Horton & Converse uses technology to strengthen key areas of expertise
Horton & Converse bolstered its traditional strengths in location and customer service in 1998 by adding a second flagship store and by implementing new technology in pharmacy, customer service and inventory management.
For H&C’s 14 stores, pharmacy accounted for 65 percent of the chain’s $17.7 million, with 75 percent of prescriptions coming from third party. All of the chain’s stores are located in medical centers or medical buildings, or in upscale shopping malls.
The newest store, which opened last November in Costa Mesa, Calif., in the tony South Coast Plaza shopping center, is now H&C’s “second flagship store,” said president Keith Lumpkin. “It was a service the mall wanted to have. They selected us as the operator, and we feel fortunate.”
H&C’s other flagship remains its high-volume store near St. John’s Medical Center in Santa Monica, Calif., where it does a thriving home health care business. The Santa Monica store also serves as the central home health care facility for the chain and provides goods and expertise for its other stores. Home health care is a segment of business that continues to grow for H&C.
The new store features H&C’s first POS system, one acquired from CamData of Huntington Beach, Calif. Information from this store will be used to inform the other 13 stores about product and category movement and trends, and Lumpkin said he is not sure whether it will be necessary for every store to have its own POS units in the future.
Another technology addition, the Health Notes touch-screen kiosk from Bergen Brunswig, was installed four months ago. Customers can use Health Notes to search and locate health information, then print out the information on an adjacent printer either with the help of staff or on their own. The units are now in three H&C stores.
In the fourth quarter, the chain replaced its Apollo pharmacy system with PDX, which Lumpkin calls “more robust; it does more,” including functions that help support H&C’s patient care initiatives in diabetes, asthma and hypertension. In this program, H&C pharmacists return for study at the University of Southern California then train other H&C pharmacists.
On the disease state management program at the chain, Lumpkin said “the PDX system will enhance this.” H&C’s program is “moving along,” but when it comes to reimbursement, he added, “it’s a chicken-and-egg situation.”
Another technology on the horizon for H&C is a web site. The company has registered Hortonandconverse.com and is in the process of designing the site, which will provide information and promote the stores. Lumpkin questions some of today’s chain strategies, such as drive-through pharmacies-at least, he doesn’t believe this is H&C’s direction. The chain has no drive-throughs so far, and only one store, near UCLA, is open until 2 a.m.
Carving a niche in a mall environment
Compared to H&C’s other locations, the new store is most similar to one in the Century City mall adjacent to Beverly Hills, a location Lumpkin said “does very well. We feel [Costa Mesa] will be as good as Century City.”
As a second flagship store, it is only around a quarter the size of the St. John’s flagship store, so the new one is not expected to achieve the latter’s volume. The new store’s clientele include mall shoppers, as well as office workers, mall employees and high-ticket tourists for whom the shopping center is a must-see stop in the region. Tourists from other countries often ask for Viagra. “We have to explain that they need a prescription,” said Lumpkin.
Pharmacists sell OTC products in H&C stores. “We like to capitalize on the view that the pharmacist is the most trusted professional” and if they recommend an OTC product and H&C’s assortment is selective, “it backs up the chain’s customer service strategy,” Lumpkin explained.
The new store’s biggest front-end category is vitamins and herbals. Lumpkin is thinking of adding another herbal display in place of color cosmetics by the right front entrance, since there are several beauty-specialty competitors in the mall, such as the cutting-edge Sapporo. “Some [natural health] shoppers know what they want, but we have a person who specializes in herbals, nutritionals and homeopathic products.” In contrast, the St. John’s store has a beauty specialist.
Like many of H&C’s other locations, the new store is doing well with aromatherapy and European lotions and bath items, despite the presence of many shops specializing in this kind of product in the mall. Customers still shop for such items at H&C, said Lumpkin, because it is convenient.
Other growth areas are sports and foot care, which are prominently signed and adjacent to each other on one wall of the new store, where both are doing well because, Lumpkin noted, Orange County residents are sports-minded and buy items such as braces, while tourists stock up on Dr. Scholl’s products.
The store’s interior features an elegant look with light wood, gold lettered section signs-the first time H&C has used signing on its sections-and fine finishing touches, including three built-in niches on one wall, which feature Bergen Health Notes, featured items (a recent example is a pet healthcare line called Dancing Paws) and a Flower Essences aromatherapy display with rows of tiny glass bottles suggesting an old-fashioned pharmacy.
Along with service, location is central to H&C’s image and Lumpkin noted he was selective about the South Coast Plaza site. It took seven years before South Coast Plaza offered what H&C thought was a suitable space within the large mall. The privately owned chain turned down several it felt didn’t have the right foot traffic.
One reason H&C waited was prior experience. At one point, the chain had several more stores in Orange County, where both its headquarters and the new store are located, but several of those stores were closed a half-dozen years ago when H&C pruned back to the most viable locations.
This site, in a shopping mall with such exclusive retailers as Gucci and Tiffany, draws on that clientele, but H&C’s site also is not far from Sears, with its high-volume foot traffic.
Considering H&C’s big business in home health care, the category is minimized here-as it is at the Century City store. Only a lift chair in the window, signed “Having trouble getting up?” and with its price, $895, printed, hints that this is a big component of H&C’s overall business. “It is not an impulse item at that price, but the idea is to plant a seed,” said Lumpkin. In the future, there will be more home health care signing and in-store education.
Since one of its neighbors is a Brentano’s Bookstore, H&C is considering holding a health-related book signing in the future. “We’re trying new things here,” said Lumpkin, “and we can switch gears quickly.”
Horton & Converse Pharmacies
Headquarters: Newport Beach, Calif.
1998 sales: $17.7 million
% change vs. 1997: N/A
No. of units: 14
Average store size: 3,000 square feet
Pharmacy sales: $11.5 million
% of sales from pharmacy: 65 percent
COPYRIGHT 1999 Lebhar-Friedman, Inc.
COPYRIGHT 2000 Gale Group