Main Story: Elephant Pharm- Leading the Expedition into Alternatives
Aristotle called the elephant “the beast which passeth all others in wit and mind.”
They are large, caring and intelligent. They nurture their young into their teens and live to 70 years. In Asian cultures the elephant is a symbol of wisdom. In the wild they display many familiar behaviors from play and making music to compassion, self-awareness and grief.
Kathi Lentzsch, CEO
Inspired by these characteristics Elephant Pharmacy was founded in 2002 by Stuart Skorman who chose the mascot. But it became the Pharm shortly after Kathi Lentzsch was named president and chief executive officer in May 2005.
Lentzsch drew heavily on her own personal pharmacy experience in designing the physical aspects of the newest stores and she drew on the experience of physician cousins, nieces and in-laws in the medical field to understand the growing need for a place where customers can linger and learn.
“There are some doctors in my family,” said Lentzsch, 52. “I understand why they are rushed. These docs are trying to keep their businesses alive and need to push patients through just to pay the rent and expenses. They are in a tough situation,” she said.
“At the same time all of us as individuals have left the doctor’s office saying ‘Oh man, I forgot to ask something’ or maybe the physician’s bedside manner made you feel uncomfortable. Or we just accepted what we were told and did not question the doctor,” she explains.
The result is a big gap in relevant health information, said Lentzsch.
“We are doing our best to fill it with specialists available to customers in an environment that is not intimidating,” she said.
“Elephant Pharm is one place where time is not money (at least for the customer),” she says.
That patience is rewarded with customer loyalty, said Lentzsch. In November 2007 the chain instituted a frequent shopper program called Elephant and Friends which rewards a point for every $10 spent in the store. A coupon for $5 is issued when spending tops $100. Statistics gathered since the program’s introduction show members spend twice that of non-members with 50 percent visiting the store twice a month. Just under 20 percent drive more than 10 miles, she said.
“We get customers for life,” she said.
Lentzsch’s firm grounding in retail flows from senior level management positions at Williams Sonoma’s Pottery Barn, Macy’s, Pier 1 and at Cost Plus Inc.
Traditional pharmacies generate as much as 75 percent of their revenue from prescriptions but margins from that side of the business are shrinking. In contrast, Elephant Pharm generates most of its revenue from high-margin offerings such as beauty aids and household goods in the front of the store with more than 10 percent of their gross coming from brand-name natural and organic groceries.
Lentzsch has refined the model. Tudor Investment Corp., the Bay Area Equity Fund and competitor CVS have invested in the chain with an eye to doubling the number of local stores and eventually going national. The concept will work anywhere that Whole Foods has succeeded, she believes.
Despite the widespread consumer trend to trade down, “business has been relatively healthy the past four or five months,” she said.
This is a tough time but our customers know us well, they like our values and their values match ours, she said.
“At the end of the day, what sets us apart from the others is that we are first about people and second about product,” said Lentzsch.
