Target Pharmacy Question

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Hi everyone,

I'm a Canadian pharmacist whos been given the opportunity to franchise a Target pharmacy here in western Canada.

Performance wise (e.g. script count, OTC sales etc) how does Target fare in the states? It's hard to make a decision without having some numbers because I'll be going up against Safeway, Shoppers Drug Mart and some small mom and pop shops near by.

Thanks for any input.

Pharmer187

Target has the absolute worst computer program. It takes twice as long to process a rx there as compared to most pharmacies. The system is circa 1990. They don't use bar code check or scan paper rx. Their bottles are annoying. Most of their pharmacies do not fill a lot of scripts.

Originally Posted by genesis09

Target has the absolute worst computer program. It takes twice as long to process a rx there as compared to most pharmacies. The system is circa 1990. They don't use bar code check or scan paper rx. Their bottles are annoying. Most of their pharmacies do not fill a lot of scripts.

They upgraded to RedRx though. That's a better looking program, though I heard it has its own problems.

Also, there are some busy Targets. I did a rotation at one that did 350 a day, and it was definitely staffed adequately to fill that many scripts.

As far as profit, depends on the store. Some of the pharmacies operate at a loss, but they serve to bring in more people to the store, so therefore the store as a whole benefits.

Originally Posted by Pharmer187

Hi everyone,

I'm a Canadian pharmacist whos been given the opportunity to franchise a Target pharmacy here in western Canada.

Performance wise (e.g. script count, OTC sales etc) how does Target fare in the states? It's hard to make a decision without having some numbers because I'll be going up against Safeway, Shoppers Drug Mart and some small mom and pop shops near by.

Thanks for any input.

Pharmer187

I've heard that the Canadian side will be different because in the States the pharmacies are owned by Target. It sounded like Canadian Target pharmacies will NOT be owned by Target. Please double check with them on this before making your decision. I only went to pharmacy school and did not have any business education. I'm still going to tell you a few things about their pharmacies in the States.

I think what they are doing is making you take the financial risks in the business, which I think is fair in a way because there are risks in any type of business. I don't think Target corporation had any idea about what it takes to have a successful retail pharmacy business. They didn't have the tools, connections, or expertise. After working for them for couple years I felt like they just jumped into this pharmacy business thinking it's going to be an easy moneymaker. I don't think they knew the cost of running a pharmacy BEFORE they spend all the money adding pharmacies to many Target stores.

Some locations are just bad for business. They put a pharmacy no where near residential areas or hospitals. And they didn't know it's going to cost over 100k USD in inventory to run a low-volume non-profitable pharmacy. They should have considered all this BEFORE they invested so much into this.

So Pharmer187 I don't have the exact numbers on scripts or OTC sales because they vary so much based on locations. I think location is going to make or break this whole pharmacy thing. I thought what they were going to do in Canada was to work with existing independent pharmacies. Is that the case for you? If you are already nearby then you should have pretty good idea on your sales. If they were going to move your existing pharmacy into a Target store, your customers will have to walk into the Target store to get to your pharmacies. There is no drive-up that I know of in the States. How many of your existing customers will follow you into that Target store?

Right now when they look at our pharmacy financials is prescriptions only. OTC sales is not part of our sales. Also within a Target, OTC selections are very small, you will only have 2 or 3 different brands of one item if we have it at all. The OTC selection is smaller than pharmacies such as Kroger, Meijer, or Walmart. So, we don't have as much OTC stuff to sell, it's not going to help with sales. One other thing is they don't spend nearly as much on advertising for pharmacy like they should if they want their pharmacies to grow.

They should be running tv commercials every day for a week at least once a month, instead of spending much more to constantly make new and different tv ads for Target stores alone. All they need to do is run the same ad and they are not doing that. So many people come in not knowing there is a pharmacy in the store and they have been to the store many times. When we do have tv ads, they made us look less than medical professionals. I think for a while they were calling us sneeze-whisperers. Take a look at this http://vimeo.com/28370671 I hope the link works if not, google sneeze whisperer. My patients were like "what~?" and laughed when they saw the sign in the store.

So that's where they want to spend their money on. Paying someone who is not a pharmacist to come up with silly things and make us look like fools. Also like many retail chain pharmacies they cut tech hours for low volume stores, but down to single digit number per week which is kind of unheard of. To me that went way overboard. This just shows that no one with a pharmacy background made that decision. You should search for my other posts on tech hours if you would like to see them. This is saying those low volume stores needs to do 30 scripts per tech hours and mid volume stores only need less than 10 scripts per tech hours. This single digit number of tech hours is not enough to run a small pharmacy that needs to stay compliant with state and federal regulations. I need that number just do manage my inventory alone monthly, which is why our pharmacists voluntarily work pass scheduled shift without any overtime pay every day just to keep up.

I hope this is not too much information. I don't want to sound too negative, but this is just what I'm seeing. I'm actually quite curious about this whole Canada franchise thing. May be I can work in Canada instead. Feel free to put specific questions here, I'll check back later
Good Luck

P.S. I wouldn't be too worried about the computer system (PDX) at this point. They were converting to REDRX for a while and looks like they decided not to use it. I don't know if you guys use PDX in Canada. I don't see any reason why Target pharmacies in Canada need to use PDX. PDX is like 20 years behind compared to Kroger, Meijer or Walmart. Those pharmacies have their own systems I believe, and PDX does not even have barcode or rx image scanning functions. It's kind of embarrassing

Wow, thanks for the amazing reply clachan3.

I gotta say you provided me with some very insightful information (and a nice laugh with that "Sneeze Whisperer" video LOL)

Yes you are right; the Canadian Target pharmacies are franchised, so basically I'm running my own pharmacy within their store. I can hire my own staff, order my own inventory; however, there will still be some restriction on certain things. For example, the Target dress code will still be adhered to, I will have to use their pharmacy software, POS system, the hours of operation etc. I totally agree that they are allowing the owners to take the majority of the risks.

In addition, you will have to pay them a monthly portion of your profits towards advertising (money well spent apparently LOL), a franchise fee, and technical support. But at the same time there are many perks on rent, generic rebates, and OTC royalties, infastructure, water, electricity, not to mention using their foot traffic to generate sales. And yes, you are right, its all about location. They are opening up stores in some very good spots that I think can generate some good revenue.

Yes I've heard bad things about PDX. I would hope they would have upgraded to something else since it's probably not gonna work with the Canadian pharmacy differences (laws, fees, insurance billing etc.).

Thanks again. Much appreciated!!!

Originally Posted by Pharmer187

Wow, thanks for the amazing reply clachan3.

I gotta say you provided me with some very insightful information (and a nice laugh with that "Sneeze Whisperer" video LOL)

Yes you are right; the Canadian Target pharmacies are franchised, so basically I'm running my own pharmacy within their store. I can hire my own staff, order my own inventory; however, there will still be some restriction on certain things. For example, the Target dress code will still be adhered to, I will have to use their pharmacy software, POS system, the hours of operation etc. I totally agree that they are allowing the owners to take the majority of the risks.

In addition, you will have to pay them a monthly portion of your profits towards advertising (money well spent apparently LOL), a franchise fee, and technical support. But at the same time there are many perks on rent, generic rebates, and OTC royalties, infastructure, water, electricity, not to mention using their foot traffic to generate sales. And yes, you are right, its all about location. They are opening up stores in some very good spots that I think can generate some good revenue.

Yes I've heard bad things about PDX. I would hope they would have upgraded to something else since it's probably not gonna work with the Canadian pharmacy differences (laws, fees, insurance billing etc.).

Thanks again. Much appreciated!!!

You made a great post. I was looking for the same information. I am based in Ontario however. I also have not decided whether or not to pursue this opportunity yet. Have you attended a discovery day yet...and how was it? I would value a potential fellow franchisee's opinion such as your own. My main concern is that there is a lot of instability in the pharmacy business at this time including but not limited to regulatory and scope of practice changes...it's hard to know how this will all pan out. Your insight would be greatly appreciated as I am also on the fence at the moment! Did you show your contract to a lawyer...did they have any specific concerns, my lawyer seems clueless!

I also received the leaflets from Target.

There's a weird business decision I don't get: they have purchased, and will be taking over, several Zellars pharmacies. Said Zellars pharmacies recently closed and moved their patient files over to Drug Store pharmacies in Loblaws. So they're going to have to build their patient base up from zero.

I've also started the interview process for Target. Has anyone gone any further than the phone interview? any insight at all into this opportunity? nothing but uncertainty so far

Hi Pharmalin and pharmer187

I am in the same situation as you. I am in Ontario and have been given a offer for a location in toronto. I am not sure yet though as Target is not yet established in Canada and whether this business model is a very good one. Did you make your decision yet? The manual that was given to us is countrywide and therefore very general in terms of how things will turn out in our specific store or location. With no generic rebates in Ontario, limited earnings from the OTCs, unrealistic projection of professional services revenue and inability to sell the business down the road are some of the downsides that are making me question this opportunity. Any opinions and insights from your research would be greatly appreciated.

Fact: Target didn't feel that the business was worthwhile owning directly, so ask yourself (and them?) how and why they came to that conclusion.

I think the deal would be best if you were a struggling/treadingwater independent near a Target: you could move your business there and build on your existing clientele.

In Ontario, I think the independents are at a big disadvantage as I feel the big players have some way to get better pricing/opportunities that the independents won't have available to them, but then again, I'm a very cynical person. Independents can do various specialty services to survive, but it might be hard to many of those things at Target.

The Target pharmacies will certainly be losing money on opening day, since their main cost will be a pharmacist with no RXs to fill. I doubt you can lose too much hard-cash by going with Target if you go in with a partner to cover the hours, other than the loss of your own time (which is definitely valuable). I can't imagine you having more than one assistant at opening, and if you need one, that's a good problem to have. Be prepared to hustle for transfers though. Inventory is usually on credit, and cheap to carry if it isn't, how much you can get back in refunds if it goes unsold is the bigger question.

Definitely bargain Target to waive monthly fees for the first X months, they can afford the hit more than you can, or better yet, only accept if the fees are ironcladly based on a %age of sales or $x/RX, then you can't lose. They shouldn't have a problem with this, after all, their advertising and other work will pay for itself in increased RX volumes, right?

The biggest risk is: can they later de-franchise your location, or otherwise cut you out, if it ends up successful? Or arbitrarily raise your fees? You're taking risk, do you get enough of an upside if you end up being successful, or will they just move the pegs that much further away?

Overall, if the contract is half-decent (get a franchise lawyer to determine this, not me or you) and you want to get into some form of pharmacy ownership/management, and can afford to be lean for a while, go for it. It could work out very well, but make sure you can easily transition out and back into something else if it doesn't work out, just as you would if you were to start your own independent.

I'd suspect Target will largely franchise them to the former Zellers franchisees, but doesn't want to just give them away. Target wants to extract as much as they can, and wants to see what some others would bring to the table to bargain down the ex-Zellers people. Some of the ex-Zellers people might not be so great though.

It all comes down to location and how well Target executes in my opinion. I still prefer the US Walmarts' pricing+selection over Canadian Walmarts', but maybe that's because Canadian Walmarts have minimal competition other than Costco. I'm the cheapskate that tries to do all of his shopping in the US and online, so what do I know other than my love for US Target

Don't take any of this as professional advice, come to your own conclusions. Consult a lawyer/accountant/real professionals before committing to anything, don't blindly follow random someguys on the intarwebs.

Has anyone gone to discovery day yet at Target HQ?

Will they be asking us more behavioral interview question crap or will they actually let us ask questions about the business model?

Thanks!

I am still waiting for a firm date for a Discovery Day. From what I know of the business model, it just seems to me that a Target Pharmacy Franchisee will be taking on 100% of the risk in starting the pharmacy business for Target. And the reward, even if the business is successful, does not appear to be worth the risk. I really believe that Target has to throw in some type of minimum salary, or perhaps a subsidy for a 2nd pharmacist for the business.

hey everybody,
I'm going for discovery day next week, have anyone went????? any new information??????

Just got an offer to go to their discovery day. Anyone gone yet willing to share what it is about. Also has anyone been offered committed to the franchise willing to share? Seems like a huge risk at this point unless I am missing something?

After extensively examining this opportunity I have decided to give it a pass. Target is very unwilling to shoulder any of the risk, and that risk is extensive. The pharmacy operation will easily lose at least $100 to $200 K in the first couple of operating years. The rewards simply do not justify the risk that the Pharmacist operator has to take on.