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Shoppers Drug Mart exploring opportunity between food and pharma


Food is becoming more important to Shoppers Drug Mart's overall business, executives with the drugstore chain said during a speech Wednesday.

Patrick Dean, Shoppers Drug Mart’s senior vice-president of category management, and Chong Bang, senior VP of merchandising, told an audience of some 140 from the grocery industry that food and household now make up 30 per cent of Shoppers sales (and it is 30 per cent of front store sales) and that SDM is focusing on convenience and value in the food category.

An earlier version of this story incorrectly said that food makes up 30 per cent of Shoppers' sales.

Shoppers Drug Mart opened its first food store in Brampton, Ont., in 2002. "We weren’t trying to be a grocery store. We were never going to be in fresh, or perishable products," he told the audience at Wednesday's event in Mississauga, Ont., hosted by Food and Consumer Products of Canada.

Today, he said, Shoppers recognizes that what it is good at in the food category is convenience. But the variety of products Shoppers is able to offer in food is widening. Over the next year, Dean said, the retailer wants to “incorporate a better, healthier component to our food offer.”

SDM will also look at adding a four-foot gluten-free section to its stores, as well as a four-foot organic section.

Within the context of a value proposition, Dean said, “we have a lot of runway left when it comes to food.”

Dean added that food will be tied in with the retailer's pharmacy advice. For example, customers will be able to learn what types of foods work best with the medicines they have been prescribed.

SDM grew its market share in food by 6.6 per cent last year.

A big part of SDM's growth in food has been thanks to its food flyer insert (8.8 million flyers distributed weekly), and the weekly flyer that goes to 10 million households. The flyer, said Bang, features a lot of food.

Bang said the retailer is also using other media channels. Shoppers' website, for example, has 1.6 million visits per month, with site visits up 18 per cent last year.

Bang said SDM is also looking at targeting its 1.2 million active e-mail subscriber base with more personalized offers.

Dean also touched on the cosmetics and beauty business at Shoppers during his speech. SDM, he said, now has 28 per cent market share in prestige cosmetics sales in Canada.

SDM's market share growth in 2012 in cosmetics was 46.8 per cent–a number that may not be so surprising when put beside another statistic: 70 per cent of SDM’s customers are women.

Dean added that half of cosmetics products carried at Shoppers' traditional large-format stores are not available at Loblaws or Walmart.

He added that SDM's strength in prestige cosmetics has benefitted from the plight of the traditional Canadian department store. In the U.S., attempts to put such beauty concepts into drugstores haven’t been as successful because American department stores are in better shape than the Canadian ones.

Additional figures shared by Shoppers Drug Mart had the industry’s ears buzzing:

• private label products numbers 7,500 (with more than 700 launches expected this year)

• more than 10 million Optimum loyalty card holders

• budgeted capital expenditures of $250 million for 2012; 75 per cent to be invested in store network, with an increase in retail selling space of approximately 3.5 per cent

• 59 per cent of Canadian shoppers visit SDM at least once a month or more

• average basket size is $17; with about 51 per cent coming from front shop and 48 per cent from pharmacy.

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