Revenues of $90 million and a growth plan that includes opening up to nine stores in the next 12 months at a time when more stores are closing than opening begs the question: what is Pharmaca doing right? It starts with the company’s approach to improving the health of its customers.
Like a typical pharmacy/drugstore, Pharmaca draws on conventional best practices and traditional medicines through its pharmacy department. What differentiates Pharmaca is its inclusion of integrative healthcare practices, which offer complementary treatment options, in addition to traditional methods, to offer a complete healing regimen with minimal invasive interventions.
“Integrative health doesn’t preclude you from using scientific-based or traditional methods; it says there are complementary methods that can help manage your disease state or disease condition,” said Mark Panzer, CEO and president of Pharmaca. “Pharmaca takes this concept and further differentiates itself from other chain drugstores by staffing its locations with practitioners, both in the pharmacy and at the front end.”
To understand how this staffing and pharmacy approach was developed, one must step back 13 years to when Pharmaca’s founder, Barry Perzow, decided to sell his burgeoning natural food store chain, Capers Natural Food Markets, to Wild Oats Community Markets (which was then acquired by Whole Foods Markets).
Although Perzow was able to retire after the sale, he wasn’t ready to sit still and began looking for a new alternative. “He’d been through Europe, was familiar with the apothecaries in Europe and Canada, and wondered why there weren’t any in the US,” said Panzer. “He also didn’t understand why there wasn’t an alternative for drugstores the way there is for grocery stores.”
In 2000, after a number of years researching and developing the integrative pharmacy concept, Perzow launched Pharmaca. By the end of its first two years in business, Pharmaca had opened seven stores in four states.
Panzer said it wasn’t only Perzow’s eye for alternatives that kept the chain growing; it was his understanding of market demand. “People were turning away from having someone else manager their healthcare,” he said. “Today, people want more control over their healthcare and are moving from an acute-based treatment model to one focused more on prevention.”
As consumers trended in this direction, Perzow was right there with a business model to suit their needs. “Consumers need more help at the pharmacy level. They need more informed or practical education on what the alternatives are between just taking a prescription and using complementary and alternative products and methods to manage their condition or improve their health,” said Panzer.
Pharmaca’s ability to talk about keeping people on their medication and preventing people from needing to go on medication in the first place makes it an attractive partner in the fight to lower the cost of healthcare. “We’re focused on helping consumers stay healthy versus trying to manage the health condition that they acquire or that exists already,” said Panzer. “We’re not precluding prescription therapy but rather including complementary and alternative product offerings to provide consumers a comprehensive healthcare solution.”
Beyond a cure
This consumer need brings it all back to Pharmaca’s biggest differentiator: its approach to staffing. Its pharmacies are staffed in the traditional way, with pharmacists who concentrate on science-based healthcare practices.
But on the front end, rather than clerks whose main jobs are to stock traditional OTC, beauty care, and convenience items, staff members are trained healthcare practitioners. “We have homeopaths, naturopathic and osteopathic doctors, herbalists, estheticians, nutritionists, and ayurvedic practitioners,” said Panzer. “That’s who staffs our floor. That’s what differentiates us.”
Staffers understand not only the science behind the products being sold, but how they complement each other or, in some cases, are the go-to supplements to use to manage or improve a health condition. This approach to staffing has helped Pharmaca recruit and retain the professionals it needs to staff each department.
“We have more people who want to work for us than we need,” he said. “Our turnover is extremely low compared to the rest of the drugstore industry, both in the pharmacy and on the front end.”
Pharmaca has developed a following of loyal practitioners who not only want to practice what they’re trained for, but also enjoy the environment in which they work. They also believe in the model Pharmaca is trying to promote as being part of the healthcare system, a position Panzer believes all drugstores should be working toward.
“To help people manage or improve their health condition or disease state using medication therapy management, you have to look at both science-based prescriptions and things that can be complementary,” he said. “We can help our customers become more proactive and preventative in their approach to managing their healthcare.”
Another important piece of Pharmaca’s innovative style as a drugstore chain comes from its approach to product selection. Unlike most drugstore chains, Pharmaca stocks its locations with all-natural and organic products.
“We don’t carry Fritos or Pepsi. We don’t carry alcohol or beverages other than natural ones,” said Panzer. “When you look at it, we’re strictly in the healthcare business. Our front end is geared around that.”
Each Pharmaca location is laid out in specific sections by form and function. Whether letter vitamins, multivitamins, bone health, sleep aids, stress management, diabetes, or beauty care, each department has a particular purpose and a trained professional to assist customers.
To optimize its product selection, Pharmaca uses category managers who are responsible for specific segments of the business, including supplements, OTC, consumables, beauty care, and lifestyles. “These individuals are charged with making sure we stay up to date in the marketplace with items that fit within our model, which includes all-natural and organic products focused on health and sustainability,” said Panzer.
Each product considered for placement has to meet certain Pharmaca criteria before being stocked, and category managers watch the market by going to trade shows such as Expo East and Expo West to see what new vendors have popped up and what new products are hitting the marketplace.
“Because we are a small chain, we’re not as intimidating for new vendors as trying to go directly to a Whole Foods, Walmart, Walgreens, or CVS,” said Panzer. “We can experiment and help bring to market some of the smaller vendors’ and manufacturers’ items or product lines.”
The way Pharmaca stocks its stores is indicative of the chain’s overall outlook. In terms of products, innovation often starts with small players. Pharmaca looks for those innovators and for ways to bring them into the marketplace, introduce them to consumers, and give them a format where they can experiment with packaging, product size, and market approach.
“We’ve got an exclusive in the US to bring an organic facial care line, Primavera, into the US market,” said Panzer. “We’ll be the first to carry it, and we’re introducing it into the US, giving Primavera an entry point to test the waters.”
Pharmaca’s approach to introducing integrative healthcare into the drugstore industry is the same. Although the chain is challenged with educating consumers who don’t understand why this approach is important, given its growth possibilities both from a consumer standpoint and its work with healthcare institutions to manage the healthcare crisis, this company doesn’t have much to lose.
“As we branch out into new markets, we help consumers understand how they can more proactively manage their healthcare to improve outcomes, how they can reduce their costs, and how Pharmaca can help them,” Panzer concluded.