Lewis hones broad product strategy
How does Lewis Drug thrive in a crowded and super-competitive marketplace? The company’s success formula is no big secret, said Bob Meyer, SVP of merchandise and marketing, but that doesn’t mean it’s easy to replicate. “[We try] to find niches in the marketplace where we feel we can do better than our competition,” Meyer explained.
Longevity and deep roots within the communities Lewis serves also help cement long-term customer loyalty. “Consumers look at Lewis as a convenient and reliable retailer that’s been there now for 75 years,” Meyer said.
To that end, Lewis’ top merchant said, “We try to portray in our marketing, ‘We live in the same community you do, so we experience the same challenges you do. And we’re going to react to what your needs are. If you tell us you want something, we’re going to try to fill that need for you.’ That’s part of the reason we’re successful. We can react to things very quickly, compared to some of our competition. ... That’s a big advantage for us.”
To help it get an even better read on customer preferences and behavior, Lewis will soon introduce a new mobile app designed to make shopping easier and more convenient. “That’s going to help us track even more information on consumer shopping patterns,” Meyer said. The new app will give participating customers access to exclusive promotions and product giveaways. Meyer added, “We’ll be able to monitor everything they purchase, and when.”
‘Our offerings are wide’
Meyer, who joined Lewis in 1977, has been a key architect of the company’s two-pronged approach to retailing, encompassing both large-scale stores serving a broad range of needs in its more urban and suburban locations, and a network of much smaller and more traditionally merchandised drug stores serving smaller towns and rural areas.
“People look at Lewis as a big convenience stop because of our multiple locations and convenient locations in a lot of different markets, so we sell a lot of everyday consumable items,” Meyer added.
“In the larger-format stores, our offerings are wide,” agreed Scott Cross, EVP and CFO. “We’ve attempted to do some of those things in the rural communities, but where we’re most successful in those communities is just being a complete healthcare store for them. The focus there is prescriptions, OTC medications, vitamins and health aids. ... We’re really first and foremost a healthcare store for those communities.”
One of Lewis’ most distinguishing characteristics in its larger stores is a massive seasonal selection of lawn and garden plants and supplies. “That’s one of our largest categories, volume-wise, next to pharmacy … in our larger store markets,” Meyer said.
Lewis Drug president and CEO Mark Griffin added, “Our garden centers are bigger than Walmart’s. It’s our second-biggest division outside of pharmacy.” Lewis’ lawn and garden departments, which extend into the parking lots of its larger stores during the three-month selling season, drive high margins and fast turns.
Also gaining traction is a rapidly expanding pet supply department, “especially in the larger-format stores,” said Meyer, where Lewis has added more high-end brands “to become that complete pet stop.” The bet is paying off. “We’ve seen tremendous growth in that area in the last 18 months,” Meyer added. “Our volume has more than doubled. And we expect double-digit increases over the next few months, because we feel that there’s a real niche.”
A more efficient shopping space
In spite of expanding front-end categories and its broad-based approach to merchandising, Lewis’ merchants are finding they can condense the product mix in larger stores and reduce the store footprint from as much as 50,000 ft. — the current size of its largest units in the Sioux Falls market — to a new retail format half that size. Reducing the square footage in newer Lewis Drug stores will allow for a far more efficient use of space, lower operating costs, better turns and easier access and shopping for customers, executives said. The first two of these new, smaller stores are now under construction in Sioux Falls.
“We think 25,000 sq. ft. could be our sweet spot,” Cross said. “We think we’re going to be able to maintain a large majority of our sales and still offer the same [categories and products],” he added. “And the first one to open [in 2018] … will give us a much better location, where it’s easier to get in and out of our parking lot, and a more accessible drive-up window — all of those things that will make us more convenient for our customers.”
Lewis also is developing a new, 7,000-sq.-ft. store in downtown Sioux Falls. That store, set to open on Phillips Avenue some time in 2018, “will be an entirely different animal,” corporate VP Nikki Griffin said. “It will be a boutique assortment of product, and will cater to that new clientele who either live or work — or both — in downtown Sioux Falls.”