Lowes Hardware
Drug/hardware combo strikes a chordDave Vaczek
Employing a variety of store formats and market-responsive merchandising and promotion in such categories as lawn and garden and hardware, Hi-School Drugs has held its own in Washington and Oregon markets where big-box operators, such as Fred Meyer and Wal-Mart, and Longs, Rite Aid and Walgreens scramble for sales.
Cognitive services, including health screenings and flu shot programs, featured at its 21 pharmacy stores support a core pharmacy business in its major markets of Vancouver, Wash., and Portland, Ore., and in small outlying communities.
In tailoring front-of-the-store assortments toward community demands, the Vancouver-based chain employs frequent advertising, with an increased focus on food and beverages. Eight- to 12-page drug store circulars run every other week, its hardware merchandise is featured in one or two circulars per month, and the chain sends out 10 coupon books per year through direct mail or newspaper inserts, noted vice president of operations John Crawford.
It means different things in different stores. For instance, in some more rural locations, the company has installed fabric departments.
In 10 stores, it has moved to digital processing photo services from overnight.
And in six of Hi-School's combo drug/hardware stores, it operates 8,000- to 10,000-square-foot lawn and garden centers outside on a seasonal basis. "Springtime is our Christmas. It starts in February and runs into the summer months," Crawford said.
Hi-School has been sourcing select seasonal and general merchandise from China for the past three years. Last Christmas, shoppers snapped up a 20-foot truckload of musical Christmas trees.
Crawford said the hardware business gained a boost last year when Fred Meyer slashed its hardware assortments. The chain operates nine free-standing 8,000-square-foot Hi-School Hardware stores as Ace and True Value franchises, and the franchises occupy half the space in seven 18,000-square-foot drug/hardware combo stores. Hardware provides high-margin sales from Hi-School pharmacy customers, as well as other shoppers who are drawn to the convenience of shopping in smaller stores. "It gives us a niche that others do not have," Crawford explained.
The chain employs the buying clout of a franchisee to stay competitive with Home Depot and Lowes. As its drug store in rural Silverton, Ore., has grown in stages over the years to 40,000 square feet from 18,000 square feet, the hardware selection kept pace, increasing to 22,000 square feet from 3,000 square feet, to keep up with local demand.
Its two extended care pharmacies in Vancouver and Spokane, Wash., which feature medicine-on-time dispensing systems and service facilities, including foster care, posted 15 percent sales growth in 2004.
Hi-School last year sold 11 of its 18,000-square-foot stores in the Vancouver and Portland markets to Walgreens, all of which Walgreens has remodeled, phasing out in the process the hardware store component of the combo units. Responding to customers' requests, at four of the sites Hi-School moved the hardware businesses to new 5,000- to 10,000- square-foot free-standing hardware stores, near the new Walgreens stores.
Hi-School Drugs
Headquarters: Vancouver, Wash.
2004 sales: $139 million
% change vs. 2003: 23%
No. of stores: 33 *
Avg. store size: 5,000 sq. ft.
Rx sales: $97 million
% of sales from Rx: 70%
Sales per store: $4.2 million
* Includes 21 drug stores, nine free-standing hardware stores, two extended care pharmacy facilities and one dollar store
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