It's September and retailers are already feeling the pinch of sluggish consumer spending, but not here in a wealthy enclave in north Toronto. Shoppers Drug Mart Corp. is opening one of its biggest, glitziest new outlets and it doesn't look much like a drugstore, with its high ceilings, large windows and bright ambience.
Glass shelves filled with fancy bottles of cosmetics and fragrances greet consumers at the entrance. Organic foods and Nintendo portable consoles are among the products further inside. Customers could pick up $435 facial creams, pose for passport photos and even drop off their prescriptions (it is, after all, still a drugstore).
Under the direction of former chief executive officer Glenn Murphy, Shoppers transformed itself into a Canadian retail powerhouse. Its expansion has been dramatic, growing to more than 1,100 stores from about 800 in 2001. These were the best of times, and they continued under the leadership of Jurgen Schreiber, who became CEO in early 2007. Shoppers has been continually evolving, branching out into high-end beauty products, groceries and seasonal gifts to the point where it is more like a neighbourhood mini-department store. Throw in a burgeoning array of high-margin private labels, a loyalty card that is the envy of retailers across the country and a near doubling of profit in the past five years and it's not hard to make a case it is the most successful retail chain in the country.
But all that was during good times for the broader economy. Now that the tide is turning, it's up to Mr. Schreiber to keep up the momentum.
“We all would love to live in better times,” Mr. Schreiber says in a rare interview, surrounded by a team of his executives but fielding almost all the questions himself. “We have to work a little bit harder, be a little bit sharper … But we don't feel it [the slowdown] in the same way. We are winning market share.”
INVESTORS' HAVEN
Drugstores are considered a haven for investors and operators alike in recessions. They carry products – from pills to nose sprays – that consumers need, rather than just want.
But Shoppers and other drugstore chains now have diversified way beyond the pharmacy to carry discretionary items ranging from jewellery to iPods. These are often the first to be dropped from customers' shopping lists in tight times.
At the new north Toronto store, there are no signs of grim times. Mr. Schreiber says its launch is the chain's most successful. His only regret is that City Hall barred Shoppers from building a second store entrance to the parking lot, which Mr. Schreiber thinks would bolster the outlet's business even more. The economic downturn isn't sidetracking his further expansion plans.
Mr. Schreiber, 46, may be well positioned to ride out a recession. He's a seasoned executive of health and beauty companies, having led a global retail giant's European operations before joining Shoppers as president in 2006. At A.S. Watson & Co. Ltd., the retail division of conglomerate Hutchison Whampoa Ltd., he spearheaded growth in cosmetics and fragrances, partly by introducing new brands in thousands of stores in 23 countries. And he oversaw the acquisition of the Drogas and Spektr chains.
And he's worked through recessions, watching the fragrance business soften and learning that promotional deals are needed to lure cash-strapped consumers in harder times, he says. “And do not give up on your staff. The moment you start seeing a sales reduction, and you cut the sales force, or the people behind the counter, you have problems with your customers. Be relentless taking weak brands out, and putting new brands in.”
He's a strong presence at meetings, and gets right to the point. He's a detail person: He visits the new north Toronto store at least every two weeks, even though it's not in his neighbourhood.
Today, as other North American retailers struggle amid sagging consumer confidence, he continues to break new ground at Shoppers. It is becoming a destination for pricey and in-demand beauty brands, the likes of the hot Harajuku Lovers fragrances ($49 for a 30 ml bottle). Early this month, it took the bold step of rolling out an entirely new concept – an upscale, standalone beauty store and spa called Murale, developed by star design firm Burdifilek. It is the author of remodellings of luxury retailers' stores, including Holt Renfrew's flagship in Toronto and a Neiman-Marcus near Boston.
