Altoona’s hometown drug store bets bigger is better

ALTOONA, Pa. —Nestled in a quiet mountain range just 96 miles east of Pittsburgh and about 30 miles from Penn State, the new Kopp Drug store here is reflective of the small regional chain’s recent decision to get a little bigger—or at least go to market that way. Kopp Drug executives hope its new prototype, at almost 10,000 square feet, gives it a better chance to compete with the big national drug chains in town, which include CVS and Rite Aid.

Kopp Drug currently is in the process of finding new, higher-traffic locations for its stores. As it secures the new locations, it will slowly introduce the chain’s larger footprint store. Today, the average Kopp Drug store measures about 5,500 square feet.

When Drug Store News caught up with Kopp Drug executives earlier this summer, the chain was relocating four of its stores. Earlier this year, the company completed the first two of its planned relocations. The new stores also feature a drive-through pharmacy window. The plan is to complete the store in Bellwood, Pa., by the end of the year and to have the store in Holidaysburg, Pa., wrapped up in early 2008.

“Our growth plan at this point is to make the stores we have bigger and better,” said Steve DeCriscio, Kopp Drug’s chief financial officer.

As part of the makeover, Kopp Drug is dedicating a 150-foot section to durable medical equipment. The one-stop home health shop features an assortment of bath safety items and fashionable canes and walkers, but nothing that requires reimbursement under Medicare Part B. That’s a business Kopp has decided to leave to specialty home care centers because of the additional labor resources required to process Part B claims. “This seemed like a cleaner way to get into [DME],” explained Kopp Drug president Morley Cohn. “It’s a good way to get started.”

Kopp’s DME offering does include some big-ticket items, however, such as a recliner/lift chair with a price of $584.99.

In just the first four weeks since introducing the new cash-only DME set, sales were ramping better than expected, and customer feedback was positive, company executives told Drug Store News.

The chain also is using the extra room in the new prototype to highlight its beauty offerings. The new-look stores feature track-lit cosmetics gondolas in the center of the store. Another new addition: an end-cap from NYX Professional Make-Up, a line of value-priced cosmetics with a premium look and feel.

The stores also feature a gift boutique—Kopp Drug actually owns and operates three stand-alone gift boutiques, called Isabella’s, named after one of Kopp Drug president Morley Cohn’s two granddaughters—which sports a selection of locally inspired sports memorabilia and assorted knickknacks, including a large Yankee Candle display.

“When I get done with this, I’ll have two stores that are 10,000 square feet; two stores that are 7,000 square feet,” noted Cohn, who currently is looking at a building with 10,500 square feet of selling space in Bellwood, Pa., for a third store.

Currently, Kopp operates 10 stores and is projected to reach total sales of $38 million this year—about $32.5 million of that in pharmacy.

Kopp Drug represents one more example of how a small-town pharmacy operator can dominate pharmacy market share in a town amid big-chain competitors. For three consecutive years, Kopp Drug has been named the region’s favorite hometown pharmacy by the local newspaper, the Altoona Mirror, and boasts a 35 percent share of the $80.2 million pharmacy market, according to data from Chain Store Guide, a leading provider of retail intelligence.

Kopp Drug accentuates that hometown pharmacy feel with an outdoor advertising campaign that showcases the local pharmacist in that particular area. On average, Kopp Drug pharmacists have about 20 years working for the company.

Under Cohn’s direction, Kopp Drug currently is exploring a central fill program for its 10 drug stores, which all are within a 30-mile radius. Central fill would enable the chain to automatically process refills—having them ready at the store of the customer’s choice every 30 days. If executed on a large enough scale, that could help bring a greater degree of predictability in terms of inventory management, cutting down on the costs of standing inventory and the need for.