Thomas DeVillers
Scott Chojnacki says Community Pharmacy needs to “find a way to increase our customer base.”
A plea in May brought more business to longtime independent Community Pharmacy, but the boost petered out after a month and the store continues to struggle. A variety of factors are to blame, especially decreased insurance reimbursement, which threatens the entire industry.
But, says Scott Chojnacki, a member of Community Pharmacy’s marketing team, “We’re not leaving. We’re in a position of maintaining, sustaining. We’re going to have to find a way to increase our customer base. There’s no way around it. No business can just continue without changing, if it doesn’t grow.”
If enacted, recommendations in a new study may help. The city of Madison has been concerned about the health of downtown independent retail for some time. A draft report, reviewed by the Downtown Coordinating Committee on Nov. 17, offers a number of strategies, ranging from marketing to incentives.
“I think we’re really excited to think about what kind of action items we can take from this report and start working on,” says Rebecca Cnare, urban design planner with the city’s Department of Planning and Community and Economic Development.
Some of Community Pharmacy’s struggles are related to the pharmaceutical industry, while other problems are the same ones facing all brick-and-mortar retail stores, especially in places like downtown, where rents are high and parking generally more expensive.
Community Pharmacy has two locations. The downtown branch, near the intersection of State and West Gorham streets, has seen its customer counts go down each of the last few years. Its year-old Middleton Store has cut back pharmacy service, offering it only from 3 to 6 p.m. weekdays.
“Anytime you put a pharmacy in, it’s not going to be gangbusters right away,” says Chojnacki. There’s been an uptick in business, however, since Mallatt’s, a venerable local pharmacy, closed two stores and ended retail prescription business at two others.
“Bottom line — the insurance companies have put us out of business,” says Mike Flint, Mallatt’s CEO. “Reimbursements for prescriptions in the retail pharmacy world are below our cost.”
It’s the same at Community Pharmacy. “In the last year we’ve seen our reimbursements go down 7 percent,” says Chojnacki, “which is really, really significant when you consider how much it takes to run a pharmacy and pay pharmacists and have all those drugs on hand.”
It’s not just the mom-and-pops that are feeling the sting. “Declining reimbursement rates have been impacting and posing challenges to the entire retail pharmacy industry, both independent pharmacies and national chains, for a number of years,” says Scott Goldberg, senior manager of media relations for Walgreens, based in Deerfield, Illinois.
At Community Pharmacy, “We are doing our best to pursue how that can be changed, but it seems the only way we can make inroads is by political means., says Chojnacki. “Basically what we’re looking for is transparent and fair pricing for drugs. Right now, there’s no system in place where that is happening. If that could happen it would be possible for independent pharmacies like us to survive and thrive.”
Other factors are also hurting business, such as the rise of online pharmacies that deliver drugs via registered mail. And there’s the simple fact that, believe it or not, many people don’t know that Community Pharmacy fills prescriptions.
“I hear that all the time,” he says. “We’ve been around for 44 years, and the prescription pharmacy has always been a part of our store.”
Community Pharmacy began in 1972 as part of student government at the UW-Madison. In 1976 it became a cooperative. Besides prescriptions, it offers a broad variety of herbal extracts, supplements, homeopathic remedies and body care products.
One thing that hasn’t helped Community Pharmacy yet is the surge in people living downtown.
“There was a great deal of excitement about that in the long term for us,” Chojnacki says. “Most people do their prescriptions and their shopping in a very small area. My sense is that we’re not reaching them — certainly not as much as we had hoped to.”
With fewer customers and fewer dollars, the store doesn’t have the advertising budget it used to have. “We’re far more limited in reaching our potential customers,” says Chojnacki. “That’s obviously not what you want to have happen when you’re trying to climb your way out of something.”
Community Pharmacy is trying to compensate for its low advertising budget by emphasizing social media, like its Facebook page. The store also has an electronic newsletter.
But what really sells the store is the experience of being there, Chojnacki believes. “I would encourage people, if they have any friends or family who would benefit from the products we sell here, to actually show them the store. Show it themselves,” Chojnacki says. “I just have to think once people actually talk to us, see how knowledgeable we are, see how much we can help — that makes a difference.”
Fostering “the development of retail that serves everyday household and personal needs” is one of many strategies offered in the new Downtown Coordinating Committee report, prepared by Minneapolis’ Tangible Consulting Services with support from Perkins+Will Inc., based in Chicago.
“Ensuring a Vibrant Downtown Retail Destination: A Retail Assessment and Strategy for Downtown Madison” includes State and King streets and the Capitol Square. The $50,000 study was prepared for the committee and Central Business Improvement District and took six months to complete. The Common Council is expected to consider the report early next year.
“In the end it turned out to be a kind of menu of strategies,” says Cnare. “Now is when the work begins.”
The study suggests several strategies to help local retailers. Some are simple, such as coordinating business hours, branding and marketing the business district, encouraging businesses in basements and upper levels (which are cheaper to rent), and improving “user experience of parking facilities.”
Bigger ideas include assisting retailers in buying their space, giving developers incentives (like tax abatement) to favor local stores, and creating “retail laboratories” to help emerging entrepreneurs get established by giving them a place to have “pop-up businesses.” It also recommends attracting a more diverse mix of residents in downtown housing.
“[The study] will be used to help guide discussions in terms of figuring out what our community priorities are,” says Cnare. “I think there are some low hanging fruit in the document that everybody’s raring to go on, and some things that are going to be harder. But that’s okay because it gives us a chance to talk about those things.”
