This 125-year-old Canadian drugstore retailer knows that to remain top of mind with consumers it has to evolve. When Rob Sobey was appointed president and CEO of Lawtons Drugs in 2006, he didn’t know much about drug retailing. He had spent the past 19 years selling groceries for Sobeys, parent company to Lawtons Drugs and the second-largest grocer in Canada. Although Sobeys had in-store pharmacies, they were run by another division, so Sobey’s first task when stepping into the Lawtons’ role was to ask: where are we making money?
- Headquarters: Dartmouth, Nova Scotia
- Number of locations as of January 2011: 75
- Founding year: 1886
“At the time, Lawtons’ pharmacy area—which continues to be its key focus—was its biggest money maker,” said Sobey. “So my next question was where can we make more money, continue to nurture customer traffic, and ensure customer loyalty?”
The answer was the front store, which Sobey describes as any category in a Lawtons’ location other than the pharmacy. He then asked his team if there was a destination category within the front store, and the answer was a tentative no. “We had a surrogate positioning, meaning nothing stood out, and nothing enticed customers to look at our drugstores as a destination,” he said.
After learning about the growing popularity of home healthcare as a segment within drugstores, Sobey began to realize it was a good fit, especially for the Atlantic Canadian population that Lawtons serves and the direction the in-store offering had gone over the past few years.
“We’ve been into the soft medical side of home healthcare for about 20 years with consumables and diabetic supplies and the like,” said Sobey. “But we wanted to move beyond those higher volume items and into the rehabilitation side with things like customized strollers, motorized wheelchairs, and vehicle conversions.”
Rethink, restructure, and retool
Moving into such a specialized arena required more than a shifting of departments; it required Lawtons to rethink its employee complement. The company started by asking store managers to step up and learn the new home healthcare area of the business. It then hired sales and service experts in home healthcare and rehab to round out the team.
“Our managers went into the situation knowing we were hiring people who would know more about home healthcare than they do, and they worked with them to help smooth out the transition,” said Sobey. “But it wasn’t a cakewalk.”
Learning a new business and trying to bring it into a mainstream drugstore retail atmosphere was tough, he said. Even now, the company is still bringing together the lessons it has learned during the past five years to make sure it continues to be successful in its newest venture.
“The customers, employees, and vendors are different than what we were accustomed to,” said Sobey. “Especially with the vendors, it was a big wakeup call for us.” At first, some home healthcare suppliers wouldn’t supply Lawtons with their products because they were worried about their brands and Lawtons’ lack of accreditation. “We had to prove that we’re not a flash in the pan and that we are dedicated to home healthcare for the long term,” Sobey said.
The next challenge was dealing with the new employees. Many of them didn’t have much retail experience, but what they lacked in retail they more than made up for by helping Lawtons work through its initial growing pains in understanding how to deal with occupational therapists and other partners in the healthcare arena.
And then there were the customers, which Lawtons now refers to as clients. “Home healthcare customers aren’t customers; they’re clients, and we need to treat them as such,” said Sobey.
Customers coming to Lawtons for its home healthcare services aren’t just walking through its doors by chance; they’re dealing with important, personal purchase decisions that will affect their quality of life. “We had to handle that delicately, and we had to be humble,” Sobey said. “We had a lot to learn and still do.”
As Lawtons evolved its home healthcare offering, it also evolved its asset strategy, which is best reflected in the kinds of stores it operates. It has 75 stores under its belt, three of which it internally calls depot stores.
Depot stores are 23,500 square feet, 10,000 feet of which are dedicated to home healthcare. “We have a showroom, a soft medical area, consultation rooms, and mastectomy fitting rooms, and in the back, we have rehab vehicle conversions and service for products,” said Sobey. “Clients can pull their vans or cars right into the back of these units for conversions as well.”
Those three locations are in Atlantic Canada’s major markets, including Newfoundland, New Brunswick, and Nova Scotia. Sobey said they act like hubs, servicing the smaller markets as well.
From there, Lawtons has home healthcare departments in more than 35 other locations, and the balance of its stores—those that are too small or the market was deemed too small to have a larger presence—have condensed in-line home healthcare sections. Sobey said parent company Sobeys was committed to seeing Lawtons through on its goal of becoming a major player in the home healthcare, but it did require a bit of patience when the process started.
“Sobeys was willing to let our management team take a risk, but it’s only been in the last 18 months that it’s started to see the light at the end of the tunnel,” he said. “We breathed a collective sigh of relief when we saw this working—even I had my fingers crossed behind my back.”
Sobey also had to take a leap of faith when discussing with his own management team what to do about the rest of Lawtons’ in-store offerings. When he arrived at Lawtons, the average store size was about 6,000 square feet but with a high standard deviation of size.
Having worked in the grocery industry for years, Sobey wasn’t interested in filling the stores with food items, but he questioned the logic in focusing on giftware, which is a mainstay of all Lawtons’ larger locations. “I was a Missouri farmer when it came to giftware,” he said.
“I questioned the focus and asked if we could find a better use for the space, but the team said to wait and see.” Wait he did, and he hasn’t been disappointed. The company supplemented its giftware section with a larger greeting card section, and both areas have continued to grow substantially.
In addition, Lawtons is improving its private label OTC health and beauty offering. And although the retailer isn’t as focused on building a major private label food offering within its stores at the moment, if it becomes interested in the future, it has Sobeys’ thousands of private label food SKUs at its fingertips.
“Having a committed owner and parent company is crucial to our success, but we also have a committed and knowledgeable workforce,” said Sobey. “We’re very proud of the 2,500 employees we have and their fortitude. Our team members have proven they are survivors in the face of any and all competitors, and they continue to help provide the customer service and new ideas as we move forward.”