Wendy future of retail top

The Top 100 Drug Store Markets

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NEW YORK — In the battle for market share among chain drug retailers, store formats are pre-empting numbers.

Rather than seeking to dominate metropolitan areas by saturating them with new stores, drug chains are seeking to draw shoppers with distinctive retail concepts.

Walgreen Co., which at one time was opening an outlet every 17 hours, is now focusing on Wellness Experience stores. Already adopted in 350 stores in markets including Chicago, Indianapolis and Washington, D.C., the concept stresses pharmacy and the role pharmacists play in patients’ health and wellness.

In addition, the new format features a Take Care Clinic walk-in health center, an on-premises health guide who answers product and services questions and helps customers navigate the store, a Health Corner space to host individual or group health and wellness community events, and a wide assortment of fresh food, fruit and vegetables.

At the same time, the retailer has rolled out flagship stores in Chicago’s Loop and lower Manhattan. The latest example, the Duane Reade unit at 100 Broadway in the heart of New York’s financial district, includes some striking departures. Building on the retailer’s “Up Market” format, the store features a gourmet chopped salad bar, “Chop”; a cafe with a barista; an assortment of Up Market self-serve soups; and self-serve ­Fro-Yo.

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“We don’t have those amenities in any other Duane Reade,” said senior director of store concepts Mike De Fazio. Like another flagship store 100 yards away at 40 Wall Street, the unit is “a testing ground for concepts that we might want to roll out at other Duane Reade and Walgreens locations,” he said. “Our goal is to structure each store around the needs of the customers who shop there.”

CVS/pharmacy, meanwhile, will continue to roll out stores in various clusters under its My CVS initiative. Based on the success of its food/convenience and urban outlets, it will test Hispanic, high-end, low-end, top pharmacy and top beauty units.

“We are very bullish on this My CVS program, and we believe that it is one of the big differentiators that will drive volume for us in the long term,” retail division president Mark Cosby commented over the summer.

Debuting urban cluster stores was one of the first segmentation projects the chain undertook, and it proved extremely successful, he said. The urban units can be viewed as general stores in that they are typically placed where there is limited food competition. The stores expand the retailer’s customary grocery assortment, adding fresh and on-the-go food choices. They usually also have self-serve checkouts.

Sales in stores converted to the urban format have gone up 8%, while profits have risen 9%. The chain had 400 urban stores at the end of the past year and will add 50 more this year.

“This urban cluster has been a big win for us, but it also proves the power of this My CVS clustering approach,” Cosby ­commented.

For its part, Rite Aid Corp. is rolling out its wellness store, the latest version of which just premiered in Lemoyne, Pa.

Walgreens had the leading market share in 53 of the top 100 U.S. drug store markets in 2011.

The format’s lowered fixturing, especially in the H&BA departments, has made the layout more inviting and drawn attention to the pharmacy, which is the core of the chain’s business. Gondolas were lowered for distinct and easy sight lines to the prescription counter from the moment a customer walks in. A path was built from the front of the store to the pharmacy, and Rite Aid merchandised around it.

In keeping with the wellness theme, the stores’ offering of healthier food, including gluten-free and organic items, has been increased. The beauty section is enhanced with a focus on skin care and cosmetics, better directions to categories and more product information on shelves. The “Beauty for Her” and “Grooming for Him” sections have performed well, after drawing positive responses from focus groups.

“One of our main objectives going in was to highlight the pharmacy and build the store around wellness. But one of the other objectives was to make it even easier to shop and for customers to quickly find their way around the store,” Rite Aid chief operating officer Ken Martindale said during a tour of the Lemoyne store earlier this month.

Rite Aid has some 570 wellness stores and plans to have close to 800 by the start of the new fiscal year in March.

The focus on formats notwithstanding, there was one notable change in drug store market share last year in three metropolitan markets. With its acquisition of USA Drug, Walgreens has substantially boosted its share in Memphis, Tenn.; Tulsa, Okla.; and Little Rock, Ark.

For 2011, the top 100 U.S. drug store markets remained the same, with the New York metro area (which includes parts of New Jersey and Pennsylvania) in the No. 1 spot with total drug store sales of about $18.61 billion and the next biggest market, Los Angeles-Long Beach-Santa Ana, Calif., at $8.23 billion.

Rounding out the top 10 drug store markets by sales were Chicago-Naperville-Joliet, Ill., at $6.83 billion; Philadelphia (Pa.)-Camden (N.J.)-Wilmington (Del.) at $5.38 billion; Miami-Fort Lauderdale-Pompano Beach, Fla., at $5.26 billion; Boston-Cambridge-Quincy, Mass., at $4.73 billion; Detroit-Warren-Livonia, Mich., at $3.41 billion; San Francisco-Oakland-Fremont, Calif., at $3.37 billion; Houston-Sugar Land-Baytown, Texas, at $3.30 billion; and Dallas-Fort Worth-Arlington, Texas, at $3.11 billion.

Walgreens had the leading market share in 53 of the top 100 drug store markets in 2011, while CVS/pharmacy had the top share in 37 markets. Rite Aid held the largest share in 10 markets.

In 2011, Walmart was one of the top retail pharmacy players by share in 52 of the top 100 drug store markets. Other chains that were among the leading operators by share in their respective market areas included Jewel-Osco, Kroger, Marc’s, Discount Drug Mart, Bartell Drugs, Giant Eagle, Publix, Aurora, H-E-B, Fred Meyer, Safeway, King Soopers, USA Drug (now part of Walgreens), Wegmans, Kerr Drug, Kinney Drug, Albertsons, Meijer, Giant (Ahold USA), Hy-Vee, Medicap and Dillon.

Russell Redman contributed to this story.

*To read the full "Top 100 Chain Drug Store Markets" report, including chain rankings within the top 100 markets and lists of the top 50 drug chains by store count and sales, please see the Oct. 22, 2012, print issue of Chain Drug Review.


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