Editor's Note: Scrutiny on scripts

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Editor's Note: Scrutiny on scripts

By Seth Mendelson - 09/04/2019
Just a few years ago, some would call this outright blasphemy. But changing times may be changing one of the most basic principles of mass retailing.

Could there be too many pharmacy counters in the marketplace, and will retailers look to cut back on this longtime cash cow?

The answer, amazingly, may be yes, and some key retailers may be taking steps to protect themselves. In just the last two months, Walmart has cut back its number of pharmacists, and Lunds & Byerly’s, an upscale, trendsetting Minnesota-based supermarket chain, announced that it was getting out of the business of filling scripts altogether.

By themselves, these two acts are not the start of a trend or a barometer on how the overall health of the pharmacy business is faring. The fact is that Walmart still operates pharmacies in nearly all of its 5,000 stores, and there is no evidence that the giant chain is going to scale back its pharmacy operation any time soon. Lunds & Byerly’s, even with all of its glamour and loyalty in the Twin Cities metropolitan area, still is a relatively small player in the upper Midwest, and it is clear that the chain’s officials think they can make more money and serve their customers in other ways that they are more comfortable with.

Yet, other signs exist indicating that there are simply too many pharmacy counters at mass retail stores across the country. Other retailers are complaining about the costs and logistics of maintaining a fully-staffed pharmacy counter. And, retailers are becoming more and more aware that declining profits from the pharmacy, caused by a number of reasons including high procurement costs and government regulations, as well as rising wages for pharmacists, require them to take a second look at the category.

Let’s be clear here: The pharmacy will remain the backbone of most retailers’ merchandising and marketing strategies. The major drug store chains, larger mass merchandisers and supermarket chains will continue to utilize the pharmacy as both a profit center and a customer draw to both fill their coffers and attract customers into their stores. Pharmacists also will remain a key cog in winning over consumers, mostly by offering the expertise needed to help them make the right decisions on their healthcare needs.

Yet, these small signs cautioning that not all is perfect with the category need to be recognized, and retailers need to take the right steps to protect their pharmacy operations and get the most out of this business.