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Analyst Says New Drug Stores Might Not Be a Prescription for Success

Posted October 25, 1999

— Pharmacies seem to be on every street corner, and sometimes there is one right across the street from another.

Shopping at drug stores may be convenient, but pretty soon you may drive right by them to get your prescriptions somewhere else.

Drug stores we know today could become a thing of the past. Leading retail analysts believe the chains are fighting off extinction by building more locations.

"In my opinion, it is sort of the last gasp effort to try and regain some of that market share that they've lost to the supermarket chains and the discounters," said retail analyst Ken Gassman.

Gassman said drug stores have lost customers for one simple reason.

"Everything that you buy at that drug store is available someplace else for almost the same level of convenience, certainly for the same low prices and certainly with a greater assortment in many cases," said Gassman.

The director of pharmacy atKerr Drugadmits that pharmacies are facing stiff competition, but he adds that there is more prescription business out there thanks to aging baby boomers.

"We can't see 10 to 15 years down the road, but we can see five years down the road. We know that prescription volume is going to double in the next five years," said Mark Gregory, directory of pharmacy at Kerr Drug.

Customers say there is another thing that may keep drug stores around a little longer.

"It's just a mindset. You go to the drug store to get your drugs and your beauty supplies and everything," said customer Alicia Carlucci.

Gassman did say his opinion is a minority one in the retail analyst community.

Kerr Drug said that it is trying a number of different things to try and differentiate itself like free delivery, drive-up windows and eventually being able to order prescription refills over the Internet.


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