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Local Economic Snapshot Drugstores

Local Economic Snapshot Drugstores

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Published by: The Dallas Morning News on Sep 03, 2012
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05/04/2013

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LOCAL ECONOMIC SNAPSHOT | DRUGSTORES

Walgreens, CVS top D-FW prescription sales
By MARIA HALKIAS
Staff Writer mhalkias@dallasnews.com

Some of the best corners in Dallas-Fort Worth today house a Walgreens or a CVS drugstore. The two largest U.S. drugstore chains — CVS is No. 1 and Walgreens is No. 2 — also dominate the local $3.5 billion-a-year prescription drug market, according to recently released market share data from Chain Store Guide. In addition to each having more than $1 billion in prescription sales in North Texas, the retailers’ front-end sales, or nonprescription sales, represented an additional $2.2 billion in local sales last year. CVS stores are more productive. Its D-FW nonprescription sales totaled $1.6 billion last year vs. Walgreens’ $555 million.

Dallas-Fort Worth* pharmacy market share
Walgreens and CVS continue to dominate area prescription sales. Each national chain had more than $1 billion in local sales last year. Area Prescription sales Company stores (in millions) 2010 market share 2011 market share Walgreens CVS Wal-Mart Kroger Albertson’s Tom Thumb Target Sam’s Club Brookshire Food Store; Super 1 Foods H-E-B Costco Wholesale Market Street Other** 171 181 102 78 49 59 41 21 21 4 9 6 67 $1,019 $1,006 $431 $286 $219 $170 $86 $56 $51 $27 $26 $15 $133 11.5% 9.4% 7.1% 4.7% 2.3% 2.0% 1.3% 0.8% 0.7% 0.4% 3.3% 27.8% 28.0% 12.2% 8.1% 6.2% 4.8% 2.4% 1.6% 1.5% 0.8% 0.7% 0.4% 3.9% 28.9% 28.5%

*Covers these counties: Collin, Dallas, Delta, Denton, Ellis, Hunt, Johnson, Kaufman, Parker, Rockwall, Tarrant and Wise. **Including independents such as Dougherty’s and Preston Road Pharmacy.

How well are chains selling the rest of their stores?
CVS, Walgreens and independent drugstore chains sell more than prescriptions. The industry calls that business its front-end sales. It includes everything from food and drinks to health and beauty products. Company CVS Walgreens Other Front-end sales (in millions) 2010 market share $1,640 $555 $38 1.7% 24.6% 1.7% 69.4% 24.9% 2011 market share 73.4%

Household demographics
Here’s a snapshot of the Dallas-Fort Worth market generating these pharmacy sales: Population Percentage of U.S. population Number of households Percentage of U.S. households Average persons per household Average age Average household income Per capita income Median household disposable income Income devoted to food and beverage at home 6,475,391 2.08% 2,360,623 2.02% 2.71 33.4 $79,073 $29,422 $48,165 5.7%

Fastest-growing store categories
It’s mostly edibles that are showing growth in drugstores.
Annual change in dollar sales for 52 weeks that ended July 7
20% 15% 10% 5% 0

I Drugstores I All types of stores combined 11% 7% 3% Crackers Wine 8% 2% Juices 8% 1% Carbonated beverages

18%

9%

2% Salad dressing, prepared foods, deli

Market area ethnicity
Race or ethnicity for Dallas-Fort Worth area households:
White Hispanic Black Asian/ Pacific Islander Other

Quick facts on pharmacists
Pharmacists now mostly work for big chains and are hourly employees. Some still own their own independent pharmacies. U.S. D-FW area Annual pay, mean Hourly pay, mean Entry-level education Number of jobs Job outlook 2010-20 Employment change, 2010-20 $112,160 $53.92 Doctoral or professional degree 272,320 25% growth 69,700 $110,130 $52.95 Same 3,490 N/A N/A

65.4% 27.8% 15.1% 5.5% 14.1%

NOTE: Does not total 100% because residents may be in more than one category

SOURCES: Chain Store Guide; Alteryx; U.S. Bureau of Labor Statistics; Nielsen

The bottom line
“CVS and Walgreens want to grow their nonprescription sales. That’s why you see more coolers and food aisles in the front of the store. The idea is if I can steal more of your convenience shopping trips then maybe I can end up with your prescriptions. The reverse is true with Wal-Mart, Target and the supermarkets.” “You can tell from the sales increases at Walgreens, CVS and Rite Aid that they’re doing a nice job of innovating around food because many of the big prescription drugs, like Lipitor, are off patent and are now generic. That’s why they’re playing the convenience card so heavily.” “Nielsen’s research shows that oneand two-person households are more likely to shop at drugstores and convenience stores. Nielsen’s Todd Hale mentioned that he always wondered why drugstores didn’t include gasoline pumps. He noted that Walgreens is now adding electric vehicle charging stations. Dallas is among the first markets to get them.” Maria Halkias, staff writer, The Dallas Morning News

Craig Rosenblum, partner, Willard Bishop

Todd Hale, senior vice president, consumer and shopper insights, Nielsen

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