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SDM strikes right balance between front end, pharmacy

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TORONTO — Shoppers Drug Mart is innovating across its business to protect the balanced sales equation that makes it the envy of its counterparts in the U.S. Like American drug chains, SDM is known for pharmacy and an expanding array of health care services, but it is also a leader in beauty in Canada and maintains a robust front-end trade.

Under Jeff Leger, who became president of the company at the start of 2018, SDM has upheld the tradition of embracing new ideas that has been a hallmark of the retailer since it was founded in 1962. Over the past 12 months, the company has broken new ground in both pharmacy and beauty, while continuing to capitalize on synergies created when Loblaw Cos., the biggest supermarket operator in Canada, acquired the drug chain five years ago.

Arguably, the most noteworthy recent move by the company was its entry into medical cannabis. SDM launched an online platform for the sale of such products in January, giving Canadians living in Ontario and Alberta who have the necessary medical document (similar to a prescription), access to medical cannabis from 10 licensed ­producers.

“The reason why we wanted to get into this space was we knew that there was a medical need,” says Leger, adding that SDM hopes to introduce the service across the country in the near future. “There are many patients who are looking for medical cannabis, because for them traditional solutions have failed. With the position of trust that we have and the expertise of our pharmacists, it made sense for us to get involved.”

The active participation of pharmacists is central to the company’s approach. In accordance with Canadian law, medical cannabis cannot be dispensed in retail pharmacies, but is instead shipped directly to patients’ homes. SDM is providing the expert advice that is delivered in-store when other pharmaceutical products are dispensed through the Shoppers Cannabis Care Center, a virtual team of health care professionals that selects the right strain of cannabis based on the prescriber’s recommendation, reviews a patient’s medical history and identifies contraindications with other drugs.

“We started this process three years ago with work around education and the pharmacology of it,” Leger explains. “We assembled a panel of experts that included pharmacists and physicians who were in mostly pain management and also in oncology for nausea. We even created a formulary, a kind of standardization of doses.

“Shoppers is committed to giving our pharmacists the tools they need. It’s not always easy to know the right blend of different psychoactive agents — there’s CBD, there’s THC — what percentages are best, and what pharmacological effect they will have. As a result of our work around education and awareness, the comfort level of our pharmacists with medical cannabis has increased and patients have really been much more forthcoming about their needs.”

Entry into medical marijuana is just one way that SDM is working to enlarge the positive impact it has on the health and well-being of customers. Leger and his team are intent on accelerating the evolution of the company’s pharmacies to play a larger role in health care.

“We’ve been at this for a long, long time,” he says, “but meaningfully, the first service that really expanded the scope of pharmacy practice started in 2009 with flu injection. Last year we were well over 1.5 million flu injections across the country. That’s led into medication review services and prescribing in some jurisdictions, Alberta being the most advanced with a pharmacist able to prescribe any medication, except for controlled substances, within their competency. Every province has a smattering of different services like point-of-care testing for strep throat, where pharmacists can administer the test and then also initiate a ­prescription.

“Using Alberta as the gold standard, we’ve been helping advocate with the provinces and our provincial pharmacy associations to continue to expand important health care services that help can keep people out of after-hours clinics and emergency rooms. All provinces are making moves every year and giving pharmacists broader authority.”

Looking further ahead, SDM plans to more closely align its resources with Loblaw and other health care providers, including physicians, to increase its reach and impact. Leger says QHR Corp., an electronic medical records company based in Kelowna, British Columbia, that was acquired in 2016, will help facilitate the process.

“We have 1,800 pharmacy locations across the country, 420 of which are in a [Loblaw] grocery store, and the rest in Shoppers Drug Mart locations,” he says. “So 85% of Canadians are within a 10-minute drive of our stores. We have really great penetration in the community, including 600 medical clinics and about 100 dietitians in our network.

Another new service leverages SDM’s prowess in health and beauty care. The Beauty Clinic by Shoppers format, which is currently being piloted at two locations in the greater Toronto area (GTA), provides customers with easy access to cosmetic dermatology treatments — including injections, dermal fillers, microdermabrasion, peels and laser services — in a discreet setting. The stores, in the Oakville and Don Mills neighborhoods, are staffed by nurse practitioners and medical ­aestheticians.

“We knew we had a lot of trust with consumers around health and around beauty,” says Leger. “It was interesting for us to make the leap to combine both, because it’s going one step further in terms of beauty services to include dermatology services and injectables. Customers really trust the Shoppers Drug Mart brand. The clinics are still in the pilot phase, but we’re pretty happy with the response thus far.”

The Beauty Clinic by Shoppers concept stands on a strong foundation. Paced by its 440 Beauty Boutiques — a format that Leger asserts delivers an elevated customer experience that’s among the best in the world in any class of trade — the drug chain is the leader across the category, from value products to such luxury brands as Lancôme, Chanel and Dior. The company is harnessing the power of the internet to augment that position in a couple different ways. One is to amplify the online voice of its in-store beauty advisors, brand-agnostic experts who help customers find the products that are right for them.

“We’re in the process of launching what we call Shoppers Beauty Pros, a team of beauty advisors from all geographies across the country that will help drive inspiration,” Leger explains. “Beauty is all about inspiration, particularly in e-commerce or the digital ­channel.

“We’ve trained some of our best beauty advisors to serve as local influencers. Our plan is to continue to use them to help drive inspiration for our brand from a digital perspective. Because Gen Zed and young Millennials mostly find their inspiration online.”

The Beauty Pros will support SDM’s push into e-commerce. The company last summer introduced an internet platform that brings together what is said to be the largest assortment of mass and prestige beauty products in Canada.

“It’s a huge thing for us to participate as an omnichannel retailer,” Leger notes. “All of our beauty products are now available online. We started with luxury products last year and have added masks, derm, fragrance and hair care.

“In addition, we now have a test with Instacart in Toronto involving delivery of front-shop items in 13 stores. We’re in the process of expanding that group throughout the GTA. It’s gotten off to a great start. We’re also exploring what other front-end products we might want to sell online.”

Food and beverages is another area where SDM aims to bolster its position. The company has long had a presence in the category, but its aspirations have increased considerably since the acquisition by Loblaw.

“We’ve always had a pretty large food business,” says Leger. “It was mostly around dry grocery and convenience items. So we had a program to offer the lowest price on milk, butter and bread. That’s been in place for 15 years.

“After the merger with Lob­law we were in a position to grow in this space. We were able to be seen as an authority and attain a trust level in fresh food, which you really do need, especially if you’re going to sell fresh vegetables, fresh fruit, fresh meat and meal solutions.

“In 2014, we had a pilot involving an expanded food assortment involving six stores in the Toronto area. We had to figure out how to manage shrink on food, which is different, especially when you have a large assortment — not just milk and bread and butter — when you’re selling more fresh items such as meat. We played around with many different combinations and really learned from the expertise of Loblaw. This allowed us to create a model that we were really happy with, and we were able to scale it for Shoppers Drug Mart.”

Today SDM operates 107 stores with an enhanced food presentation. Leger says that plans call for 10 to 15 more of the departments, which are “quite profitable,” to be added each year.

A unifying force for all the various initiatives under way at SDM — and its parent company — is the PC Optimum loyalty plan. The program, formed through the melding of Shoppers Optimum and Loblaw’s PC Plus in February 2018, has 18 million members, almost half the population of Canada.

“PC Optimum enables us to connect the dots,” says Leger. “Customers now can earn more points, because they can earn across grocery and spend on beauty, or they can spend in the drug store and use their points to pay for groceries or apparel through Joe Fresh. Another big advantage we have is a MasterCard program called PC Financial, which is the largest issuer of MasterCards in Canada, and that’s connected to PC ­Optimum.


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