Are Drugstores Priced Too High to Compete in Grocery?
In a RetailWire discussion back in August, Everyone Getting Into the Grocery Business, Charles Walsh, president of OmniQuest Resources, noted, "No question that mainline grocers such as Walmart, Kroger and their ilk will be affected by the growth of the ‘pantry’ offerings developing in dollar stores and drug store chains. There isn’t a chance in Hades that these chains will unseat the dominant grocers, but they will have an impact on their growth."
Major drugstore chains have been among the most aggressive retailers pushing into groceries, with Walgreens, for example, pointing to itself as one solution to the food desert problem facing the U.S.
Drugstores, to be sure, have some advantages. With chains such as CVS, Rite Aid and Walgreens seemingly on every major traffic corner, location is not an issue. Relatively small store size also adds to the convenience factor.
But convenience comes at a price and the question becomes how much more consumers will be willing to pay for it?
According to market basket survey of a 25 items at stores in the Boston area, the average drugstore tab for these groceries was $102.94 versus $75.60 for the supermarkets.
"Drugstores are not doing shoppers any favors by carrying groceries at convenience store prices," said Edgar Dworsky, founder of Consumer World, which released the survey. "We are not talking about just a penny or two difference per item, but as much as a dollar or two in some cases."
Rite Aid was the most expensive of the drugstore chains, with the market basket adding up to $107.96. CVS was the least expensive of the three drugstore chains at $98.12.
The three supermarket chains in the survey included Market Basket, Shaw’s and Stop & Shop. Supervalu-owned Shaw’s was the most expensive at $83.56, while Market Basket was the cheapest at $68.55.
- Deal or No Deal: Buying Groceries at the Drugstore? – ConsumerWorld.org
- Everyone Getting Into the Grocery Business – RetailWire
Discussion Questions: Is there a workable equation to the price vs. convenience decision for consumers? Will higher prices be a significant roadblock to drugstores looking to pick up share of the grocery market?