Payless Drug Store
PayLess doubles down with brisk growth, upfront Rx - PayLess Drug Stores - Drug Store News Annual Report, part 2 - Company Profile WILSONVILLE, Ore. -- PayLess played fast in 1991's slow economy with an aggressive 25 percent increase in stores, a new regional structure to optimize its California market, and a drive to win new customers with highly visible upfront pharmacy placement. Following an active expansion program over the past six years, PayLess has doubled its penetration since 1985 to reach 401 stores in 10 western states with around half of the stores in California.
The chain added 80 stores, including 52 Oscos, in 1991 and plans to open 42 more this year, mainly in northern California, Rocky Mountain states and the Pacific Northwest.
The Kmart subsidiary showed strong performance with a net income rise of 18.9 percent on sales of $1.89 billion for the fiscal year ended Jan. 29, up from $1.64 billion in 1990, for an expansion-driven sales increase of 15.2 percent and with same store sales increasing 2.7 percent.
After acquiring 52 Osco stores in Colorado, Wyoming and Utah in 1991, PayLess split the chain into two marketing zones earlier this year. Nine states comprise one zone with California as a separate zone or region, enabling the chain to focus on California's unique consumer demands while merchandising effort is concentrated on other Western states separately. A third distribution center in Utah, scheduled for completion in 1993, will provide added support for stores outside the Pacific states.
Payless is upgrading as well as expanding. Since introducing its REX award-winning 45 degree floor design, which enhances the visibility of core departments, 27 sites have been remodeled to reflect the format. Six more remodels are planned for 1992, with an estimated 95 percent of new stores conforming to the 45 degree format as space allows.
Payless is also courting customers with convenience, a good demographic bet as the large baby boom group ages. Most new and remodeled stores are positioning pharmacy near the entrance with comfortable waiting areas and convenient rest rooms. Since pharmacy customers are sometimes unwell, the up-front pharmacy signals that PayLess won't make them walk farther than necessary to fill a prescription. As with most chains, pharmacy is an increasing percentage of sales, growing from 18 percent of sales in 1990 to 21 percent in 1991.
The PayLess acquisition strategy reflects a drop in new shopping center construction. To pursue both fill-in and new market expansion, the chain is modifying its usual store lease program to include purchase of existing store sites, such as the recent purchase of three Vons.
PayLess at a glance
Company name: PayLess Drug Stores. Headquarters: Wilsonville, Ore. Officers: Tim McAlear, president/ceo; Dave Jessick, senior vp/cfo. Sales: $1.89 billion. Store count: 401. Store size: 36,000 (26,000 selling space). Markets: 10 Western states. Highlights: Acquired 52 Osco stores as part of 20 percent climb in store unit; split chain into two marketing regions with California separate from nine other states.
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