Brooks Pharmacy is Committed to Candy

by Mary Ellen Kuhn
With the Eckerd stores acquisition on the horizon, the Brooks Pharmacy chain is ready for the big time, and candy category manager Matt Kirk is up for the challenge.
Matt Kirk, senior category manager for candy and food for the Warwick, R.I.-based Brooks Pharmacy chain, is a master o f understatement.
“I’m right to the point,” he says during the course of an interview. “Some people like it, and some don’t.”
Thus it comes as no surprise that he is not overreacting to the recent announcement that Brooks’ parent company, The Jean Coutu Group, is set to acquire 1,500-plus Eckerd drug stores. Asked what impact the acquisition will have on his role at the chain, his answer is merely a wry chuckle coupled with this observation: “I’ll probably never see another day off for the rest of my life.”
After 37 years in the retail trade [more if you count part-time work as a teenager], Kirk doesn’t get worked up too easily. He’s already been through a few acquisitions, although on a smaller scale. Kirk joined Maxi Drugs, a subsidiary of The Jean Coutu Group (a Canadian company) in 1987, when it was a two-store venture. Maxi/Jean Coutu acquired 16 pharmacies from Douglas Drug Inc. in 1990, and in 1995, it acquired the Brooks Pharmacy chain of more than 200 stores. Brooks’ current store count is 333.
Meet Matt Kirk
Family: Wife, Linda; daughter, Meridith, and son, Matt.
Pet: Cat, Inky.
Career Track: Started stocking shelves in an IGA store at the age of 14. Worked for supermarket chain, Purity-Supreme in Boston from 1967 to 1987. Switched to Purity-Supreme’s Heartland Drug division in 1982 and continued there until joining Maxi Drug in 1987. In 1995, Maxi’s parent company acquired Brooks Pharmacy.
Leisure-Time Pursuits: Major fan of Boston’s four professional sports teams. He’s also a NASCAR fan and often devotes vacation time to traveling to NASCAR events.
Favorite Part of the Job: The people
Least Favorite: The aperwork
Alternate Career: Working as a consumer rights activist
Dedicated to variety
Kirk’s low-key demeanor is not to be confused with a lack of intensity or commitment. The plainspoken, unpretentious Kirk can typically be found in the office from 6 a.m. to
6 p.m. And even before the developments with Eckerd, he found it difficult to take more than a week’s vacation each year. (This year, however, he’ll be taking a few extra days off in October for his daughter’s wedding!)
Despite his full schedule, Kirk doesn’t hesitate when it comes to making time to meet with a vendor, no matter whether the company is large or small.
“I’m always looking for something new. If you don’t see people, you’ll never know [what is available],” he reflects.
One longtime sales executive at a mid-size candy vendor recalls calling on Kirk 30 or so years ago. “He is no different buying for this chain of stores [than he was then],” says the vendor. “He’s the same humble, polite, funny person. He’s a gentleman.
“Whether he buys from you or not, what is relevant, in my opinion, is that he’ll see anyone, and he’ll look at any item,” notes the vendor. “He is very accessible.”
Kirk prides himself on creating an enticing candy assortment that serves to create a point of difference for the Brooks chain, which competes in its New England markets with such mega-retailers as Walgreen’s and CVS. Incorporating unique items from smaller players into the Brooks candy mix makes for a more interesting shopping experience, Kirk believes.
And that’s why he’s willing to stock one or two SKUs from a number of different regional vendors, rather than relying on an assortment comprised mainly of offerings from the market leaders. It requires more paperwork, but Kirk is convinced that it’s worth the trouble.
Well-stocked stores
All of the major drug store players have convenient locations and fairly comparable prices, so assortment is critical to attracting shoppers, Kirk reiterates. “What I can do is give them [shoppers] a deeper selection,” he says. Complementing the selection, he continues, is a strong “in-stock position, which is a big thing for us.”
As for the vendors with whom he deals, he maintains that the bottom line — for a vendor of any size — is performance. “If it didn’t sell, it wouldn’t be there,” says Kirk of the confectionery items he stocks. Being first to market with new products is a corporate mandate at Brooks Pharmacy, so certainly Kirk’s commitment to staying in close touch with vendors is a means to that end.
When making new-product decisions, Kirk isn’t afraid to go with his gut — at least to a certain extent. “A lot of people just go straight by the numbers,” he says. “I use numbers, but I also go for items that I like.”
Between the cash-register candy fixtures and the in-line candy aisle, Brooks stores typically carry more than 400 everyday candy SKUs. That includes 212 SKUs in the cash register area alone, where the shelving typically extends from 20 feet to 24 feet. “There’s not an inch of space left up front,” says Kirk.
Depending on the size of the store, the length of the candy aisle ranges from 28 feet to 40 feet and boasts a large assortment of laydown and peg bag products. In the latter category, there’s everything from mainstream M&M’s and Reese’s Pieces to bagged novelty items such as Ring Pops, Pop Rocks and Whistle Pops.
Brooks offers a private label bagged assortment that numbers about 50 items supplied by Ame rican Food Products, Methuen, Mass. The chain recently revamped its private label candy packaging, switching from header-card bags to flow bags and incorporating a system of color-coding to indicate pricing. Candy in red bags sells 2/$1; blue-bagged items are 99 cents each; and green packaging indicates that the price is 2/$3. Kirk says he introduced the 2/$1 private label bagged candy eight years ago, and it has established a solid niche for itself.
“It doesn’t bring in a large dollar ring, but it satisfies the customer who wants to purchase a variety of candies at a reasonable price,” he notes.
Fast Facts About Brooks Pharmacy
History: A recognized name in the New England drug store trade for more than 65 years, Brooks Pharmacy is a subsidiary of Maxi Drug Inc. Brooks also is the American network of Canada-based The Jean Coutu Group. The Jean Coutu Group is the second-largest company in the drug store sector in Canada.
Store Count: 333 Brooks Pharmacy outlets; acquisition of 1,539 Eckerd drug stores pending at Confectioner press time.
Geographic Reach: Brooks currently operates in seven states in the Northeast. The Eckerd drug stores and support facilities to be acquired are located in 13 states in the Northeast and Mid-Atlantic region, with particularly strong concentrations in New York, New Jersey, Pennsylvania, North Carolina, South Carolina and Georgia.
Staying close to the consumer
And Kirk is all about taking care of the Brooks customer — even to the point of willingly fielding customer complaints.
“If anyone calls with a customer complaint,” he says. “I’ll go out [to a store] and buy the item. I may have the rep pick up the item, but I’ll pick it up myself too.”
Recently, he says, he heard from a shopper who felt the marshmallow Easter egg item he’d purchased was too hard. “So I went out and bought a couple,” says Kirk, who reports that he found the egg’s candy shell was too thick.
“I like the customer calls,” says Kirk. “Usually they’re very easy to deal with. All they want is to have someone to talk to.” Gentleman that he is, Kirk is more than willing to oblige. Again, perhaps it’s a reflection of his down-to-earth style, but the senior category manager finds spending time at the store level to be an informative exercise.
He makes regular Brooks store visits to see how the plan-o-grams are carried out at store-level. Kirk also likes to keep an eye on the competition with frequent visits to retailers in all classes of trade.
Showcasing seasonal
Brooks uses four-foot lowboy display fixtures located on a diagonal from the candy gondola to show off seasonal candy selections. Kirk adds anywhere from 115 SKUs at Halloween to more than 200 at Easter. Halloween and Christmas generate the greatest seasonal revenues for the chain, he reports.
Kirk also does his best to keep shoppers committed to the candy category during the summer months. This year’s summertime assortment will include about 150 SKUs. Kirk brings the first batch of them in right after Easter, and then refreshes the assortment with some different SKUs in June.
“Instead of having the same set out there from May through September, we break it up and bring in new items in between,” he says. “You keep the Twizzlers and the marshmallows out for the whole period, but then you bring in fresh stuff to attract consumer interest.”
Kirk also uses endcaps and shipper displays to keep frequent shoppers interested during the course of the season.
“The endcaps change a few times during the season,” he says. “At Christmas time, they’ll change from boxed chocolates over to gift sets for another couple of weeks then to packaged candy, so the customer gets a look at something fresh when they come in.”
Managing seasonal candy sales is a challenge, Kirk acknowledges. Not only are consumers shopping later and later for their holiday confections, but vendors are pushing retailers to advance their seasonal candy order placements.
“More manufacturers are looking for earlier commitments on seasonal,” says Kirk. “No one wants to run big inventories. They’re looking for a commitment five or six months before the holiday.”
Brooks revamps plan-o-grams annually. Last year, says Kirk, he added more peg bag space within the candy section. This year when the new plan-o-gram goes out to the stores at the start of September, he expects that it will be reconfigured to allow for more shelf space — necessary to accommodate the proliferation of candy packaged in stand-up gusseted bags.
In general, Kirk says, he’d like to see vendors offer more items in smaller and more efficient pack types. It’s beneficial for the retailer and appeals to the consumer, he maintains.
Matt Kirk’s Do’s and Don’t’s for Vendors
Do negotiate fairly. As one might expect with someone as direct as Matt Kirk, he appreciates a straightforward approach to negotiation. "I just ask them to come with their best price," he says. "I won’t call people back two or three times looking for a price."
Don’t think you’re the only company out there. "We only have so much space. Every store is not a Wal-Mart," Kirk emphasizes.
Do be honest. Vendors seeking to establish a relationship with Kirk would do well to remember that honesty is the best policy. "Don’t come in telling me that all our competition carries this product so that when I go out to check their stores I find that it’s not carried in this part of the country," says Kirk.
Do be part of the markdown program. It benefits both retailer and vendor in the end. "On our markdown program I expect the vendors to share in the liability of their products that I am purchasing in good faith," says Kirk. Sharing in the potential liability in this way makes it easier for a retailer to take a chance on unproven products, he points out.
Don’t expect plan-o-gram miracles. "Vendors all think that they can change your plan-o-gram 12 months a year, which is getting out of control," Kirk observes.
Do respond quickly to requests "If you are asked for a new item sheet, please do it ASAP before another item moves ahead of it," Kirk urges. "I do not believe that some manufacturers realize how many new items or items that you do not currently carry are shown to you each year. If I have all the information at hand and an opening comes up in a program at the last minute, they will be considered first."
Regional Player Brooks To Move into No. 4 Spot in U.S. marketplace
When Brooks Pharmacy’s parent company, The Jean Coutu Group, signed an agreement with J.C. Penney Co. to acquire approximately 1,539 Eckerd drugstores and support facilities this spring, it was a case of the little fish swallowing the bigger one.
Brooks operates 333 U.S. drug stores, and The Jean Coutu Group has 324 stores in Canada. It doesn’t take a math whiz to see that the Eckerd store count is more than twice that of the current Brooks/Jean Coutu operation.
But the Jean Coutu Group has a track record that inspires confidence in its ability to pull off such a feat. Brothers Francois Jean Coutu and Michel Coutu explained in an April presentation to financial analysts and members of the media that when their company acquired Brooks in 1995 the contrast between the acquirer and the acquired was even more dramatic — 242 Brooks outlets vs. 20 Jean Coutu pharmacies. This time around, the company enjoys the advantage of more sophisticated technology that will facilitate the integration of the two organizations. The chains also have some operational similarities.
The acquisition price of $2.375 billion is about 30 percent of the acquired stores’ total sales of $7.9 billion — which makes it a "very attractive" transaction, pointed out Michel Coutu, president and CEO of The Jean Coutu Group U.S.A. He noted that a more typical ratio for such transactions is a purchase price equal to about 70 percent of sales.
That’s not the only number that looks good to The Jean Coutu management team. Despite the fact that it is a smaller chain, Brooks has higher front-end profits and a lower shrink level. When the advantages of scale the acquisition will bring are factored in, there’s major upside potential, Michel Coutu told analysts.
Brooks’ profit margins are significantly higher than Eckerd’s (6.2 percent for Brooks vs. 4.3 percent for Eckerd), the brothers pointed out, despite the fact that it’s a much smaller operation. So there is substantial margin-enhancement potential for the acquired stores.
What’s more, Michel Coutu noted that acquiring the Eckerd stores will mean improved negotiating clout for Brooks.
With the Eckerd acquisition, The Jean Coutu Group will become the fourth-largest drug store chain in North America, with a combined network of 2,196 stores. The Eckerd stores — which will continue to operate under that name — are located in 13 states in the Northeast and Mid-Atlantic region. Only CVS (which is acquiring 1,260 Eckerd stores), Walgreen’s and Rite Aid will be larger players in the drug store channel.
At Confectioner press time, the transaction — subject to government review and approvals — was expected to close this month.