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Shopper’s Drug Mart – Charting A New Path

Shoppers Drug Mart is accelerating the health and wellness customer journey

Almost six years since Shoppers Drug Mart was acquired by Loblaw Companies Ltd. – a move Loblaw executive chairman Galen Weston described as a “transformational partnership” that would change the country’s retail landscape – Canada’s largest pharmacy network has grown and evolved far beyond the traditional role of medicine dispensary.

Today, the ubiquitous retailer with its familiar red-and-white banner has become as much a destination for Ace baguettes, sugar snap peas and freshly prepared sandwiches as it is for prescription and over-the-counter medications, flu shots and beauty and skincare products. While it’s not quite the place for a full grocery shop, Shoppers certainly has more than enough food and household SKUs to deliver one-stop shopping for convenience and safety-conscious consumers.

“We’ve been selling food for a long time, but thanks to the assortment available through Loblaws, we’ve added fresh meat, vegetables, salads, PC Chef meal kits and different meal solutions,” says Jeff Leger, president of Shoppers Drug Mart, which posted $13.3 billion in sales through 1,343 stores in 2019 – an increase of more than $2 billion from 2013, the year before its acquisition by Loblaw.

Last year’s numbers are likely to surpass 2019’s. For the first three quarters in 2020, Shoppers saw $10.5 billion in sales – an increase of more than five per cent from the same period in the previous year.

“During the height of the pandemic, we saw changes in consumer behaviour, in particular in their food shopping habits,” says Leger. “We saw many customers discover Shoppers again not just as a convenience store or a health and beauty retailer, but also as a food retailer.”

Shoppers in 2019 boosted its fresh offering and launched same-day home delivery in partnership with Instacart. Last October, Shoppers also added thousands of daily essential items to its e-commerce site, which launched in 2018 as an online beauty store.

These turned out to be particularly timely moves as COVID pushed Canadians towards one-stop and online shopping. Many customers also took full advantage of Shoppers’ same-day home delivery service, which Leger says was in especially high demand for over-the-counter medication purchases in the early days of the pandemic.

Managing Through Crisis

When much of the country went into second-wave COVID-19 lockdown over the Christmas holidays, Shoppers was well positioned to meet another surge in demand for the essential items Canadians stocked up on during the first lockdown, says Leger.

“We’ve done a lot of work around our supply chain to make sure it’s secure,” he says. “We’ve also done a pretty good job of ensuring the safety of our colleagues, our store employees and our customers. A lot of measures were put in place to do this – from plexiglass screens to stringent sanitation protocols to signage designed to keep people safely distanced in our stores.”

As the year that was – and it was quite a year – gives
way to a 2021 that portends better days ahead despite the ongoing uncertainty around the coronavirus, Shoppers is readier than ever to serve the needs of Canadians, says Leger.

The company plans to do this in part with even more offerings in food and with new locations in new cities. Leger says Shoppers has hit on the right mix of offerings and price points based on geography, and enjoys the “halo effect” from such popular Loblaw brands as PC Chef, No Name and Farmer’s Market.

Growing Fresh

“We think there’s a lot of opportunity for us to continue to grow the fresh side of our business and we have a couple of different formats for this offering, for either urban or suburban locations,” he says. “Our customers love the convenience of being able to shop for fresh food along with their usual Shoppers purchases, and they trust us to deliver this convenience in a way that’s safe for them and for our employees.”

That trust translated into double-digit growth in food sales in the wake of the pandemic, with notably strong performance in stores that have enhanced fresh offerings, says Leger.

“People really do recognize us for food now,” he says. “Loblaw’s goal of being best in health, best in beauty, best in food – that applies to the whole organization, including Shoppers, and I think it’s resonating really well with our customers, who see us as much, much more than a pharmacy.”

Transforming Pharmacy

The transformation of Canadian pharmacies has been underway for many years, says Leger. Historically, the community pharmacy was a place Canadians turned to for their medications and for advice on which pharmaceutical products worked best for their ailments.

“Today in Ontario, our pharmacists do medication reviews, and in Alberta, where pharmacists have the most developed expanse in terms of scope of practice, we’re prescribing for ailments such as high cholesterol, high blood pressure and diabetes,” says Leger. “In some cases, instead of going to emergency rooms, people are going to their pharmacies.”

When COVID-19 struck, Shoppers pharmacists stepped up to fill in some of the healthcare service gaps that appeared after hundreds of physicians across the country temporarily closed their offices and switched to online consultations.

Shoppers further contributed to the pandemic containment effort by offering instore COVID-19 testing for asymptomatic customers in Ontario who meet the criteria set out by the province. Of the 60 Ontario retail pharmacies that launched this service last September – on top of what was expected to be one of the busiest flu vaccine seasons in the province – 50 were part of the Shoppers network.

Leger says Shoppers has also had ongoing discussions with provincial governments about the role of pharmacies in the second and third phases of the COVID-19 vaccine rollout.

“We’re hoping that as more vaccines become available and we get to Phase Two and Three, we can accelerate the rollout of the vaccines through our network of 1300-plus pharmacies,” he says. “We have the capacity – last year alone, we administered over two million flu vaccines over five weeks, and we could have done many more had there been more supply of the flu vaccine.”

Beyond COVID-19, there are many other reasons why Canadians will be looking to Shoppers to address even more of their healthcare needs in the future. In the past year alone, Shoppers has expanded its health services portfolio to include telemedicine – through its $75-million investment in virtual care provider Maple Corporation – as well as primary care through its pilot medical clinic in Toronto.

These healthcare-focused investments build on the company’s $170-million acquisition, in 2016, of QHR Technologies, a Kelowna, B.C.-based provider of platforms for electronic medical records, virtual care and electronic prescriptions.

“Canadians really know and understand our format, and they know we have a range of services that are complementary to other systems like family practice, after-hours clinics and ER,” says Leger. “Our pharmacies in particular are extremely accessible in every community, open late hours, and you don’t have to book an appointment to see our healthcare professional pharmacist – you can just go into our stores.”

Shoppers remains laser-focused on its goal of improving Canadians’ access to healthcare, adds Leger. He foresees healthcare in the near future as an omni-channel experience, with services delivered in hospitals and clinics, as well as in community pharmacies and through telemedicine.

“We plan to continue to build out digital components to create this digital front door – this way of accessing healthcare through digital means. We think Canadians are ready for this.”

Jeff Leger

“We want to continue to build our presence in digital health, and through our partnership with Maple, we’ve trialled different services that give Canadians access to virtual care, and people really loved it,” says Leger.
“We plan to continue to build out digital components to create this digital front door – this way of accessing healthcare through digital means. We think Canadians are ready for this.”

Canadians are also ready for more food – including more fresh offerings – from Shoppers. And Shoppers is well positioned to deliver.

“This is all part of our strategy, as a combined company with Loblaws, to combine healthcare with a real thoughtful approach around food, groceries and various other things that determine people’s health,” says Leger. “The expanding role of pharmacies just makes sense given our purpose of helping Canadians live life well.”

A Prescription For Growth

Since it was purchased by Loblaw Companies Limited in 2014, Shoppers Drug Mart has been a strong contributor to the organization’s top and bottom lines.

6.1% Same-store sales growth

10.3% Pharmacy same-store sales growth

2.4% Front-store same-store sales growth

$10.5 Billion

5% vs. 2019 Shoppers Drug Mart sales to end of September, 2020

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