For many supermarket executives, adding a pharmacy is a lot like taking a prescription. They know it works, even if they don't fully understand exactly why or how.
It seems to be a universally accepted axiom that offering prescription drugs leads to increased sales in other product categories, but which products receive the most benefit and which strategies best leverage the pharmacy remain matters of debate.
"I don't know how measurable that is, because there are so many different factors that influence it," said Ron Simms, president of the Drug Division at Marsh Supermarkets, Indianapolis, and chairman of the Food Marketing Institute Pharmacy Committee. "Typically, when you add a pharmacy, sales start slowly and there are so many other factors that will hit the store during that period of time."
The fact that supermarkets are adding pharmacies at every opportunity indicates that the tangential benefits exist, he said, despite the fact that they may be difficult to quantify.
A 1998 study by the Food Marketing Institute, Washington, found that 54% of supermarkets surveyed said they did not know what impact the pharmacy had on total-store sales. Of those that did know, most said pharmacy boosted sales by 4% to 6%. The effect on HBC category sales was more certain, with 56% of respondents reporting that HBC sales increased from the addition of a pharmacy. More than three-fourths of those who said they measured an impact on HBC said the sales increase was more than 10%.
"Whenever we add a pharmacy, it gives a boost to all the categories traditionally found in drug stores," said Marc Jampole, a spokesman for Penn Traffic, Syracuse, N.Y., which has pharmacies in 88 of its 220 stores. He declined to specify a percentage by which sales increase in other categories, but he did say that the stores with pharmacies tended to have larger HBC departments.
Richard Hayes, director of pharmacy at Rainbow Foods, Hopkins, Minn., said Rainbow also has expanded its HBC selections in stores where it has added pharmacies. He said it was "hard to tell" what effect pharmacies have on other departments, in part because the expanded HBC sections make comparisons difficult.
At Marsh, Simms says the company usually resets the entire HBC department in preparation for a new pharmacy.
"We don't necessarily go a lot deeper in HBC products in a pharmacy store, but we'll get a broader selection of products, because we'll get movement of products that pharmacists recommend," he explained.
One East Coast supermarket operator, who asked not to be identified, agreed that sales in the HBC aisles receive the biggest boost -- up to 30% -- from the addition of pharmacies.
The increases in crossover sales come not just from pharmacists recommending over-the-counter medications, but from the nature of pharmacy shoppers themselves. First of all, they might need to purchase auxiliary therapeutic products, and second, they tend to come back regularly.
"It's the best loyalty program you could have," said the source at the East Coast chain.
Curt Maki, vice president of nonfood at Topco Associates, Skokie, Ill., estimated that adding a pharmacy could give a 25% boost to the health-and-beauty care category.
"Those that do have a pharmacy are creating a boutique-like effect that's different from the rest of the store, so it can certainly set the HBC section apart from grocery," he said.
The categories most influenced by the addition of a pharmacy are the ones about which consumers are most likely to ask the pharmacist for advice, such as cough-and-cold products and analgesics, Maki said. One category that he suggested could get a strong boost from being placed near the pharmacy is adult incontinence, which he said often is wrongly grouped with baby diaper or feminine hygiene products.
Ted Fullerton, vice president of retail operations, Minyard Food Stores, Coppell, Texas, said baby care items can get a sales boost from the pharmacy department. Children tend to get sick a lot, he said, and "moms pick up diapers and general merchandise for kids."
Some stores still position their HBC departments too far from their pharmacies, said Simms of Marsh. "I believe that is probably the most glaring merchandising thing that you need to do," he said. "The products that the pharmacist spends most of their time recommending and the products for which the customer will seek their recommendation... need to be adjacent and convenient to the pharmacy."
A 1997 study by the American Pharmaceutical Association, Washington, found that 64% of consumers talk with their pharmacist at least some of the time when choosing over-the-counter medications.
A forthcoming study from Willard Bishop Consulting, Barrington, Ill., will reveal that 70% of consumers report that assistance from in-store staff is important when deciding where to buy OTC products, according to Jon Hauptman, vice president.
"Consumers in general want to take more control over their own health care," he said. The Copps division of Roundy's, Pewaukee, Wis., places signs in the OTC area stating that pharmacists can answer questions.
"It draws attention to the fact that people are there to help," said Jay Wolfe, director of pharmacy at Copps.
At Stop & Shop, the company is in the process of testing a couple of different ways to leverage the pharmacy into other product categories, according to John Fagan, vice president of pharmacy at the Quincy, Mass.-based chain.
The company is placing natural-foods products near the pharmacy in some stores, he said. Stop & Shop also is experimenting with a program being tested by vendors throughout the country in which a nutritional food item is displayed on a rack across from the pharmacy for a month at a time with informational material.
"We find that at Stop & Shop we would rather have [food displays] across from the pharmacy rather than Robitussin or things like that because it does distinguish us from the drug store and ties in with the rest of the store," he said.
