A new Quebec pharmacy chain is banking on the theory that aging baby boomers like stores that are close to home. Thus the brand name Proxim, short for the word proximity.
Proxim was created earlier this year by the amalgamation of two independent pharmacist groups, Groupe Essaim and Gestion Santé Services Obonsoins. With 291 stores, mostly in Quebec, it’s now the third largest drugstore chain in the province in terms of outlets, behind Jean Coutu and Uniprix, and has about $850 million in sales compared to Jean Coutu’s $1.6 billion.
Proxim’s retail and marketing strategy, however, differs from other drugstores, which have positioned themselves as places to also buy groceries and general merchandise. As president and CEO Michel Chartrand trumpeted during the banner’s launch: “Ketchup, windshield washer fluid and dog food: not at Proxim!” The reason? Fierce competition in consumer products among drugstores has led to reduced profit margins. On the other hand, the aging population and rising cost of prescription drugs have driven up profits of health-care items. According to Proxim, consumer products, which accounted for 70% of sales in drugstores several years ago, now only account for 30%.
Proxim’s approach isn’t bad given that its stores average 3,000 square feet, much smaller than a typical Jean Coutu or Pharmaprix (Shoppers Drug Mart). The strategy also fits the conclusions of HEC Montreal marketing professor Jacques Nantel- hired by Proxim as a consultant- who says the post-55 set spends 20% less time in big stores.
But just because ketchup won’t flow from the shelves “doesn’t mean we’ve abandoned the front shop,” says Proxim director of marketing Véronique Lettre. “Seasonal items, baby items and household items are all in decline,” says Lettre. The focus is shifting to high-profit personal health and well-being products that are closer to the drugstore’s original raison d’être.
For instance, three in-store Fruits & Passion mini-boutiques have been set up that can add up to $200,000 in revenues. This fall will see the launch of environmentally friendly and organic products-ranging from deodorant and toothpaste to vitamins-and a line of specialized skin care items.
Proxim is using the tag line “Votre destination bien-être” (Your well-being destination) and is running an awareness campaign created by Bleu Blanc Rouge. In one 15-second French-language TV spot a hairdresser announces the “good news” that Proxim has arrived. A second phase of ads this fall will show the Proxim difference.
While the focus this year is on consolidating the Quebec network, next year Proxim will look to Ontario, where it has just 15 stores (plus 15 in the Maritimes). It aims to get one Ontario independent pharmacy per month to join the banner.
But Mark Grenville, a Toronto retail leasing consultant with Grenville International Consulting, says there aren’t many independent pharmacies in big cities like Toronto, and it could be tough to implement the “cater to the baby boomer strategy” in small towns where “the public often perceives larger stores as being able to offer better prices.” Unless Proxim can really differentiate itself, “I don’t think it’s going to be so easy.”
