London Drugs pumps sales with service and selection

Drug Store News,  Feb 2, 1991  

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London Drugs pumps sales with service and selection

RICHMOND, B.C. -- It's after 6 p.m. at London Drugs' airy suite of executive offices, and nobody shows any signs of leaving. The place is a bustle of quiet but intensive activity, with operations people, secretaries and shirt-sleeve executives scurrying in and out of one another's offices as though it were mid-morning.

It's one of many signs that this is no ordinary retail company. "I have to tell people to go home at 7 p.m. a lot of nights," said Wynne Powell, vp-marketing and retail technology. "You can't buy that kind of attitude."

Controlled frenzy

London's 35 large-scale drug and general merchandise stores in western Canada bustle with the same kind of controlled frenzy, with throngs of shoppers buying everything from toothpaste and snacks to personal computers and zoom lenses. They pushed sales at London to about $600 million last year, or more than $17 million (Canadian) per store. With high-end computer systems ranging into the thousands of dollars and traditional drug store items still accounting for 65 percent of the business, some units in the Vancouver market are doing almost twice that in annual sales.

London's high-energy corporate culture and high performance standards are set by a small cadre of top executives led by chairman, president and ceo Tong Louie. A youthful 76, Louie was the recipient last year of both the Order of Canada and a doctor of laws degree from the University of British Columbia. In his spare time, he runs; last year, he ran a marathon in Florida.

At the day-to-day helm is executive vp and chief operating officer Mark Nussbaum, an American who once served at Sun Ray Drug in Philadelphia and as a vice president at the defunct Whelan chain in New Jersey with Phil Wise and Jack Futterman. Twenty-one years ago, Nussbaum brought his ideas about broad-based merchandise selection and customer satisfaction to London's fledgling, three-store operation at the behest of its former owner, which later sold to Tong Louie. The rest, as they say, is history.

"About 19 years ago, I coined the phrase, `Think like a customer,' and we still try to treat every customer with the same respect and warmth," Nussbaum said in a rare interview. "Customers respect us; we have surveys showing that 80 percent of the population in the lower mainland [Vancouver and other cities] shop us at least once a month."

Turn on a dime

The reason, said Nussbaum and other London executives, is service, extensive selection and perceived value. "We're unique in our pricing and assortments--we find things customers don't expect and make it fun to shop. And because we're totally centrally controlled, we can turn things on a dime if something doesn't work."

"We don't try to con our customers," added Len Marks, vp-general merchandise and pharmacy. "We don't always have the lowest price, but we're competitive."

London is aided by sophisticated automation and information systems; it was Canada's first drug chain to install checkstand scanning chainwide, and its technology people are pushing hard to upgrade inventory control and purchasing systems. Computer-assisted planogramming--utilizing A.C. Nielsen's SpaceMan and SpaceMax systems--is already in place.

"Within three years, we'll be on a par with Wal-Mart in terms of technology," Nussbaum says. "We're looking for perpetual inventory capabilities within three years, where buyers will be able to call up any store and get an item count and other information on any item. We're already getting velocity reports and other information."

The chain's unique position among Canada's drug chains is most apparent in what Marks terms its "fabulous selection."

"We think we're the best-merchandised stores in North America," he said. "We're also in-stock 99 percent of the time--we work hard at it."

Sixteen of London's stores feature complete computer sales and service centers, staffed by knowledgeable salespeople drawn from the computer industry. "We're a significant chunk of the computer business in western Canada, and we have an IBM franchise, which is hard to get in this country," noted Powell.

Powell's retail technical group also handles the merchandising, purchasing and marketing of photofinishing services, electronics, cameras and photo supplies. Drug store areas like pharmacy, HBA, greeting cards, books and convenience foods, are handled as a separate division under Len Marks.

Both divisions put a heavy emphasis on in-store training and customer satisfaction.

Employees are encouraged to communicate problems to the top and to advance their careers aggressively, Powell said. They're also encouraged to maintain high standards in merchandise presentation, display and customer service.

Rounding out London's 6-man team of top managers is vp-retail stores Jerry Bleet and vp-finance Norm Hoff. Together, the six form what Powell calls a "flat" management team devoted to "consensus management." For the present, London adheres to a controlled, slow-growth policy, adding two or three new stores a year funded out of internal cash flow. It's goal: $1 billion in sales and 50 stores within five years.