Nevada Board Of Pharmacy
City outskirts are better bet for pharmacy retailers: there are a few flashy drug stores on The Strip, but the real front for pharmacyz is on the outskirts of the city, where communities of new arrivals continue to growDoug Desjardins When you think of Las Vegas, retail pharmacy doesn't exactly jump to mind, but that's not the case when retailers think of Sin City. For them, Las Vegas is a fast-growing big city with a population tailor-made to fuel prescription sales over the next few decades.
While Las Vegas is one of the world's top destinations for tourists, with millions of visitors flooding into the city every year, tourism has little do with pharmacy growth. Outside of the few drug stores located on The Strip most notably the CVS flagship, easily recognizable by the giant rolls of film spooling out from its roof--and on nearby streets, most stores aren't close enough to benefit from the tourist trade.
For pharmacy retailers, the real action in Las Vegas is on the outskirts of town, where developers are building homes year-round to keep up with the 50,000 new residents who move here each year. Las Vegas, like most desert cities, has a sizeable population of older residents, but it's adding thousands of young families who move there for the seemingly endless stream of jobs in the service and construction industries. Some 33 percent of the population is between the ages of 25 and 44.
Those massive housing developments are springing up in the desert around Las Vegas and in nearby cities, such as Henderson, a once-small town that now has a population exceeding 220,000. And for every housing development, there are shopping centers anchored with supermarkets and drug stores opening their doors in advance of the new arrivals.
Albertsons has been leading the way in that area with the rollout of its Sav-on drug stores and its combination supermarket-drug stores. The city's No. 1 pharmacy retailer has 54 stores in Clark County with 36 stand-alone Sav-on stores and 18 supermarkets that have pharmacies inside--60 stores in total when factoring in nearby Paradise, Nev., part of the growing greater Las Vegas market.
"We're working on co-branding our supermarkets with signs to let people know there are pharmacies inside," said Sav-on spokeswoman Karen Ramos. Albertsons had planned on rolling out its dual-branded stores with full-sized supermarkets and pharmacies under one roof in Las Vegas--something it did up in Reno, Nev., in 2000--but hasn't revealed when that initiative will begin.
Although it's the top retailer in Las Vegas, Albertsons lead has been shrinking for the past several years. That's because the newest arrivals in town are two retail giants that are making a big push to build market share.
Walgreens opened its first Las Vegas store in 1999 and has exploded in Clark County since then. In a little more than five years, Walgreens has opened 48 stores in the metropolitan area, with more than 20 in Las Vegas and dozens more in bordering cities, including Henderson and North Las Vegas. At its current rate of growth, Walgreens is likely to take the No. 1 spot from Sav-on within a few years.
Like other retailers, Walgreens tries to build its stores on busy corners with drive-through windows that provide customers the convenience of staying in their cars--a real attraction in a city where temperatures hit 115 degrees in the summer. And while Walgreens is building most of its stores outside the city, it has two stores on The Strip that tap into tourism dollars.
CVS arrived in 2001 and now has 20 stores in the Las Vegas area. It also has the most unique and visually impressive store in Las Vegas, located on The Strip: a 16,000-square-foot store festooned with giant rolls of film and a massive lipstick case that seem to explode through the roof of the store.
Because architecture on The Strip is larger than life, the store, an early variation on the chain's Life Store prototype, incorporates many of the elements of the typical CVS building, but ex aggerated to match its surroundings.
Most CVS stores in the area are miles away from The Strip, tucked away in new strip malls and shopping centers. Like Walgreens, its presence on The Strip is more for show as it pursues high-growth markets outside the city.
The fifth-largest player in Las Vegas is Smith's Food and Drug Centers, which is part of a 125-store chain based in Salt Lake City with stores in seven Western states--and part of the Kroger empire. As the name suggests, the stores are a supermarket-pharmacy combo and have 29 locations in the Las Vegas area.
Smith's stores are large, occupying up to 80,000-square feet, and have a full pharmacy located on the right side. In addition to a standard supermarket, the stores also have sections in the rear dedicated to general merchandise. Unlike its fast-growing rivals, Smith's opens only a few stores each year, but those locations usually anchor new shopping centers in growing areas. It also has the advantage of being the city's hometown chain.
Rounding out the top five retailers in Las Vegas are national powerhouse Rite Aid and regional player Longs Drug Stores. Rite Aid is a relative newcomer to Las Vegas, but already has 26 stores in the metropolitan area and is vying for corner lots to fuel its growth.
Longs has been around since the days when Las Vegas was a small city. The chain has seven stores in the Las Vegas area and isn't likely to add to that count this year as it's in a slow-growth mode, focused more on upgrading its existing stores. Longs' Vegas stores, however, soon will get a new look as the chain rolls out its new Total Visual Appeal prototype, which features new signage, wider aisles, brighter lights and a refurbished cosmetics area.
The newest player in Las Vegas pharmacy retail is Wal-Mart's Neighborhood Market. The chain opened four stores in Las Vegas in March and plans to open more next year. The 30,000-square-foot stores each feature a supermarket and a full pharmacy with a 24-hour drive-through window, adding to Wal-Mart's already sizeable presence in Clark County.
One to beat
When Walgreens enters a new market, it usually does so in a big way. The chain started building here in 1999 and already has opened 48 stores in Las Vegas and Clark County and soon could overtake Sav-on as the No. 1 pharmacy retailer in town. While it operated 16 fewer pharmacy counters than Albertsons did there in 2004, Walgreens managed to lock up almost 30 percent of the local pharmacy market, compared with Albertsons'--still the leader by store count--19.1 percent share.
Walgreens has focused on expansion in outlying areas and nearby cities like Henderson, Nev., which are more affordable and attract a mix of older residents and growing families, the two prime sources of prescription sales growth: people over 55 or under 5 years of age.
But Walgreens also has staked out territory in downtown Las Vegas. It operates a large, glitzy store on the south end of The Strip directly across from CVS' flagship store and another across from the Stardust Hotel.
One to watch
In the competitive Las Vegas market, Sav-on Drugs is still the one to beat. With 54 pharmacies in the metropolitan area, it's the top pharmacy retailer in the city--at least for now. To stay on top, the chain will have to hold off a furious charge from Walgreens.
One advantage Sav-on has on the competition is its alliance with parent company Albertsons, which is the top supermarket chain in the city with 38 outlets. Of those, 18 currently have Sav-on pharmacies inside.
Albertsons will try to remain atop the leader-board with two ongoing initiatives. The first is a co-branding effort that calls for new Sav-on Pharmacy signs on Albertsons stores. The second is a focus on building stand-alone drug stores at busy corner lots with drive-through windows--a page from the book CVS, Walgreens and Rite Aid have used to put the heat on Sav-on in recent years.
One for the books
While Smith's Food and Drug Centers are unknown outside of the West, they're a familiar name in Las Vegas and enjoy a home-field advantage over national chains that are setting up shop here.
The 125-store chain based in Salt Lake City has 29 locations in the Las Vegas area, making it the third-largest retailer in Clark County. As the name suggests, Smith's operates supermarkets and full-sized pharmacies under one roof and carries a large selection of general merchandise.
Stores occupy up to 80,000 square feet and look a lot like Fred Meyer supercenters--a resemblance that's no coincidence, as the Portland, Ore.-based chain used to own Smith's. Now, both are part of Kroger Co.
LAS VEGAS: WHO'S WINNING *
2004 Rx 2004 front-end Total stores
market share market share ** w/Rx
Walgreens 26.9% 48.2% 44
Albertsons 19.1 NA 60
Rite Aid 11.6 19.5 28
CVS 8.8 11.5 15
Kroger ([dagger]) 8.3 NA 24
Source. Chain Store Guides 2004 Drug Industry Market Share Report
* Market defined as Las Vegas and Paradise, Nev. ** Reflects drug
stores only ([dagger]) Includes Food 4 Less, Smith's Food & Drug
Centers
LAS VEGAS: THE STAKES *
Population 1,587,190
No. of households 584,544
Median disposable income ([dagger]) $40,879
Total Rx sales ** $751.6
Total front-end ([dagger][dagger]) sales ** $257.3
THE SIDES
Drub stores 243
Supermarkets 133
Mass merchants 75
Warehouse clubs 7
Source: Chain Store Guides 2004 Drug Industry Market
Share Report
* Market defined as Las Vegas and Paradise, Nev.
** Sales in millions ([dagger]) Per household
([dagger][dagger]) Reflects drug stores only
COPYRIGHT 2005 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2005 Gale Group
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