HRG

posted by Dave Wendland

If a major retail drug chain wants to enter a state with a strong pharmacy base without organically growing market share, the best way to achieve it is to acquire one of the area’s foremost regional drug chains. That’s precisely what happened as Kerr Drug struck a deal to become part of the Walgreens family.

I imagine the feelings going through the heads of Tony Civello and his core management team were reminiscent of what our company’s founder felt in 1979. At that time, Dave Hamacher and Marty Stein, two registered pharmacists, were operating one of the most successful regional chains in the country. Although only 19 stores strong at that time versus Kerr’s 76, Stein Drug epitomized health and wellness services. From full optical centers to home health care, pristine front-of-store merchandising to best-in-class pharmacy operations, Stein Drug was the cat’s meow in the Milwaukee market. Walgreens approached Dave and Marty and presented an offer that they could simply not afford to pass up. Ironically, a number of those original store locations remain intact today.the family opted to divest its retail operations

Similarly, Steve Morton and his family operated a regional chain of Morton Pharmacies within the Fox Valley area of Wisconsin. Midway through 2012 they too were approached by Walgreens. Presented with a very difficult decision, the family opted to divest its retail operations and enter a new phase of their business.

Dave Hamacher went on to start D.P. Hamacher & Associates (following his retirement in 2000, the company is now called Hamacher Resource Group). Steve Morton and his siblings focused their attention on the long-term care market. Given Tony Civello’s strong foundation in the retail healthcare space, don’t be surprised if he continues to make his mark on our industry.

What does an acquisition like this mean for other regional chains or independents in the Carolinas? I don’t think it is doom and gloom. In fact, it presents a unique opportunity to strengthen unique services, hone product offerings, and develop closer relationships with loyal customers. Although Walgreens may very well be situated at the intersection of “Happy and Healthy,” there are many other street corners that can remain vibrant pharmacy destinations for area patrons.

Do you believe that additional acquisitions will emerge? What are the two or three best tactics to thwart new competition from national powerhouses?