Drug retailer’s brand losing ground to competition

Shoppers Drug Mart Corp.’s brand image has been hurt by increased competition from retailers such as Loblaw and Wal-Mart expanding into pharmacy.

In its “Best Retail Brands 2011” report, researcher Interbrand said that the drugstore’s “brand value” has fallen 17% to US$2.6 billion from the previous year.

Along with increased competition, Shoppers Drug Mart has had to deal with new generic drug regulations, the departure of CEO Jurgen Schreiber and reduced capital expenditures, all of which have eroded the brand.

Another issue the retailer faces is the dichomtomy between its new and older retail spaces as it has expanded into new larger store formats, and moved into food and electronics.

"There's an issue of consistency with them that will be remedied over time," said Stephen Weir, manager, client services at Interbrand.

One area that helped grow the brand for the retailer was going into grocery. "It was a natural extension and helped drive traffic," said Alfred DuPuy, Interbrand managing director.

To prevent further brand erosion, DuPuy suggests Shoppers Drug Mart go back to the basics, and think across a number of fronts to grow their brand. "They need to talk amongst themselves and do industry research to make sure what they're trying to do is what they're actually doing," said Dupuy. "Are there other areas or categories they can expand into or are there areas that they shouldn't be involved in?"

It’s not only competition on its own home front that Shoppers Drug Mart has to deal with. As Canadian brands face increasing competition from new U.S. entrants into the Canadian market, they’ll need to offer compelling reasons for customers to remain brand loyal.

Interbrand used three aspects in making its assessments of a brand: financial performance, role of the brand in the purchase decision process and brand strength.