I think Dollar General could take that Popshelf format, reduce some of the toys, increase the drug/OTC mix, throw a pharmacy in the back, and have a very pleasant "drugstore" with a front end that customers would shop (assuming the current Popshelf pricing and mix stay). There is no liquor/tobacco at Popshelf and I don't think it would be needed in this drugstore format either, but I suppose they could put it in- cut off some of the towels/bedding to do that I guess. The light and pleasant vibe of the Popshelf store, along with the color mix, would be pleasing to people who don't feel very well. Dollar General is a highly effective consumables retailer (food and drug). They know what they are doing in those categories.ClownLoach wrote: ↑November 11th, 2024, 12:30 pm
I forgot London Drugs but yes, went there once in Vancouver because I needed an umbrella with surprise rain and the place was packed with customers - who were buying. Don't remember enough about the store though. For my Canadian comparison don't forget that Dollarama seems to be on every corner there although I know it's closer to Dollar Tree than Dollar General.
I did not know that Longs folks went to Dollar General, but it makes a lot of sense. That Longs "center aisle" of islands of grocery products was sometimes oddball brands (similar to Grocery Outlet?) but there were always fantastic deals to be had there. The stores were tired and gloomy but CVS didn't improve the experience at all with their putrid carpet, price increases and removal of all those fun treasure hunt items.
But you're correct the merger and consolidation left us with the worst operators and that is why they're failing now as people look for alternatives to their high prices, depressing stores, and terrible service. And Wall Street instigated all of this with mergers and their constant demand for relentless margin growth. They loved all the service reduction, store maintenance reduction, and price hikes until the customers all went away.
Dollar General would be another one who arguably could run a better front end at Walgreens or CVS than they can themselves. I actually think there needs to be an attempt to see if a totally modern and contemporary treasure hunt plus convenience front end pairs with a pharmacy/drugstore in the back half. Almost like a Five Below type look and feel but with better merchandise. Something to make the place feel fun, energetic and intended to make you smile and feel better if you're going there because you are sick. The medical experience is too clinical and bleak so why does the retail side have to match?
I just don't see that right now either of the duopoly is innovative enough to fix this business. They will be seen as having too many stores to make the kinds of changes needed. They each need to identify a few test markets and then go in and blow up the entire model. Remodel the stores, remerchandise them entirely with the right pricing to get foot traffic and complement the stores they're next to which are usually conventional grocers, change the ads, change everything and market the hell out of the new concept. They need to have a few years of time even if it loses money up front. Then take the wins and roll them nationwide. If it's profitable and generates foot traffic with a permanent reduction of X% of the gross margin then tell Wall Street to suck it up. This is why they're probably better off being under private equity so they don't have to report publicly. As long as the stores make money and have consistent cash flow to stay open then who cares if they're not the best earnings play for Wall Street. I remember those insane quarterly earnings for CVS not long ago and wondered how they could possibly be arguably more profitable than Walmart and other major retailers... Obviously that was not built to last and now those glory days are gone. They need to rebuild the model for the future.
Price is one of the biggest reasons these US drugstore chains have lost the front end. They have a nice assortment of store brand items but the prices on these items are so high there is no draw to buying these items in most cases. The markups on store brand OTC products are insane and these chains count on that as a major profit center.
Dreiling and Vasos both came to Dollar General from Longs after the CVS transaction. Dreiling also spent time at Safeway before Longs. Dreiliing got to Dollar General in 2008 and Vasos got there around the same time. Dreiling retired from Dollar General in 2015. Vasos took over as CEO at Dollar General in 2015 and retired in 2022. Then Dreiling exited retirement and got hired as CEO of Dollar Tree/Family Dollar in early 2023 (stepped down last week due to health reasons) and Vasos returned to run Dollar General again in 2023. Those two along with whoever else they brought from Longs (which I suspect were more than a few private label, merchandising, and buying people on the consumables side) are who made Dollar General into what it is today as far as a highly effective consumables retailer goes. Before they showed up, those stores didn't really even handle many consumables; they had some snacks/household goods but little to no private label and a lot of other random general merchandise junk.
