Bill Mather, a pharmacist in the small town of Greenfield, Iowa, wanted to make sure his neighbors could fill their prescriptions without traveling long distances or incurring long wait times.
So when drugstore chains and big-box stores began to expand into rural markets, he sold his drugstore in 2007 to Pamida, a grocery chain owned by department store company Shopko, hoping that it would keep his practice alive. Then, in 2019, when Shopko declared bankruptcy, closing more than 360 stores, he and another Shopko pharmacist helped open a new pharmacy for the town of about 2,000 people.
Across the country, pharmacists like Mather are filling the voids left by the withdrawal of large drugstore chains and big-box stores with pharmacies from small communities. In some areas, pharmacists who were laid off when large chains closed are now opening new pharmacies, often in the same locations. In other regions, owners of pharmacies in neighboring towns are opening new branches. Without them, many communities would have been left without a pharmacy.
It wasn’t like this before. Big-box stores like Shopko began aggressively pushing into the drugstore market 30 years ago, hoping customers would fill their carts while the store filled their prescriptions. Large chains have established footholds in small towns by acquiring independent pharmacies or driving them out of business.
According to the Bureau of Labor Statistics, the number of pharmacists employed in big box stores peaked at more than 31,800 in 2012. But as online sales and mail delivery of consumer goods and drugs on orders were increasing, the big box stores had no reason to stay. By 2019, the number of big-box pharmacists had fallen to less than 18,000. (The bureau no longer reports the number.)
“Big box stores have entered smaller and smaller communities, and in essence they’ve outperformed every other pharmacy in the area,” said David Zgarrick, professor of pharmacy at Northeastern University in Boston. “Now they are completely gone and with them the pharmacy services and everything they used to provide. They left a void in many of these places.
With CVS Health’s recent announcement that it will be closing 300 stores per year for the next three years, more cities could lose another tier of pharmacies: large drugstore chains. CVS has not yet specified which stores will close.
“We consider a number of factors when making these decisions, including local market dynamics, population shifts, store density and the needs of underserved communities,” said Mike DeAngelis, gatekeeper. word of CVS Health. “In fact, reaching underserved populations has been a priority for us throughout the pandemic, like access to the tests and vaccines we have provided.”
Kathleen Bashur, spokesperson for the National Association of Chain Drug Stores, said pharmacy chains of all types and sizes play an important role in meeting the health and wellness needs of communities across the country. country. “The decision to close a store is difficult,” she said.
Zgarrick attributes much of the decline in big-box pharmacies to Amazon and other online merchants that have undermined the profitability of their non-pharmaceutical sales. In the past, big box stores could treat drugstores as loss leaders and offset that revenue with the sale of other products. Now, Zgarrick said, big box stores have to ask themselves tough questions about how to allocate their space: “’At the end of the day, how are we going to make the most money per square foot? Is it by having a pharmacy or by selling tires? »
Nelson Lichtenstein, a history professor at the University of California, Santa Barbara who has chronicled the rise of Walmart, said big box stores are constantly reassessing their store locations, closing less profitable and opening new ones in places where they think they can make money.
“They just keep kind of a slow churn,” he said.
The cost to build a big-box store is about $10 million, Lichtenstein said, and those stores can generate $200 million in annual revenue. Pulling out of a site is therefore not a huge loss for a large company if revenue declines.
“So they’re going to close the stores and leave a town devastated because Walmart put the other guys out of business,” he said.
Walmart did not respond to questions about its closures.
The growth of online options for all kinds of items, spurred by home shopping during the covid-19 pandemic, has put additional pressure on big-box stores.
“Now they’re less likely to make those purchases on the go than they were five years ago,” said Adam Hartung, business strategy consultant at Spark Partners. “They’re not going to say, ‘Oh, let’s get a prescription and, while we’re at it, walk around the store and look at the vacuum cleaners. It doesn’t happen anymore.
Hartung said the US retail market has an excess of stores, up to 40% compared to other countries, and more big box stores are expected to close in the coming years.
But the closures offer opportunities for regional chains or pharmacists willing to strike out on their own.
In Orofino, Idaho, the mayor, the chamber of commerce and many residents called on pharmacist Rod Arnzen after Shopko pulled out. So Arnzen began delivering to Orofino from his store 23 miles away in Kamiah. He then opened a branch in Orofino in the building left by the pharmacy that had previously sold its business to Shopko.
Andy Pottenger, who owns a pharmacy 45 miles away in Lewiston, Idaho, added a second pharmacy in Orofino, which has a population of about 3,000, after receiving hundreds of responses to an ad he placed in the local newspaper for assess interest.
“It was overwhelming,” he said. “It kind of cemented the idea that we should do it.”
In Montana, Mike Matovich, a third-generation pharmacist, opened stores in Roundup and Hardin after Shopko closed.
“It’s a pretty big community and there’s a hospital and a clinic in town,” Matovich said of Roundup, “and all of a sudden people are driving 50 miles one way to fill an antibiotic for a kid sick.”
Matovich has seen what can happen when a rural community loses its only pharmacy.
“If there’s a hospital clinic and a pharmacy there, they’ll do pretty well,” Matovich said. “Once you lose one or the other, communities start to struggle because people start leaving to be closer to health care.”
For the residents of Greenfield, Iowa, Shopko’s decision meant they had to scramble. Shopko had sold the pharmacy records to a Walgreens 50 miles away. Some people have turned to Hy-Vee grocery stores in neighboring Iowa towns Atlantic or Winterset, or Walmart in Creston, each at least a half-hour away. Others have gone to mail order.
“It was pure chaos,” said former Shopko pharmacist Rachel Hall. “People were trying to figure out what to do, where to send their prescriptions.”
Mather, Hall and the rest of the Greenfield staff were only given a week’s notice after being told they had nothing to worry about. Their pharmacy was among the fastest growing locations in the chain.
“We literally had Shopko trophies that we threw away when we left,” Hall said.
Former Shopko executives contacted by KHN declined interview requests. Shopko Optical, which operates in 11 states, said it is no longer affiliated in any way with Shopko Stores and declined to comment.
Mather and Hall did not want to abandon Greenfield. They contacted NuCara, a chain of 30 retail pharmacies in five states, and he agreed to help them open a pharmacy in their city.
NuCara opened pharmacies in two other communities that Shopko left. In the towns of Cokato and North Branch of Minnesota, NuCara partnered with pharmacists who had previously sold their pharmacies to Shopko, said Brett Barker, vice president of pharmacies for NuCara.
In Greenfield, Hall and Mather weren’t allowed to speak to customers at the new NuCara pharmacy until Shopko officially closed. Hall said Shopko management wanted to retain the value of the customer files it sold to Walgreens. So Hall and Mather asked the local chamber of commerce to spread the word.
They found temporary space at the local hospital, which moved its billing office to accommodate them. A year later, they moved back to their old location in the old Shopko building, leasing the space to new owners, who operated a housewares store there.
After serving three generations of Greenfield customers, Mather was relieved the town still had a pharmacy. But he couldn’t forget how Shopko ended things.
“The way they slammed the door, I was really unhappy with that,” Mather said. “It wasn’t fair to all the people at Greenfield Pharmacy and the people of Greenfield. Shopko couldn’t care less.
Still, the move has come full circle for Mather. Greenfield still has a pharmacy, like when he started at Murdy Drug in 1968. It’s just a different storefront, with a new name on the sign.
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