President Lynne Fruth sheds light on regional chain's strategy
“Our main priorities are expansion, development of efficient and effective clinical services (Medsync, centralized medication therapy management services, specialty at retail, mobile immunization billing), increasing efficiencies (through central fill, training, scheduling and technology), and finding ways to differentiate ourselves in the market (Acessamed, etc.),” says Fruth.
The main priorities on the front end over the next 12 months will focus on increasing front-end sales and gross margin.
“The front-end business has been soft over the past year,” she explains. “We have several different objectives getting started to attack this issue that involve the purchasing department, store operations and marketing/advertising.
“In the marketing/advertising department we are changing the design of our monthly circulars, creating new reports to monitor ad sales product turns and a new markdown program to handle remaining ad merchandise. Operationally, we hired a new district manager to bring in some fresh ideas on merchandising in the stores. He will be working with the store managers to develop new merchandising programs to keep items in the store fresh and up to date. The purchasing department will be focusing on increasing vendor support on monthly ads through scan downs and the selling of ad space and promotional in-store display space. We are also developing additional reporting to track vendor revenue, ad sell-through, buying trends and seasonal carryover.
But even if those goals are met, significant challenges remain.
“Access to the patient remains the largest obstacle — without access, we have no chance to ‘wow’ the customer and make her a Fruth customer. Capital will also be a hurdle as we look to expand, update our stores and examine the needs to update our technology,” says Fruth.
On the front end, there are many external challenges: The shopping patterns of customers are always changing, competition continues to move in, and the online businesses continue to grow.
Although she describes the front-end business as being soft, Fruth adds that several categories are growing at a strong pace. “The pet food and supplies category continues to be a very strong department; we have increased this department in all stores over the past year,” she says.
“The e-cigarette category is growing at a double-digit rate in sales and product offering. As consumers become more concerned about their health, more people are looking for smoking alternatives. The dollar category has also been very strong, and we have been adding dollar sections in many stores.”
Fruth has been at the forefront in the war against medication abuse. “We led the way in West Virginia with our decision to discontinue the O-T-C sale of non-tamper-resistant PSE [pseudoephedrine] items. We have already implemented new comprehensive policies and procedures with regard to controlled substance dispensing, and we plan to implement a mandatory edit and review on select prescriptions which trigger multiple ‘red flags.’ We are also exploring what part Fruth can play as a drug takeback center,” says Fruth.
She adds that another challenge is to develop solutions for attracting and retaining customers in both the pharmacy department and the front end of the store.
“With the proliferation of the Affordable Care Act, Medicare Part D and Medicaid managed care programs dictating access, many patients are no longer truly loyal to one brand over another. As technology continues to make things easier for patients to manage their health, the demand for more products and services at less cost is increasing while reimbursement rates continue to drop. The next generation of customers is demanding more and tolerating less than any previous generation,” says Fruth.
“Customers are also busier and more well informed; they continue to seek value and are aware of pricing in the market.
“Retail has trained customers to wait for the sale, and customers don’t want to pay full retail for products — they want to purchase items when on sale, when they have a coupon. I see this continuing for a long time, as there is more and more competition for the same customer.”
Some of that competition will come from national pharmacy chains and big-box retailers.
“At Fruth, we still believe in the power of a strong regional chain to improve patient care in our area by partnering with local and regional health care systems. Fruth will be looking to build on and expand those partnerships in the coming year as we work together to make our communities stronger and healthier,” she says.