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Thrifty-White Drug: aim is to be 'store of choice' - 2003 Annual Report

Liz Parks

Thrifty-White Drug, operator of 41 traditional drug stores in the central and northwest states, is introducing a number of initiatives designed to grow sales by offering consumers more value.

As one of its marketing initiatives this year, Thrifty-While is redefining its product mix, seeking to enhance the traditional core areas of HBA, photo, cards and cosmetics. This year, gifts and other niche categories have been expanded at Thrifty-White, and they now are positioned within each store's main traffic aisles.

Other new categories that Thrifty-White has moved into this year, said Tim Erdle, vice president of store operations and marketing, are floral, coolers and freezer departments, which he said, are geared "to increase frequency in customer visits."

"We have a variety of competitors from giant discounters to independents," said president Bob Narveson. "Most towns we're in have a Wal-Mart, Target and Kmart. Most of the grocery chains have pharmacies as a part of their program."

And in the face of such choices before the consumer, Thrifty-White is looking to a higher principle to attain success. "The main point we need to focus on is providing the best possible customer service and becoming the store of choice within each of our markets when you think of your drug store needs. If we continue to provide that service, we can compete with anyone."

To reward loyal customers and to attract new customers, Erdle said Thrifty-White is focusing its marketing and advertising programs this year on "value-added product incentives with prescription fulfillment or merchandise fulfillment."

For example, one new Thrifty-White promotion offers discounted prices on select items whenever a shopper brings in a new prescription, a refill or a transfer and buys $25 of general merchandise.

Erdle said these promotions will be featured in all print and radio advertising throughout 2003.

The bottom line

Last year, Thrifty-White's total sales increased 20 percent to $176 million, but aggressive promotional activity took, as it always does, a toll on margins.

To help drive front-end sales, Thrifty-White has introduced a number of value-added programs, including a free-stamp offer when shoppers purchase a greeting card and a buy-three-cards-get-one-free promotion.

"The greeting card category growth," Erdle noted, "has been slowed by the use of electronic greeting cards via the Internet, so we have ongoing programs to promote growth."

In photo, another core front-end segment, Thrifty-White currently has 12 one-hour-photo labs in stores, and those stores have shown strong growth in both one-hour and next-day developing.

Erdle noted that photo sales have been affected by increased digital usage. To combat that loss, the chain has added three Kodak Picture Makers with digital capabilities over the past six months.

Another challenge, shrinking margins at the pharmacy, "has forced us to become more efficient and to look at the places where we spend our time," Narveson said. "We have looked at the work flow in the stores and pulled all of the administrative tasks possible back to the corporate office where they can be performed more efficiently."

The chain has installed an interactive voice response system, which Gary Boehler, executive vice president of pharmacy and health care services, said, "allows for fewer interruptions during the day with phone calls. In busier stores, this has saved up to 1,000 phone calls each week.

The ready refill system, Boehler said, is Thrifty-White's "opt-in system" for automatic filling of long-term maintenance medications for about 120 specific therapeutic classes of drugs. Once enrolled, said Boehler, a patient's medications automatically come up in the daily work queue five days before they are due to be filled, which allows the pharmacy staff adequate time to get those prescriptions ready for mail out, pick up or delivery.

In other cost-saving initiatives, Thrifty-White has replaced its traditional dial-up communications system with a more cost-efficient frame relay system, which has "reduced adjudication time from an average of 30 seconds to two seconds, allowing or quicker fill times," Boehler pointed out.

In the pharmacy, Thrifty-White has installed Baker APS pharmacy scales in 45 of its stores. And to help even out the workload of pharmacists in high-volume pharmacies, Thrifty-White is in the process of installing robots into some of its pharmacies. Boehler said there currently are six Script Pro SP-200 robots in place and two Script Pro SP-100 units are on order.

"The advantages of using this type of automation," Boehler said, is that "prescription filling times have been reduced by about one minute per prescription."

Boehler said that approximately 50 percent of all prescriptions dispensed are filled using the robots.

Thrifty-White also has developed a central-fill system to fill prescriptions for its approximately 10,000 nursing home and assisted living customers.

Approximately 8,000 prescriptions for those long term-care customers, Narveson said, are filled from three central-site filling centers spread throughout the region.

Over the past five to six years, between 30 and 35 Thrifty-White pharmacies have been remodeled and enlarged. Boehler said the upgrades have helped to create a smoother work flow with the addition of drop windows, pick-up windows and areas for patient counseling.

Last year, Thrifty-White, which operates under a variety of sizes and structures from clinics to traditional storefronts, opened its third long term-care filling center, two traditional drug stores and consolidated one store into an existing store. Six stores were remodeled.

Last year, two stores were sold to HyVee, and two locations were closed. This year, the plan is to open eight stores.

In 1999, Thrifty-White created an affiliation program for independent drug stores. Under the Thrifty-White Independent Retailer Program, an independent operator has the ability to purchase the same product mix and be part of the same advertising and promotions that currently run in a typical Thrifty-White Drug store. Currently, 11 independents are associated with the program.