Shoppers Drug Mart has become a huge pandemic winner — and it didn’t happen by accident


Like the recessions before it, this year’s pandemic-induced economic downturn has had its winners and losers.

Shoppers Drug Mart is one of the winners. Its parent company, Loblaw Companies Ltd., saw profits rise during the first quarter of 2020 despite the added costs of pandemic safety measures, with Shoppers’ same-store sales rising more than 10 per cent. And though Loblaw’s profit dipped in the second quarter due to those extra costs, its revenue increased. At Shoppers, though pharmacy same-store sales fell, front store sales rose.

The pharmacy chain recently got into the COVID-19 testing game alongside Rexall and other community pharmacies, the latest in a long line of moves by the company aimed at expanding its profile in health care.

Shoppers was one of the first to have a successful loyalty program, two decades ago. It invested heavily in beauty not long after, and succeeded at that, too. When the Ontario government decided in 2012 to allow pharmacists to give flu shots, Shoppers rolled this service out across the province.

In 2018, the company got its medical cannabis license. That same year, it announced it was launching an in-store beauty clinic offering non-surgical procedures such as peels and injections, for which there are now two locations.

Love them or hate them, it might seem like the retailer is ready for anything, always ahead of the competition.

That’s no accident. Shoppers has been steadily increasing the services it provides and pouncing on new opportunities, looking to a future where it resembles a community health hub rather than just a local pharmacy.

President Jeff Leger calls it their “connected health-care strategy,” the latest piece of which is PC Health, a soon-to-be national app that connects users with nurses and dieticians, makes recommendations and sets goals, then rewards users for following through.

It’s this digital focus that is driving the company forward, he said.

“The core of our connected health-care network is the digital properties or digital tools that we’re developing, along with our extensive physical network of professionals, including pharmacists at the centre of it but also physicians.”

The one-stop shop

According to retail analyst Lisa Hutcheson, much of Shoppers’ success is due to the fact that it has remained true to its slogan from mid-80s: “Everything you want in a drugstore.”

“As they’ve grown over the years they really haven’t lost sight of that,” she said.

But that doesn’t mean they haven’t changed.

Bruce Winder, a retail analyst and author, said Shoppers went from being a pharmacy to also being a beauty store when it launched beautyBOUTIQUE in 2003 and made a name for itself selling high-end makeup and perfumes.

And when grocery giant Loblaw bought the drugstore in 2014, Shoppers became part of what Winder calls Canada’s “oligarchy,” the trio of grocery companies that make up a big share of the market (one of them, Metro, bought Quebec pharmacy chain Jean Coutu in 2017).

Shoppers’ multi-streamed trajectory started “many, many years ago,” Leger said. With a strong pharmacy system in place, multiple health-care operations, clinics and professionals in the company’s network, Shoppers sought to integrate those pieces.

“We thought, we can bring these things together to really help enhance what we think is going to be the future,” he said.

So what does that future look like?

“Health care will be more about an omni-channel experience and a mixture of digitally led tools that are efficient and easier for people to access, along with brick-and-mortar-type services.”

It’s all about data

You can’t talk about digital without talking data, and as is the case for many companies now, data is a big part of how Shoppers operates.

A lot of that data comes from its loyalty program, which many customers have been using for years.

The PC Optimum program builds “deeper relationships” with those customers, said Leger, not to mention longer relationships. It also spans all of the parent company’s divisions: apparel, grocery, drugstores and banking.

In other words, the company gains insight into what their customers want, and the loyalty program ensures those customers get everything they need from Loblaws and Shoppers.

Hutcheson called the PC Optimum program a “win-win,” since Shoppers can use the data to determine customers needs. And PC Money adds another layer of data and loyalty, she said.

Winder said despite Shoppers’ size, they act much like a small company, often trying new things and innovating “like crazy.”

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Shoppers owns and operates a number of other operations, including Wellwise, which sells assisted-living devices, and QHR, an electronic medical records company. They also have a minority stake in telemedicine provider Maple.

Then there’s Shoppers’ first medical clinic, which opened in August at its Lawrence Ave. W. and Dufferin St. location in Toronto. Though many Shoppers locations have third-party clinics attached, The Health Clinic by Shoppers is the first one owned and operated by the company. Leger said these clinics will be more “digitally enabled,” another movement that’s been accelerated by the pandemic.

Leger said they also hope to use data from the new clinics to inform their doctors and pharmacists.

“How do we make it a bit more efficient for the care provider to have the right information at the tip of their fingers when they need to help a patient make a decision?” he said.

Winder called this new venture “quite brilliant,” pointing out that beyond their benefits for customers, the clinics will also be a revenue stream for the company.

Hutcheson agrees; having a clinic next door naturally means a client emerging from an appointment is likely to go to Shoppers to fill their prescription.

“Having them next to each other … makes it easy for the customer,” she said.

Of course, all this benefits Shoppers, as it continues to add services to its “value chain,” as Winder put it.

‘The two systems can coexist’

All said, the more services provided at pharmacies, the less strain on the health-care system, Leger said.

Provinces have been increasingly empowering pharmacists, allowing them to prescribe certain medications and deliver other services — and none more so than Alberta, which Leger said is ahead of the pack. There, pharmacists can prescribe all Schedule 1 drugs and blood products, with certain restrictions.

In 2017, a study by the Conference Board of Canada (co-sponsored by the Canadian Pharmacists Association and the Canadian Alliance for Sustainable Health Care) explored the economic value of pharmacies branching into other health-care services.

They looked at three services in particular that have been successful in pharmacies, explained principal research associate Isabelle Gagnon-Arpin: smoking cessation, medication review and management for cardiovascular disease, and pneumococcal vaccination. The researchers forecasted the economic benefit of having pharmacies provide these services, and found that depending on the uptake, the value could range between $2.5 billion and $25.7 billion over the 20-year forecast period.

This is in part because of the role these programs play in preventing long-term, costly illnesses, said Gagnon-Arpin, and because they could help keep people alive — and working — for longer.

And by offering the programs in pharmacies, there’s a return on investment, she said, since the reimbursement cost for a pharmacist is generally lower than that of a doctor.

When asked whether he thinks the line between public and private is being blurred in Canada’s health-care system, Leger pointed to the long history of private companies delivering public services, using flu shots as an example.

“The two systems can coexist,” he said.





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