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Jurgen Schreiber poses for a photo in a Shoppers Drug Mart in Mississauga, Ont. The tightening market has prompted some industry observers to predict that Mr. Schreiber could eventually steer Rexall into being acquired by a bigger global company to give it more purchasing power with suppliers and other economies of scale.

Deborah Baic/The Globe and Mail

A former leader of Shoppers Drug Mart Corp. is taking over the top job at arch rival Rexall, the country's second-largest specialty drugstore chain after Shoppers, at a time of intensifying competition in the sector.

Jurgen Schreiber, who was chief executive officer at Shoppers for four years until 2011, will become CEO of the newly renamed Rexall Health in August, the company said on Thursday. It also includes health clinic division Medicentres Canada and ClaimSecure, a health-benefit claims management business.

The appointment by parent company Katz Group of Edmonton comes as competition heats up in the drugstore segment after the takeover of Shoppers by grocery titan Loblaw Cos. Ltd. last year. At the same time, drugstores are feeling a pinch as provinces reduce funding for generic medications.

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Mr. Schreiber faces not only Shoppers but an array of other large chains, including Loblaw and discounters Wal-Mart Canada Corp. and Costco Canada, that are all focusing more on health and drugstore items. They're catering to an aging, health-conscious population, raising the stakes for all the retail players.

The tightening market has prompted some industry observers to predict that Mr. Schreiber could eventually steer Rexall into being acquired by a bigger global company to give it more purchasing power with suppliers and other economies of scale.

Mr. Schreiber had previously led A.S. Watson Group, a European chain of health and beauty stores, which is part of global conglomerate Hutchison Whampoa Ltd.

"I was attracted by Rexall's obvious strength in the Canadian market, its innovative approach of providing a broad array of health care and related services to its customers and patients, and the very significant growth opportunities in the evolving Canadian marketplace," Mr. Schreiber said in a statement. He was not available for an interview.

Rexall, which has been without a CEO since Frank Scorpiniti stepped down last October, has been updating its store design in "pool-side" aqua and concentrating more on health items such as vitamins and alternative medicines and margin-friendly private labels.

Wendy Evans, of retail specialist Evans & Co. Consultants, said Mr. Schreiber has a strong background in boosting sales of high-margin beauty and cosmetics merchandise. With gross margins of up to 50 per cent or more, beauty products can generate more than twice the margins of other goods, such as toothpaste.

But Mr. Schreiber is an outspoken leader who "got into a little bit of trouble at Shoppers" when he aggressively fought the Ontario government's introduction of new profit-biting generic drug regulations, she said.

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At the same time, he would be well suited to prepare the chain for a takeover by A.S. Watson or U.S. chain Walgreens Boots Alliance Inc., she said.

"The links that Schreiber has to A.S. Watson could make Rexall a potential acquisition opportunity and help that group break into North America," added Jeff Doucette, general manager of retail consultancy Field Agent Canada. A Rexall spokesman did not comment on a possible takeover strategy.

Mr. Schreiber was most recently CEO of Edcon Group, the largest non-food retailer in South Africa.

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