Chains have different strategies as they battle for dominance

The battle of the drugstore chains comes down to different competitive tactics. Rite Aid, with a 37 percent share of the Seattle drugstore market, explains its strategy in one word: convenience.

Bartell Drugs, Seattle's second-largest chain with 19 percent of the market, uses three words: service, neighborhood and family.

In the past five years, other chains such as Longs and Walgreens have entered the Northwest. Longs has managed to acquire a 13 percent market share, but Walgreens has yet to make significant inroads.

As independents gear up for the future by concentrating on health care services, Rite Aid's plan is to stay focused on prescription drugs.

This means targeting an aging population and making readily available new drugs such as Viagra and Propecia (a hair-loss prevention medication), said Alison Costello, a Rite Aid spokeswoman.

Its strategy calls for stores at prominent intersections. "Customers want quick and convenient, in-and-out quickly," Costello said.

Rite Aid offers drive-through pharmacies, an 800 number to access a pharmacist 24 hours a day, phone-in refills, mail-order prices for maintenance drugs and a computer system that tracks a customer's prescriptions for potentially harmful combinations.

To keep up to speed with online pharmacies, Rite Aid invested $7.6 million this year for about a 22 percent stake in Bellevue-based drugstore.com.

Though the chain's pharmacists do private consultations, they do not give flu shots or prescribe emergency contraception (though they do dispense it with a doctor's prescription).

Rite Aid, with 3,800 stores nationwide and 145 in Washington, suffered financial woes after it bought Thrifty PayLess in 1996 for $1.4 billion plus $890 million in debt assumption. A year later, it bought PCS Health Systems for $1.5 billion. These debts, combined with a federal investigation into Rite Aid's accounting practices, caused the stock price to plummet from $51 a year ago to single digits today.

New chief executive Robert Miller, formerly CEO of Portland-based Fred Meyer, quashed rumors that Rite Aid would sell some of its West Coast stores.

Rite Aid reported 1998 annual sales of $12.7 billion and profit of $143.7 million.

The 109-year-old Bartell's chain approaches the drugstore market much the same as an independent pharmacy owner. Its strategy calls for putting stores in neighborhoods instead of at busy intersections.

"We have a lot of respect for the independent pharmacists in the community, and many of the things we do in our stores mirror the independent neighborhood pharmacies," said Mike McMurray, vice president of marketing.

The family-owned company operates 45 stores in Snohomish, King and Pierce counties and will continue to expand, McMurray said. It will open stores in Everett and Maple Valley next year.

Bartell's is about customer service and building relationships, said John Ahrenius, manager of Bartell's Magnolia store. It's important for his 40 employees to feel like they're part of the Bartell family, he said, so worker retention is important.

"We have several employees who have been here 10 or 12 years or more," Ahrenius said.

Marla Christianson, a pharmacist at the Magnolia store for 18 years, said it's not just the benefits and pay that keep her there. It's things like getting a birthday card from the company and having the president stop by to shake her hand.

"We are proud of the people we have within our stores," McMurray said. "We think they offer excellent service."

The company had estimated sales of $150 million in 1998. It intends to stay focused on the Puget Sound market, McMurray said.

Though he agrees with Costello that the demand for prescription drugs is increasing and convenience is important, McMurray said Bartell's also emphasizes services such as bone-marrow testing and blood-pressure monitoring. Its pharmacists perform compounding, give flu shots and prescribe emergency contraception.

As for online drugstores, the company doesn't see them as a threat.

"It's in its infant stages," McMurray said. "Some aspect of the Internet related to pharmacy is a reality. We don't know what it will be, but we're studying it. We have an Internet site and think the Internet will be a great communication tool for our customers."