Presented by:
James Norris, Merchandise Manager
London Drugs
Vancouver, BC
James Norris has been with London Drugs for 29 years, serving as a store manager for 12 years before rising to merchandise manager. He is responsible for non-electric housewares, hardware, laundry, cleaning, smart home and connected fitness.
London Drugs was founded as a corner drug store in 1945 by Sam Bass, who named the store to appeal to British immigrants settling in the area after World War II. The original location is across the street from today’s flagship store. In the early years, cameras and film were key product categories and Bass created traffic-generating promotions. He built the operation into 16 stores, and sold in 1975 to the Daylin Corporation, which sold the chain the following year to the Hy Louie Group. Today the fourth generation of the Louie family leads the group of companies, which include a resort, airlines, IGA grocery store and an insurance division.
London Drugs is now an 80-store chain in western Canada, with 51 stores in British Columbia, 24 in Alberta, four in Saskatchewan and one in Manitoba. The trading area serves 12 million residents, about 32% of the Canadian population, or about the population of Ohio. Ecommerce business is strongest in Ontario and Alberta.
Customer Base and Key Categories
Customers are male and female, aged 45-65. Their children are away at college or grown and they have money to spend on themselves. Price is not the motivator; they seek selection and service.
Pharmacy/health care and a cosmetics department with top line brands are key attractions. Pet care is an important category and the pharmacies sell many pet prescriptions. Camera and electronics are a prime destination—a consumer can find a camera at $100 or $1,000, purchase computers or order home installation of a NEST, home security or TV system. London Drugs stores are authorized Apple care centers. Store design is clean, clear and coordinated with wayfinding and signage.
Housewares Product Assortment
In appliances, London Drugs deploys a national brand strategy for successful names such as Hamilton Beach, KitchenAid, Brita, Thermos, OXO, Rubbermaid, Corelle, GreenPan and T-Fal. Customers have strong brand loyalty.
Domestically sourced goods represent 75% of inventory (U.S. is currently considered a domestic brand), 2% from Europe and domestic private label goods stand at about 3%. They pursue a “Good, better, best” strategy and have no interest in dollar store merchandise.
The “Neighborhood Out” program discovers unique products available locally. Personnel find locally made products that benefit the entire company. For any new store, they study local demographics to appeal to residents in the trading area. For example, because of the Asian population in Richmond, British Colombia, stores there have wayfinding signage in Chinese characters.
Power of London Drugs
Because of their focus on their target customer, sales at London Drug can outperform other retailers. For instance, London Drugs sells more bath scales per door than any retailer in North America. The Taylor brand worked with the buying team to come to market with a unique product line for the London Drugs 45-65 age group, and at an opening price higher than most SKUs, to deliver a high margin category. Norris recounted a similar success experience with SodaStream. London Drugs leads other retailers in western Canada for SodaStream market share and sales of refill canisters.
Brand Framework and Character
London Drugs’ brand promise is that personnel go above and beyond the expected to take care of people and make their lives less complicated. Staff strive to model values that are based on caring and integrity and aim to create a working environment that enables good decision making. These values are demonstrated by employees’ actions that create customers for life—lifelong brand loyalty to London Drugs.
Uncommon Buyer Flexibility
Because London Drugs is a private company with few decision makers, buyers have more flexibility than in larger corporations. Buyers have an average of 15 years of experience.
Open to Buy is not their practice. Buyers are able to buy what they believe will fit their local demand. Even if inventory is overstocked, they can take advantage of opportunities to buy timely new products. They offer to work with suppliers on pricing and shipping options. With one distribution center in Vancouver, their own trucks receive shipments from vendors to transport to the warehouse. Advertising, publications, promotions and social media support suppliers.
Customer Rewards
London Drugs created LD Extras, a shopper rewards program that is a powerful tool to get closer to their customers. Active for just two years, the program will soon reach one million members. Customers receive a $5 gift certificate for birthdays and a $5 gift voucher after 10 visits. Exclusive offers can be targeted to purchasers of specific product categories.
Questions from the audience touched upon store locations, ecommerce and pricing. Their ecommerce division is yielding higher net sales than some of their stores, despite high Canadian shipping costs.
