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Pharmaca ready to put concept to new test

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Since its founding in Boulder, Colo., 17 years ago, Pharmaca Integrative Pharmacy has honed its singular vision of drug store retailing in five western states, viewed as particularly conducive to the pairing of traditional pharmacy services with natural and complementary health and beauty solutions.

The company is now intent on demonstrating that its holistic approach to supporting the well-being of customers will resonate in markets in other parts of the country.

Pharmaca earlier this month unveiled plans to open a store in Chicago, its first outside Colorado, California (where it is adding a new location in Beverly Hills), New Mexico, Oregon and Washington.

The move into Chicago comes via the acquisition of Aaron’s Apothecary, an independent pharmacy in the city’s Lincoln Park neighborhood.

“We wanted to prove the Pharmaca concept could go east, and we found somebody who had a great pharmacy in exactly the kind of market we’re looking for,” says Richard Willis, who has been president and chief executive officer of the retailer for the past 19 months.

“The customers we’re trying to reach are open to natural products — to herbs, to supplements, to homeopathic remedies — as part of what keeps them healthy. We look for people who have an inclination to natural and organic products. The demographics also need to be fairly strong from an income standpoint, because sometimes natural products can cost a little bit more,” Willis explains.

“When customers walk through the door we want them to know that we’ve done the work, so they can buy what’s on the shelf and not have to worry about the ingredients. We’re going to give them the most natural and organic products we can.”

Pharmaca rounds out its commitment to natural and alternative health and well-being with expert advice. Customers receive guidance from licensed naturopaths, herbalists, nutritionists and estheticians, as well as traditional pharmacists.

“Our staff is there to help customers make the right decision by giving them a lot of information,” notes Willis, who, prior to joining Pharmaca, worked in the retailing, distribution and publishing sectors. “That’s why we hire herbalists, naturopathic doctors and other practitioners. We want people not only to have the opportunity to buy these products but to really understand what they’re buying and how it can help them.”

The company’s dedication to providing consumers with relevant information as well as efficacious products extends to its e-commerce platform, which in the past two years has gone from losing money to accounting for 6% of Pharmaca’s sales and 15% of EBITDA. Willis says that the extent and quality of the information on pharmaca.com has helped put it in the top 25% of websites that people interested in natural products turn to, and has given Pharmaca a meaningful presence in markets where it doesn’t have brick-and-mortar stores.
Maintaining the company’s service orientation comes at a cost.

“Our labor model is more expensive than at a typical chain drug store,” notes Willis. “If you have a naturopathic doctor or someone else with a degree, they’re not going to work for minimum wage. We’ll pay anywhere from 50% to 100% higher than what other drug chains would to obtain that skill sets we need to serve our customers. We really try to make sure that the people who are on the floor are licensed practitioners that our customers can trust.”

Under Willis’ stewardship Pharmaca is profitable for the first time in its history. The turnaround gave the retailer’s private equity partners enough confidence to provide a $7 million cash infusion at the beginning of this year, setting the stage for the debut in Chicago and beyond. Other markets that Pharmaca is considering for possible expansion are Dallas, Austin, Houston and San Antonio in Texas, and several major urban centers in the Northeast.

“We’re fortunate to be where we are today,” says Willis. “In the last couple years we’ve started to make some money. We’re pleased about that. We also did a recapitalization and got funding from our private equity supporters so that we can go out and do some more acquisitions.

“If you talk to our people, they really believe in what we do. It’s lucky for me to be at a company where people feel that way. I’d love to see us have 50 or 100 stores at some point. In the last couple years we’ve shown people that this is a model that can make money, now let’s go out and see what we can do.”


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