Magazine article Drug Topics

Chain Head Raises Some Sore Points with Suppliers

Magazine article Drug Topics

Chain Head Raises Some Sore Points with Suppliers

Article excerpt

Chain drug retailers and manufacturers must find common ground on four issues-electronic article surveillance (EAS), every day low pricing (EDLP), efficient Consumer response (ECR), and private--label products--said Robert Hannan, chairman of the board of the National Association of Chain Drugstores and CEO of Thrift Drug Inc.

Shrinkage should be everyone's concern, but, today, retailers carry most of the burden, he said, speaking at the opening general session of the NACDS Marketplace Conference last month in San Diego. Some $1.3 billion, or 3% of sales, disappear annually through shrinkage in chain drugstores, he noted. "EAS and source-tagging can have a significant positive effect" on this problem, but the retailer is paying "all the freight on EAS. They pay for the equipment, they purchase the tags, and they provide the labor to place the tags on the merchandise."

This must change, Hannan asserted. Chain drugstores cannot afford all the EAS cost and the impact of shrinkage. "Retailers will respond by putting merchandise in less accessible locations, and perhaps under lock and key in merchandise cases. But then the product doesn't sell, and then the retailer doesn't buy the product from the supplier."

NACDS has a project in the works addressing EAS technology and building source-tagging into packaging of products, Hannan noted. "This is a great opportunity for chain drugstores and suppliers to work together."

Turning to every day low pricing, Hannan said that this phenomenon "continues to grow," leaving many chain drug retailers wondering where or if it will ever end. …

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