales, and Pharmaca plans to expand its natural/organic beauty offerings with branded and private-label products, especially in the skin care category.

Over the past two years, the retailer has doubled the penetration of its store brands, and it continues to push its private label as a "feature brand" in stores and on its website.

Meanwhile, Pharmaca's nearly two-year-old Feel Better Rewards customer loyalty program has been a "great success and an extremely useful tool," according to Panzer. For example, cardholders get special offers and discounts through WellM@il e-mails.

"It's a great way to increase cross-shopping between pharmacy and retail and to communicate with customers based on their purchasing habits," Panzer said. "From a consumer relations management perspective, it's a great tool that allows us to target our messages." 

Infrastructure application provider Tibco Software Inc. last week reported that Pharmaca is using its Tibco Loyalty Lab solution to get more insight into its customers' buying behaviors across its pharmacy, supplements, health and beauty aids, over-the-counter products and lifestyle departments.

According to Tibco, Pharmaca leveraged the Loyalty Lab to launch the Feel Better Rewards program at its 24 stores to help measure the return on investment across departments and get a snapshot of what customers were buying and why, when they made purchases and how often, and how much they were spending.

The tool's analytics also enable the retailer to visualize goals and make adjustments, as well as reward buying behaviors across different parts of the store with a quarterly dividend program to drive frequency. In addition, Tibco said, the solution is used to spur program adoption and engagement, including increasing sales and transactions, average basket size, member frequency, members shopping both the front end and the pharmacy, and members earning and redeeming rewards.

"We saw a 50% increase in the percent of customers cross-shopping retail and pharmacy and a 10% to 15% increase in per-member spending since we launched the program, plus we gained enormously valuable insights into our customers' shopping behavior," Laura Coblentz, vice president of marketing and innovation for Pharmaca, said in a statement.

Tibco Loyalty Lab vice president Matt Howland stated, "With Tibco Loyalty Lab, Pharmaca now has 150,000 members with 65% of the sales on the program and increased year-over-year growth despite a down economy."