Dive Brief:
- Hy-Vee acquired ten Weber & Judd pharmacies located in southeastern Minnesota, according to a news release. The pick-up comes shortly after the grocery acquired six Shopko pharmacy locations, along with the patient files to more than a dozen more.
- Nine locations will be rebranded under the Hy-Vee HealthMarket RX name, while one — located inside the Hy-Vee Barlow Plaza in Rochester, Minn. — will be branded under the Hy-Vee pharmacy name. All patient files will transfer to Hy-Vee.
- Hy-Vee said it will notify Weber & Judd customers of the switch and that it plans to retain all 70 employees of the pharmacies. Each location will close on April 12 and reopen as a Hy-Vee outlet on April 15.
Dive Insight:
Hy-Vee’s Weber & Judd pickup comes two months after the chain picked up files from 22 Shopko pharmacies in 17 Midwestern cities, and just two weeks after announcing it had acquired six Shopko locations — four in Iowa and one each in Nebraska and Minnesota — with plans to re-brand them as Hy-Vee Pharmacy stores.
The pharmacy business is tough for retail chains and community operators alike. Increasing fees and lower reimbursement rates are pressuring companies, while low prescription growth and intensifying competition has pushed retail chains to focus on acquiring competitors rather than expanding their business organically.
According to the Drug Channels Institute's 2018 economic report, retail pharmacies account for nearly half of all prescriptions dispensed. But their share of prescription revenue has decreased from 35.9% in 2012 to 32.6% in 2017.
Despite this, pharmacy serves an important role — and for the health-centered Hy-Vee, in particular. According to the J.D. Power 2017 U.S. Pharmacy Study, supermarket pharmacies led all pharmacy channels in customer satisfaction. Other research shows that having pharmacies in-store boosts sales across departments.
Hy-Vee, whose pharmacy locations offer text message notifications, free prescription delivery, free blood pressure checks and private medication and nutritional consultations, is also testing a HealthMarket store format that combines pharmacy and nutrition services with a limited grocery assortment. The first location opened last summer in Des Moines, and Hy-Vee plans to open a second this year in Kansas City.
In an interview with Grocery Dive, Hy-Vee CEO Randy Edeker said HealthMarket is an alternative to the pharmacy model.
“I don’t think the drugstore format is necessarily working. So can we reinvent the drugstore format for certain markets?” he said.
But the core pharmacy format is still very important for Hy-Vee. Although the economics are slowly deteriorating, the opportunity to help customers manage their health and deepen loyalty will only continue to grow.
