FINANCE

Kroger to create new specialty pharmacy division

BY CSA STAFF

The Kroger Co. is expanding its position in the pharmacy market.

Axium Pharmacy Holdings Inc., a wholly-owned subsidiary of Kroger, will acquire Orlando, Florida-based specialty pharmacy retailer ModernHealth. Financial terms of the agreement were not disclosed.

The deal will create a combined specialty pharmacy that will operate as a wholly-owned Kroger subsidiary.

"This strategic investment will accelerate the growth of Kroger's health and wellness business," said Robert Clark, Kroger's senior VP of merchandising. "Expanding our specialty pharmacy services will provide our customers with greater access to medications we don't currently dispense and access to additional services without going to another pharmacy."

ModernHealth employs approximately 500 associates who provide comprehensive specialty pharmacy services, including IV-based therapies for autoimmune and primary immune deficiency diseases, as well as comprehensive medication management for several chronic diseases and medical conditions.

Headquartered in Lake Mary, Florida, Axium employs 300 associates who work at locations in California, Puerto Rico, Tennessee and Mississippi. Headquarters for the combined specialty pharmacy will be located in a new facility under construction in Lake Mary, Florida, with continued support from existing facility locations. The combined organization will employ approximately 800 associates and will continue to operate as an independent company within Kroger.

Don Meffe, CEO of ModernHealth, will lead the new combined business as CEO after close. Axium's CEO Mark Montgomery will help ensure a smooth transition after the merger closes.

Kroger currently operates 2,230 pharmacy locations and 195 The Little Clinic locations. Axium, which became a wholly-owned subsidiary of Kroger in 2012, is an independent provider of specialty pharmacy services for patients with complex chronic conditions.

Through the merger, Kroger seeks to improve purchasing efficiencies and allow the companies to combine each other's payer strategies to bring down costs. The combination will also allow Kroger's specialty pharmacy business to expand into new territories in the West and Southwestern U.S., and expand offerings to other disease states.

"Our partnership with Kroger and Axium will enable us to provide more customers in more places with the critical specialty pharmacy services they need," said Don Meffe, ModernHEALTH's CEO. "We believe this relationship will create efficiencies, accelerate growth in the high-growth specialty pharmacy market, and improve the overall quality of our combined healthcare services. We are also pleased that this partnership means our business headquarters will remain and grow in Orlando."

The transaction is subject to certain regulatory approvals, including from the FTC.

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ERP/CRM

Mall of America joins virtual reality revolution

BY CSA STAFF

Mall of America is using leading-edge technology to enhance the on- and offsite customer experience.

The Bloomington, Minnesota-based center is the latest retail participant to adopt virtual reality (VR) technology. A new, VR-based immersive experience allows customers to “see” retail, entertainment and live events within the mall.

The tour of the mall first transports viewers to the Sea Life indoor aquarium. Other virtual attractions include the Nickelodeon Universe indoor theme park and the JW Marriott’s Cedar + Stone restaurant. Radisson Blu hotel, and a live choir in the mall’s rotunda event space.

To view the mall’s content, users can download the Vrideo app, then use a VR device like Google Cardboard, Samsung Gear or Oculus Rift. This is the latest in a series of tech-based initiatives to help enhance customer experience at Mall of America. Recent announcements include complimentary WIFI, a mall-based virtual assistant app, and a paperless valet parking service.

“When you’re talking to someone who has never been to Mall of America before, it can be difficult to convey all of the features of our property,” said Emily Shannon, director of digital at Mall of America. “Using virtual reality, we can better communicate that we have five-star dining, a seven-acre amusement park, and miles of store fronts.”

Retailers including Lowe’s, Wayfair and Ikea have also recently released customer-facing VR tools. Mall of America is using VR more for promotional purposes and less to directly drive sales than those other retailers. However, the end goal of seamlessly engaging consumers in new and compelling ways is the same.

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TECHNOLOGY

Study: Book retailer shows brand strength

BY CSA STAFF

A familiar chain has been named the most powerful retail brand of 2016.

According to the 2016 Top 100 Most Powerful Brands report from brand marketing firm Tenet Partners, Barnes & Nobile is the most powerful retail brand, and 32nd most powerful brand overall, of the year. This is the second straight year Barnes & Noble ranked highest among retailers.

The book chain received high marks for its marketing efforts, including a new slogan and creative advertising featuring Tony Bennett and Lady Gaga. Barnes & Noble was also recognized for separating its Barnes & Noble Education college business from its main retail business and offsetting declining sales and growth from store closures with continued stabilization of physical book sales growth in the educational toys and gift departments.

Tenet also said Barnes & Noble’s familiarity rating is at its highest point since 2010 and although its favorability rating remained constant year-over-year, it declined 4.7 points during a six-year period.

Tenet’s Top 100 Most Powerful Brands are ranked in corresponding order by a measure of BrandPower – a single indicator of brand strength that examines a brand’s reputation in the marketplace and its ability impact business performance.

Retail is the most represented category among the Top 100 Brands, with 13 companies hailing from the category. In addition to Barnes & Noble, other retailers on the list include Target (#45), Lowe’s (#48), Walmart (#53), Gap (#55), Home Depot (#56), Bed Bath & Beyond (#61), J.C. Penney (#72), Kohl’s (#75), Best Buy (#87), Costco Wholesale (#88), Macy’s (#95), and Tiffany & Co. (#96).

However, just five out of the 13 retail brands ranked “improved” on BrandPower year-over-year: Macy’s (#95, +12), Best Buy (#87, +4), J.C. Penney (#72, +3), Walmart (#53, +2) and Costco Wholesale (#88, +2). Steepest decliners year-over-year include: Lowe’s (#48, -5), Bed, Bath & Beyond (#61, -4), Tiffany & Co. (#96, -4), Barnes & Noble (#32, -3), Gap (#55, -3), Home Depot (#56, -3), and Kohl’s (#75, -3).

Macy’s managed to move up 12 spots from 2015 and 93 spots from 2011, and earn a spot on the top 100 list, by creating special events that enhance the customer experience. The department store chain was also credited for being an early adopter of Google Wallet and Apple Pay, as well as for offering integrated store, online and mobile applications. In addition, Macy’s received kudos for adopting the Shopkick location-based marketing app.

To create the ranking, Tenet surveys participants from the top 20% of corporations in the U.S. (based on revenue) on two key metrics: familiarity and favorability. Familiarity measures awareness of the brand. Respondents are considered to be familiar with a brand if they state they know more than just the company name. Favorability measures the perception of the brand, based on how it performs across three attributes, including overall reputation, perception of management, and investment potential.

These quantitative metrics, familiarity and favorability, are then combined into a composite score called BrandPower.

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