Retail Profile: Elephant Pharm

by dwjbolton

Leading the Expedition into Alternatives

Sidebar: Elephants Make Her Smile

Dispensing wisdom is as important as drugs at Elephant Pharm where staff offer traditional and alternative remedies with advice that encourages customers to weigh all their available options.

The chain, headquartered in Berkeley, Calif., employs 121 full time staff and 266 part timers. Stores average 12,000 sq. ft. and carry an unusually broad selection of products that range from prescription drugs available in their licensed compounding pharmacy to alternative medicinals.

The expansive, green-green Walnut Creek location east of San Francisco is one of four Bay Area stores built since 2002. Customers there can stop at the cosmetic counter for a mini-facial in a spa-recliner or fill their cart with organic food, sustainably produced paper products and cleaning supplies. There are familiar rows of greeting cards, housewares and ice cream as well as beer and pretzels.

Elephant Pharm opened its fourth store in 2007 and grossed $25 million in sales. Unusual customer loyalty, a tested business plan and state-of-the-art merchandising technology provide a solid foundation on which to grow.

Elephant Pharm is a compelling example of why readers gave independents the highest marks (92) in Consumer Reports most recent survey of pharmacies.

Price and selection play their part but customer service earned the highest praise. The magazine’s 40,000 respondents gave independents high marks for being accessible, approachable, easy to talk to and knowledgeable about prescription and non-prescription products.

“Independents also stock medical supplies that might be missing from other types of stores and will also customize medicines. Waits were uncommon and many independents offer home delivery,” according to Tod Marks, senior editor at Consumer Reports.

This elephant is green

President and CEO Kathi Lentzsch worked with architects at McCall Design in San Francisco to develop the store design in concert with the U.S. Green Building Council as a pilot to establish LEED (Leadership in Energy and Environmental Design) standards for retail pharmacies. Once the metrics are benchmarked the store will serve as a model for future LEED-certified projects.

Naturally, this green store is painted a lovely green.

The layout is open and inviting and efficiently operated on wind power with skylights that illuminate 90 percent of the store’s occupied space. There are no harmful refrigerants, the facility achieved 30 percent water savings and half the construction waste was recycled. The sales floor is well organized with low displays, eco-friendly Ply-boo signage, lots of end-caps. Knowledgeable and well-educated staff members (who humorously refer to themselves as pachyderms) are trained to emphasize whole health and fitness and also proudly extol the structure’s virtues.

Two pharmacy counters

alernative and conventional are equal in status in this venue.

“Our pharmacists are there to care for patients, not push pills,” said Lentzsch. “This is all about whole health,” she adds. “There are going to be customers who need to talk and those in a hurry who know what they want,” said Lentzsch. “I encourage pharmacists to talk with patients. I place no limit on their time. In the newest store a private consultation room is directly attached to the pharmacy, she said.

“Pharmacy wait-times are 15-20 minutes which we hear is less than other wait times at a typical chain. We are focused on serving the customer’s needs, not a generic set of metrics,” said Lauren Schiller, Vice President of Marketing since 2006.

One of the more striking findings in the survey is that consumers today spend less time seeking advice about prescription drugs: Just 38 percent of walk-in visitors during the course of a year sought advice on prescription drugs and only 29 percent asked about over-the-counter remedies.

“That’s far less than our 2002 survey, where the figures were 50 percent and 37 percent,” according to Marks.

One-third of adults take five or more medicines and supplements each week. An estimated 18 million visit an emergency room every year because they self-medicated incorrectly, according to Consumer Reports.

“Consumers need to be mindful about the potential for drug interactions that could be dangerous since more people take not only multiple prescription drugs, but also supplements and over-the-counter remedies too. Seeking advice from a pharmacist when filling a prescription is a good way to learn about possible adverse reactions and increase the odds that you’re taking the medicine properly,” said Marks.

“Our database enables us to look at drug-drug and drug-herb interactions. Our pharmacists combine their clinical knowledge with what they see in the database to help customers. This combination is a great help, versus what reading a database alone might do for customers,” said Schiller.

“We encourage alternative practitioners to share with pharmacists and invite pharmacists to explain to customers that a particular prescription may deplete their system of calcium for example and to see someone in the vitamin department,” said Lentzsch.

A different kind of convenience

“Many retailers view convenience as the number of nearby locations but I think of convenience differently,” said Lentzsch.

“Customers today often have to go to an herbal store, and then stop by the fitness store for fitness gear and then Whole Foods and a pharmacy to get everything they need,” she said.

“One-stop shopping is our kind of convenience,” said Lentzsch. She added that half of the company’s loyalty program members travel five miles or more to reach the nearest Elephant Pharm, generally passing one or more conventional pharmacies.

Elephant Pharms are typically 12,000 sq. ft. with 10,000 sq. ft. of selling space and 25,000 SKUs rising to 35,000 items during the holidays. “We have really focused on how to fit it into that size store,” said Lentzsch. “I like the intimacy of the smaller format.”
People who come to Elephant Pharm sometimes hang out for up to an hour,
explains VP of Marketing Schiller.

The principal reason is free advice from a cadre of health care professionals that range from naturopathic doctors and Ayurvedic herbalists to aestheticians and nutritionists. Classes are free and conducted in a comfortable glassed-in room at the back of the store where mats are available to practice yoga, Pilates and Tai Chi and chairs for lectures on healthy beauty, stress management and holistic health.

In-Store Education

We have 70 to 80 classes per month per store on a variety of topics from how to prevent heart disease to Easter egg painting with natural dyes (using cage-free eggs),” Lentzsch quickly adds. Attendance ranges from two to 60.

Some pharmacists turn their back on herbal remedies or they are bound by oath to recommend only products proven through clinical trials,” said Lentzsch whose herbal pharmacy stocks 117 Western herbs from alfalfa leaf to Yohimbe bark; 246 Chinese herbs from Ai Ye (mugwort) to Zi Wan (aster root); 90 culinary herbs and seeds and 49 Ayurvedic herbs – along with 58 herbal teas.

“We invite practitioners to take part in panels discussing the difference between remedies, conventional and alternative. The beauty of this approach is that we actually hear what the customers ask questions about.

“We have big ears,” she smiles, “we listen well.”

Lentzsch explained that customers learn, for example, that a chemotherapy regimen will deplete essential vitamins. Licensed practitioners like Michelle Warner, 39, a specialist in Ayurvedic medicine will help find in the store what is good for them, she said. “It’s pretty special.”

Several months before each store opens Elephant Pharm visits all kinds of practitioners in the area from physicians to herbalists, said Lentzsch.

We invite them to work with us but not full time, we want them to have successful practices on their own,” she said. “They work one or two shifts. We get their expertise. They get new patients through us,” said Lentzsch.

oday Elephant Pharm has “hundreds of experts readily available to us. They really give us an edge.”

While this strategy adds payroll expense it also provides valuable marketing information. “We can tell you on the day of class how much a student spent in the store and since we compensate instructors, we can determine the cost and benefit to us. It’s important to know whether the class is a loss leader or reduces our cost of sales,” she said. In this technology plays an important role.

eginning in November 2006 the Pharm implemented a new core Celerant POS system followed in June 2007 by a front end system from Aldata. This powerful merchandising, promotions, sales, replenishment, logistics and operations suite is a favorite of Tesco and Trader Joes and much larger chains.

ith the necessary reports in hand Lentzsch’s insistence on fiscal discipline cut the cost of teaching classes by 30 percent. Experts now determine which classes are needed.
“In the past there were classes where no one showed up and we had to pay the instructor anyway. Now we carefully listen to what our instructors and what our customers say they need. We are always listening,” she said.

he payoff: “The classes are a powerful marketing tool that leads to extraordinary word of mouth.” The store enjoys an astonishing 90 percent word of mouth, she said.

Organic selection

The building in which the Walnut Creek store resides shares a common wall with Trader Joe’s yet grocery SKUs make a significant double-digit contribution to company sales.
Nourishment is an important part of what we do, said Lentzsch. “We start with moms and kids and offer items to put in the lunch box that get children eating right from an early age,” she said.

People who eat quickly often “eat garbage.” We stock a selection of nutritious sandwiches, burritos and organic healthy foods, so you don’t have to eat badly when in a hurry, said Lentzsch.

he explained her criteria for vendors wishing to place goods in the store: alternative medicines and natural/organic foods top the list and local products and those that are sustainable, ethical or fair traded also find shelf space.

Best in class conventional products are next.

Not everybody is ready to jump aboard the natural train,” explained Schiller. “There are couples where the wife is committed and the husband is just not there. We make it safe for him to shop because there is beer and toothpaste he recognizes. We give them both a choice. In time he may realize there is another way,” she said.

It’s another bridge to walk over,” she laughs after extending Lentzsch’s analogy. “We are big on building bridges here.”

he final criteria? “It makes them smile,” said Lentzsch.

Expired medicine

he pharmacy began a medicine take-back program in November 2006 and currently partners with Teleosis at three stores. Together more than 1000 pounds of expired medicine has been recovered.

hat’s easy stuff, said Lentzsch. Recycling 50 tons of computer equipment delivered by customers is a logical extension of the chain’s philosophy.

But doing away with plastic bags long before Whole Foods, switching to CFL light bulbs and providing parking for Zip cars are nothing to shout about.

We very much believe in doing the right thing for the planet,” said Lentzsch.

See Also: Elephants Make Her Smile 

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