Another casualty of Target’s collapse: 133 franchise pharmacists

“We were surprised.

When Target announced it was closing its Canadian operations, it meant the loss of jobs for its 17,600 employees. But it also means the closures of 133 pharmacies and the loss of business for those pharmacists.

According to Jason Perepelkin, assistant professor of social and administrative pharmacy at the University of Saskatchewan’s College of Pharmacy and Nutrition, the pharmacies were the victims of poor planning on Target’s part, notably too much hype before coming into the Canadian market and lack of product on the shelves.

“If the front of the store is not bringing in people because shelves aren’t stocked, think ‘Why would I waste my time here?’” he explains. “And then the pharmacy suffers from that.”

Perepelkin says he spoke with one Target pharmacist who had “no clue” of the news prior to the announcement. “They basically found out when everyone else found out,” Perepelkin says.

Mike Jaczko, a partner and portfolio manager with K.J. Harrison & Partners Inc. in Toronto, says the news wasn’t “a complete shock.” He says when Target closed the former Zellers stores and went dark for months they lost continuity with the customer base. “They underestimated the disconnection the customer base had with the new store,” he says.

As well, the Canadian stores didn’t offer the popular product lines found in the U.S. stores, which Canadians were expecting to see on the shelves. Perepelkin says that failure applied to the pharmacies as well; for example, the Canadian pharmacies didn’t carry Target’s ClearRX trademark for prescription drug labelling that’s been successful in the U.S.

In a news release about the announcement, officials said Target will place $70 million into an Employee Trust, giving each staff member a minimum of 16 weeks’ pay, including wages and benefits. Pharmacists won’t be compensated under that trust.

A spokesperson for the company said Target “will be terminating all contractual relationships” with the pharmacist-franchisees. He further advised that patients contact their pharmacists for more details.

But Target’s use of a franchise model in its pharmacies was a popular one. Perepelkin says Target “should be highly commended” for using the franchise model because it gave pharmacists a chance to open a pharmacy without putting out all the costs up front. Franchisees took part in a four-week training program at Target’s headquarters in Mississauga.

He suspects other franchises will buy the books or the current owners will open new pharmacies. And while he says the closing of Target’s stores shouldn’t reflect on the pharmacists, he also suspects owners will still be cautious with their next moves. “If they open a pharmacy, they will be wary,” he says, “especially for the ones who go out into the community.”

Jaczko calls Geoff May, Target’s director of pharmacy operations, a “top drawer guy” in pharmacy. “I have a lot of time for him,” he says.

As for the franchisees, Jaczko says this news could be an opportunity for those pharmacists looking ahead. “It was a great opportunity for a hundred some odd pharmacists to become franchisees, and it was probably a place to learn the business of pharmacy,” he says.

“Life’s not a straight shot. Any successful entrepreneur has a few failures along the way. The reward is commensurate with the risk. And if you sat down with Warren Buffett, he’d tell you he had tremendous flame outs.”

One Target pharmacist, who asked that his name not be used because due to the limited information coming from Target’s head office, says he heard the news via a conference call during which a announcement was read aloud. Listeners were then given an email address where they could forward questions.

He says while some pharmacists may have suspected the retailer was having trouble, and some stores could close based on low performance, he says they expected “nothing on the scale of what we observed.”

“I think we were surprised and then the anger came the next day,” he says. He says franchisees are disappointed because they invested a lot of resources, knowledge and time away from family to get these franchises up and running.

“That stuff you never get back,” he says. “That’s the most painful part of it; you invested in your own business.”

He says following the news, he took stock of inventory, checked out files and is more immediately concerned about patients, as well as staff, who aren’t covered under the Employee Trust being created by Target. He hasn’t thought of future plans for now, but says he will “look at the damage and then move forward.”

“I’ve haven’t thought about myself yet,” he says.

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