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Following Shoppers Drug Mart's dive into fresh

Shoppers Drug Mart is going beyond its pharmacy roots with a big, new fresh food offering.

CANADIAN TIRE STOCKS CURTAINS ALONG with car mats. Best Buy carries mascara and laptops. Perhaps it’s not surprising, then, that Shoppers Drug Mart just started selling pork tenderloin and mangoes under the same roof as diapers and cough medicine.

Putting fresh into Shoppers will help its new owner, Loblaw, penetrate big-city neighbourhoods where it’s hard to fit large grocery stores. President’s Choice products are also being added to Shoppers. There are plans for these to eventually replace Shoppers’ Simply Food and Nativa Organics private labels.

But selling fresh–everything from organic chicken and peppers to raspberries and steak–comes with its own set of challenges.

Will Shoppers be able to change purchase behaviour for a banner associated more with medications than melons? And how will it differentiate itself from other fresh retailers?

Shoppers’ fresh pilot launched Sept. 20 at six Toronto stores. To make room for fresh, underperforming categories, such as photo- finishing and books, were removed in some cases; seasonal and magazines were relocated.

Convincing people to buy fresh products in a drugstore might be a tough go.

Stewart Samuel, program director at IGD Canada, says, “It’s a little bit like the push toward fresh foods in gas station stores; there’s sometimes more of a psychological barrier.”

Shoppers has sold snacks, milk and dry groceries for years, but fresh is a big leap, notes John Torella, senior marketing advisor at J.C. Williams Group.

“If the consumer has traditionally associated a particular range of shopping with a trip to a Loblaws or Longo’s or Sobeys, it’s really challenging to get them to suddenly take a small portion of that shopping behaviour into a new setting,” says Anthony Stokan, partner at retail consultancy Anthony Russell.

But it’s not as if Shoppers expects people to do their full weekly shop there.

Tammy Smitham, the VP of communications, says Shoppers aims to meet “fill-in” needs. In order for the new food offering to succeed, Torella says, “It’s got to save the hassle, the time, the confusion of going into a big store.”

Shoppers should fare well on that front, given its enviable presence in urban markets. The fact that numerous locations are open until midnight or 24 hours helps, too.

So does the quality of fresh in the pilot stores. On a recent visit to one in Toronto, a woman in line remarked she didn’t realize the store sold sushi, and stepped away to check the selection beside a sign that read “Made and Delivered Daily.”

Trial stores also carry artisan Ace Bakery bread.

READ: Shoppers Drug Mart starts testing fresh groceries

“I think that distinguishes from a convenience store. You don’t expect that quality of bread; you’d expect Wonder bread,” says Wendy Evans of Evans and Company Consultants.

Canadian drugstores haven’t typically sold fresh food. But south of the border, Walgreens recently added juice bars, sushi chefs and prepared foods. Samuel says these are “all backed up with a very strong core grocery offer as well.”

In the U.K., Samuel says big super- market operators have developed convenience models, including Tesco Express and Sainsbury’s Local. The British grocers have adapted their existing supply chains and expertise in fresh to the smaller formats. Likewise, Shoppers can rely on Loblaw’s extensive distribution network, plus fresh and HMR know-how.

But a downside became apparent during another visit to the trial store when a male customer in the fresh section wondered aloud, “Why would I get food here when Loblaws is just down the street?”

READ: Hot and fresh foods coming to Shoppers Drug Mart

Torella thinks Shoppers should take a local approach to compete with grocers. He says each Shoppers must carefully edit its assortment based on the needs in the local market rather than providing an overly broad fresh offering.

Fortunately for Shoppers, it can raise awareness with its weekly flyer. It’s also got the big kahuna of loyalty–Optimum– in its corner.

The program is a fantastic way to advertise promotions to individual customers, says retail consultant Ed Strapagiel. Shoppers’ and Loblaw’s loyalty programs reportedly have 15 million members combined.

Smitham didn’t have specifics on how long Shoppers will test the fresh grocery concept or its expansion to other stores. Success is not assured either.

“When you get new concepts in retail,” notes Strapagiel, “you can theorize all you want, but until you throw it out there and see what happens you simply will not know.”

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