It’s really fascinating to witness the evolution of a chain of stores let alone the transformation of an entire retail category. Shopper’s Drug Mart just opened their latest large format concept store down the block in my neighbourhood. My son and I wandered in there and we were both truly amazed.

The only resemblance to its roots or the apothecary of old is that it is predominantly white – shelving, walls, floors and bright lighting make it seem clean and almost sterile. It certainly gleams from the street and I have never been in one of these as large as this one. It has to be close to 15,000 square feet.

Let’s examine what Shopper’s has become: Yes, they have a stylized pharmacy counter and they are certainly profiting in this space with the aging population and the preponderance of new drugs being designed for just about any affliction be it mental or physical; they have a huge presence in cosmetics and fragrances as they smartly took advantage of the merchandising and financial woes of the department stores here in Canada; but what is most surprising is the amount of food and consumables they are carrying today. It is as if they are taking on all comers across categories to become the 21st century version of the “General Store”. The only thing that is missing is apparel like our friends at Loblaws has proffered.

I know that Tesco has opened up Fresh & Easy stores in the U.S. and once mighty 7/11 has almost disappeared from consciousness. Canadian Tire has tried its hand at convenience stores but I believe that Shopper’s is trying to take it to a brand new level. This is an excellent example of extending your brand and the product selection that your core customer buys anyway. It’s all about convenience for their loyal customer base and increasing the basket size to drive higher returns to justify the huge increases in store size across the country.

So what does this mean? It is another way to look at consolidation except instead of the traditional mergers or acquisitions route, Shopper’s has decided to roll up categories organically and out-assort department stores, convenience stores and general stores. The strategy certainly seems to be working.

What is worthwhile to note is that the mastermind behind this strategy was a guy named Glenn Murphy who is now CEO of Gap, Inc. What is ironic is that Gap’s strategy actually needs to be the opposite of Shopper’s successful strategy that he implemented. The assortments and stores need paring down in both Old Navy and Gap brands, not expanding.

Is this really his strong suit? Only time will tell.

TheRetailTherapist 🙂

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