Kroger to create new specialty pharmacy division
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.
Mall of America joins virtual reality revolution
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.
GameStop goes seamless with geeky ‘loot’
Even geeks appreciate the convenience and hands-on experience of visiting a physical store.
Recognizing the continuing popularity of brick-and-mortar, specialty video game retailer GameStop Corp. has been extending its pure-play ThinkGeek banner into physical stores. GameStop purchased ThinkGeek parent company GeekNet Inc. in 2015. ThinkGeek specializes in selling “loot,” or collectible items and memorabilia, rather than video games.
“We’re really expanding past selling licensed merchandise from video game intellectual property and more into TV show and pop culture items,” said Mike Mauler, executive VP and president of GameStop International, in an interview with Chain Store Age. “We placed licensed merchandise into all GameStop stores by the end of 2014, and earned more than $300 million from the category in 2015.”
As an initial step toward opening stores, GameStop integrated ThinkGeek customers into its PowerUp rewards program.
“By demographic and location, we could identify product preferences of online customers,” said Mauler. “We could also determine which GameStop stores sold the most loot.”
Armed with this information, and satisfied by the performance of 30 initial test “Zing Pop Culture” stores in Australia, GameStop went ahead with brick-and-mortar rollout in the U.S. Using demographic and sales data, the retailer determined which ThinkGeek stores should be located inside GameStop stores and which should be separate. The retailer also determined whether separate ThinkGeek stores would be better situated inside malls and shopping centers or as stand-alone units. The first U.S. ThinkGeek location opened at The Florida Mall in Orlando in September 2015.
“We opened a total of three new ThinkGeek stores in 2015 and all did well,” said Mauler. “So far we’ve opened another two this year, and will open a total of 25-50 in 2016.”
When it comes to distribution management, GameStop recognizes the importance of the e-commerce channel to the ThinkGeek customer base.
“We look at omnichannel the same as everybody else, from mobile to Web to the store,” said Mauler. “We allow pickup of online orders in-store and will ship to home. In many markets, buy online pickup in store represents 40%-50% of online sales. Having a physical presence is a big part of omnichannel.”
Since GameStop has already been operating a seamless fulfillment process for several years, Mauler said implementing the same approach for ThinkGeek was not a major challenge. Although ThinkGeek inventory is fulfilled from a separate warehouse, it uses the same in-house-developed ERP system and Manhattan Associates supply chain and warehouse management technology used by GameStop. The in-store POS system is also proprietary. Currently ThinkGeek online and in-store purchases can be returned at GameStop stores, but GameStop items cannot be returned at ThinkGeek locations.
Mauler sees a bright future for GameStop’s new geeky offshoot.
“Licensed merchandise is our fastest-growing category,” said Mauler. “It made $300 million last year, should make $450 million – $500 million this year, and reach $1 billion by 2019.”