Taking over 164 Stores, Kerr Drug Quickly Sets Up Shop

Article excerpt

When the new Kerr Drug chain in Durham, N.C., acquired 164 stores from J.C. Penney through a leveraged purchase this past May, it found itself with operating stores but no corporate infrastructure as backup. As Diane Eliezer, director of marketing, put it, "We had operating stores and no company to support them." As if the task of building an infrastructure were not arduous enough, the startup group took on the challenge of doing it at the pace of five stores a day and without closing a store for even one day.

The stores included 34 original Kerr Drug stores-which had been owned by Thrift Drugs, J.C. Penney, and Eckerdplus 130 Rite Aid stores, all of which had to be re-outfitted with new POS systems, new pharmacy systems, and relabeled merchandise. "It was an orchestration beyond your wildest dreams, from the technology side, the merchandising side, and the human resources side," Eliezer said. The logistics meant taking over a Rite Aid store in South Carolina, for example, with existing employees, and putting in new Kerr technology overnight, so the new registers and pharmacy systems rang up accurately the next morning.

"We had no accounts payable, receivable, information systems, marketing, merchandising, distribution, or loss prevention; all those departments had to be built while the stores were operating."

In order to change the stores overnight, a system had to be set up and everybody had to pitch in. "The management team members were rolling up their shirt sleeves, loading trucks, and carrying cash registers into stores. It was like a Normandy Beach invasion."

Not only did each store's changeover need to be done overnight, it had to appear seamless to the customer but not unnoticed. Eliezer explained, "Customers had to be able to walk into the same stores they had always walked into with comfort, get their prescriptions filled, and buy their merchandise without a problem. But, at the same time, we had to introduce that this was a new name."

Actually, Kerr (pronounced "car") is a familiar pharmacy name in parts of North Carolina, and the right to its use was an important part of the acquisition terms. The original Kerr Drug Stores Inc. chain was started in 1951 as the Village Pharmacy in Raleigh by founder Banks Kerr, who expanded to 34 stores before selling the company to J.C. Penney's Thrift Drug division in 1995. "The Kerr name has tremendous equity here," Eliezer emphasized. "It's a very trusted name."

So in some markets, the Kerr name had to be reestablished as a "traditional" name but with "new" meaning, while in others, such as Charleston, S. …