Apparently recent provincially mandated cuts to the prices of generic drugs have hurt Shoppers Drug Mart so much that their share price is going down and they've had to cut worker hours.
If, like most people, you've been inside a Shoppers at any point in the 21st century, you'll know that they sell all kinds of stuff. Make-up, personal health and beauty products, food, household goods, supplements, seasonal tchotckes, greeting cards, books, magazines, lottery tickets, post office, photo finishing, DVDs - huge range of stuff.
But, since a cut to the retail price of generic drugs has such a strong impact, it would seem that their margins on all this other stuff - which takes up 90% of the store - is negligible.
So why sell all this other stuff then? And why do they keep getting bigger and selling more and more non-pharmacy stuff? The Shoppers near me recently bought the storefront next door and expanded into it, filling all the new space with non-pharmacy stuff, mostly cosmetics and a new post office. Why pay for more real estate (which is hella expensive) and cosmeticians and post office staff (when labour costs are typically the greatest operating expense of any organization) if your profits are all in pharmacy? Why not just do pharmacy?
2 comments:
I always thought the pharmacy was a negligble percentage of their profits, and the real money was made on the other stuff.
We never heard of a "dispensing fee" til we moved to Ontario. We were appalled! Dispensing is what you do, we have to pay a separate fee for you to count out the pills and put them in bottles? I thought this fee existed because they made no real money on the drugs alone.
Because why else, as you say, would they use all the real estate for all the non-pharma items?
This recent uproar has me wondering if they are using the pricing change as an excuse for cut backs.
I find the whole thing strange and suspicious.
Shoppers' prices on essentials like toothpaste and razors/shaving cream are sometimes double WalMart or Zellers, so I agree that something doesn't wash - the margins on these items must be huge. I suspect that they are massively overextended - they've been building new standalone stores at Tim Horton's pace.
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