Kopp drug carves niche with pricey giftware

September 13, 2004

Article

Kopp drug opens 10th store in PA and carves niche in gifts and cards

CHAINS AND BUSINESS

Kopp Drug carves niche with pricey giftware

Leaded-glass fireplace screens, $200. A set of life-sized Christmas carolers, $1,500. Porcelain dolls, $200. Anthony-Thomas and Asher's chocolates, $12-$14. Items up for grabs on e-bay?

Wrong. These are the latest offerings from Kopp Drug, a 10-store drug chain based in Altoona, Pa. In an effort to stand out from a slew of competitors, including CVS, Eckerd, Wal-Mart, and Kmart, Bill Earnest, R.Ph., COO of Kopp, and Morley Cohn, R.Ph., president, are making it their business to specialize in unique giftware and Hallmark greeting cards.

Kopp Drug is so serious about growing this niche that it has allocated 3,500 sq. ft. just for gifts in its recently opened 10,000-sq. ft. store in Altoona. This store was built after Weis Markets, Kopp's landlord of 30 years, decided not to renew Kopp's lease because the supermarket chain was opening its own pharmacy. Armed with its giftware concept, Kopp Drug opened its new pharmacy very close to Weis Markets.

In each of its other nine stores there is also a separate gift department called Samantha's. In addition, there are two freestanding gift shops called Isabella's that are touted as divisions of Kopp Drug.

Earnest, who is responsible for importing gift items, spends a month in China every year buying with a group of small chains. Noting that the lion's share of the design budget for the new store was used for the gift area, he said it was designed so that the gifts could be displayed in the manner that people show off items in their homes. Four wall pillars are boxed with cherry cabinets featuring glass triangular shelves on which merchandise is displayed.

Gift items range in price from a few dollars to a few hundred dollars. "Our biggest emphasis is on home décor. Collectibles are not moving as well as they once did. People are buying things to freshen up their home," said Earnest.

In addition to a keen sense about which items to carry, knowing which lines to reduce or discard has also kept the chain one step ahead of its competitors. For instance, Kopp has reduced its cosmetic lines as a result of losing sales of higher-priced cosmetics to department stores and lower-priced lines to discounters. The chain is also discontinuing sales of Russell Stover candies and is taking on the more-pricey Anthony-Thomas and Asher's candies, which sell for about $12 to $14 a pound.

What's more, the chain has discontinued its half-priced greeting card business and has already converted five stores to Hallmark cards.

Yet another strategy has the chain carrying products from local companies, including dairy products, pretzels, and even pizza sauce.

The chain has also made the decision not to sell tobacco. "We felt it was a lot of dollars to tie up for not a lot of profit, and it's a situation in which we don't feel we should be selling tobacco," said Earnest.

Kopp operates stores of varying sizes, including 1,500 sq. ft., 4,000 sq. ft., and 6,000 to 7,000 sq. ft. "We adapt our locations to our neighborhoods rather than have every store look alike," said Ernest. We like to have our employees know our customers and our customers feel comfortable talking to our pharmacists.

Another tactic that keeps Kopp Drug ahead of the pack is the work environment it provides its staff. Earnest said many of the chain's 25 R.Ph.s have been with the company for 15 or more years. "We encourage family values, and if someone needs time off, we accommodate that," he said.

While Kopp Drug appears to have found a formula for success, the chain isn't taking any chances. Kopp has a customer loyalty card program, in which patrons earn points to use for future purchases. Using the card, customers can also obtain a 10% discount every Tuesday on anything in the store except prescriptions.

In addition, the chain relies heavily on TV commercials, which tout the contribution its pharmacists make to the community. "We provide hypertension screenings and do a lot of brown bag days," said Earnest.

Finally, Cohn, whose father is also a pharmacist (he opened the first Kopp store), intoned, "We want to be your neighborhood store." Apparently, consumers find that to be so. The chain was voted favorite hometown drugstore for two consecutive years by the Altoona Mirror.