TORONTO — Jeff Leger, president of Shoppers Drug Mart, Canada’s largest drug chain, discussed recent developments at the company including the launch of Shoppers’ first freestanding health clinic, the retailer’s innovative home health care and beauty clinic formats with Chain Drug Review editor-in-chief, Jeffrey Woldt, in a video forum hosted by CDR and sister publication Mass Market Retailers. What follows is an edited transcript of the interview.
WOLDT: Jeff, as always there’s a lot going on at Shoppers Drug Mart. Recently you opened your first freestanding health clinic. Maybe you could tell us a little bit about what is on offer there and, assuming the format is successful, how it will interact with your pharmacies.
LEGER: Sure. The official opening was yesterday. It was here in Toronto. And it’s something that we’ve been thinking about for some time. Like many other chain drug stores, we have relationships with medical clinics, and we thought the next evolution of it against our health strategy was can we manage them? Can we actually get a more integrated feel for the customer and for patients in terms of making sure that they have seamless access to health care?
So, we’re very excited about launching the Health Clinic for Shoppers. And, as I said, it’s here in Toronto, and the whole concept is to take a primary care practice and make sure that it has the latest technology, make sure it’s well integrated with the pharmacy. It’s actually co-located next door to the pharmacy that we have.
So in terms of services, it is a primary care offering. There’s family practice. There’s walk-in, there’s a big utilization of technology. As I think we’ve shared before, we have our own electronic medical records company called QHR and Accuro platforms. So it has that suite of offerings. And it’s just a consistent technology-driven standard of care. So we think that there’s a real need for that, and bringing things to a bit more of a standardization. And the initial feedback’s been really great. We’re very pleased with the start.
WOLDT: OK. That’s an exciting concept. Canada has done much better than the U.S. in terms of containing COVID-19, but it still made new demands on health care providers, including pharmacies. Maybe you could talk a little bit about how COVID has impacted your business and your thinking about the role of community pharmacy.
LEGER: It’s been a real interesting journey, obviously for all of us in the sector, in terms of adjusting to the requirements for public health, in terms of keeping employees safe and keeping customers safe during very trying times. So I think like a lot of people we saw really big shifts in customer behavior. In terms of what’s been happening, we saw a surge in prescription filling when it first started and people were worried about running out of medications, especially for chronic meds. And then we had big dips in terms of how that was playing out from a prescription perspective.
And as you know, we have a pretty well-balanced front-shop business in terms of our pharmacy. So more than half of our sales come from the front of shop. So we actually saw a lot of changes in behavior there. A lot of, obviously, household cleaning and sanitary products in the beginning, lots of hoarding, even toilet paper.
And that very quickly shifted to food. We are a very big food player, including fresh food. So as grocery stores had long lineups, we saw our food shift and grow at well north of 20%. So we were seeing some really great momentum on that. It’s almost like customers were continuing to discover our offering on that front. So, that was great.
We saw changes in beauty. We’re not alone on that front. Obviously when you think about necessities during a pandemic, prestige cosmetics is not at the top of the list, especially around color. So we saw some change on that front. Now, a lot of it’s coming back, mostly around skin care and elements like that have come back nicely.
And the real interesting one is around cough and cold and O-T-C sales. So there was a big jump in the beginning, whether it was some kind of stocking up and then shelter-in-place, or stay-at-home and social distancing also works quite well for cold viruses. So we saw some declines on that front.
So that’s all happened during the second quarter. We looked at hours of operation and delivery and driving more around e-commerce. Very similar to other people. And I’m quite proud of how the team has performed during that period of time, and our store concept has done very, very well. So we’re very happy, and we’re continuing to adjust as we come out and the consumer behavior starts to change a little bit.
On the health side, there are really some interesting things that happened. So, other than prescription filling in Canada, there was some loosening up of expanded scope of practice for pharmacists. So as physicians’ offices were not open as much, or moving to virtual, we saw our pharmacists step in and help provide continued care for chronic disease or help with acute access to acute meds. Which actually, I think, will help drive our strategy in the future, because we really are of the view that primary care needs to start at pharmacy and needs to happen in the store. So that was really, I think, a great learning.
And then we also have some virtual care tools which we had a chance to test. And I think like everybody else has seen in North America, we saw some great adoption from customers. So that also makes us quite bullish around our health strategy in the digital health space.
WOLDT: Yes. And how many of these changes that you’ve described do you think will stick, will have staying power? You mentioned the changes in pharmacy. Will the provincial regulators allow you to maintain that level of service after COVID is gone?
LEGER: I think so. I think we’ve had really good interactions with our provincial regulators and also our provincial governments. We’ve been there to help support. We’ve been open all through the pandemic. We’ve been doing some asymptomatic testing in jurisdictions like Alberta. So I’d say that I think there’s a very big openness to actually adjusting how care is delivered in the country. And I think they see the value of pharmacy and pharmacists, which is really, I think, encouraging.
WOLDT: In addition to the new health clinic format and your drug stores, you operate Wellwise Home Health Care Centers, and you have a couple of beauty clinics where people can get nonsurgical beauty treatments. Maybe you could tell us a little bit about those formats and how they fit into your long-term strategy.
LEGER: Yes, the Wellwise business is a relatively smaller unit, and we rebranded it a few years ago. It actually used to be called Shoppers Drug Mart Home Health Care, and we were very purposeful about rebranding it. We wanted to really focus on a concept of aging powerfully. So actually encouraging movement as a movement towards people aging at home. So there is a whole bunch of areas that blends that active lifestyle, but also still meets the needs from a home health care perspective. And it’s doing well. Obviously, impacted a little bit by COVID, but we think the concept resonates, and we’re continuing to look at how to expand it even through e-commerce, which also has spiked during this period of time. So we think that has strong momentum. And obviously we have an aging population, it’s going to be really important to continue to have that.
And the beauty clinic, obviously we are Canada’s largest beauty player across our luxury prestige and across masks and skin care. So it made sense because of the trust that we have with Canadians and beauty, along with health, to extend into this area, which starts to see a treatment around derm treatments, whether it’s Botox, fillers, laser or other skin care treatments. WOLDT: Another thing that Shoppers has been noted for is its entry into the medical marijuana business. Maybe you could tell us what that entails for our U.S. audience — and has it met expectations both in terms of patient care and as a business proposition?
LEGER: Yes, medical cannabis is a complicated business. The whole sector has been an interesting area to work in. We started with the premise that people are using it for medical purposes, and obviously with the legalization and the slowly growing body of evidence for certain utilizations, not as first line, but certainly within the overall treatment. But it’s an area that we should be in. We should be there to help support our patients in a way where they get trusted advice, a trusted brand. We apply the same principles of quality that we have. We run our own generic drug company. We have our own distribution centers. We’re very familiar with regulated distribution of medications.
So we got into it and we run it here in Toronto. We ship nationally. Today you can’t dispense it in pharmacy. It is actually shipped to home. So, we’re still waiting to see if that goes into pharmacy over time. We’re hopeful that it will, because it makes sense if you think about having a complete profile. But it’s been growing nicely. It’s certainly a very complicated area, and we think that it’s going to be important to stay in that area and continue to provide that service for patients. And we’ve seen it continue to grow all through the COVID pandemic, too, which has been interesting.
WOLDT: You touched on this before. You talked about your digital transformation and your growth in e-commerce. Perhaps you can elaborate on that a bit.
LEGER: Yes. So we have an e-commerce platform for beauty, and we’ve had it for a couple of years now. We sell our procedure, luxury, beauty, along with masks and also derm and fragrance and other health care components. And it’s been great. And we’ve seen a massive surge in it, obviously through COVID, when it was difficult to go into store. So we’re pretty pleased about that.
And we see the importance of an omnichannel experience in beauty. We think you need bricks and mortar where you have the advice of a beauty advisor, which is really, I think, a key differentiator for us. But you also need to have an e-commerce channel as it relates to beauty for replenishment and other educational components. And then you also need to have a really strong social media presence. So we’ve been working on all three of those areas, and we saw great performance during COVID and we expect that to continue as we come out of that area.
WOLDT: And do your health care providers, your pharmacists, use digital tools to communicate with patients at this point?
LEGER: We have a digital pharmacy app where you’re able to actually communicate on refills and also through text. That’s been working well. We have a health platform that we’re about to launch very shortly that will allow us to have a broader health conversation with Canadians. And that’s going to happen later in September.
To watch the full video of the discussion between Jeff Leger and Jeffrey Woldt, go to chaindrugreview.com.