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New ShopKo Drug Store Format Heavy on Food

HOWARD, Wisc. -- Discount store operator ShopKo Stores has officially entered the big-box drug
business here with the grand opening of ShopKo Express Rx, a neighborhood drug
store featuring pharmacy and typical front-end categories, as well as an
expanded food assortment several non-traditional special services.

The pilot project involves three stores in the 14,000-to-15,000 square-foot
range. All are in suburbs surrounding ShopKo's headquarters in Green Bay, Wisc.
Stores offer larger HBC and over-the-counter assortments than ShopKo's
traditional discount stores, as well as an optical center (Howard store only),
pharmacy (including drive-through), and business center.

A section featuring packaged, frozen, and refrigerated food occupies about 25
percent of floor space.

The food assortment is a cross between what c-stores and supermarkets carry,
according to Mike Bettiga, s.v.p. of retail, health/GM, HBC, and consumables.
While there are several flavors of Hamburger Helper and myriad frozen dinner
entrees, for example, only the dairy case contains perishables. Food is supplied
by Supervalu. Unlike many ShopKo discount stores, Express Rx also carries a wide
variety of traffic-generating beers and wines as well as cigarettes. There is
also a dollar section comprised of otc, hbc, food and some cleaning products.

The aim of ShopKo Express, said Sam Duncan, ShopKo's president and c.e.o., is to
take ShopKo's long history in pharmacy, optical, and other health-related areas
and segment them in a drive-up convenience setting -- along with a few perks not
usually found in drug and c-stores. He noted that the stores bring ShopKo into
small but rapidly growing communities. ShopKo's discount stores, in contrast,
are in major suburbs, while its Pamida discount stores serve more isolated rural

"With the strength of our pharmacy business at ShopKo, it became clear we should
do something like this," said Duncan during a tour of the Howard store.

Duncan acknowledges that ShopKo has faced some financial hurdles in its battle
against Wal-Mart and that ShopKo Express Rx could be a viable means of
differentiation. But he said ShopKo has not determined how long it will test Rx
Express or what its growth potential could be.
-- Debby Garbato, Retail Merchandiser (a VNU publication)
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