Natural Foods Merchandiser

Big box natural pharmacy no pink elephant

As Albertsons Inc. begins to make good on its promise to "combo the country" with Albertsons and Osco stores, Stuart Skorman can see down the road to a day when all the best natural foods supermarkets in America have a big-box natural pharmacy if not next door, at least in the neighborhood.

But to execute an ambitious plan to open 200 Elephant Pharmacies in top retail locations over the next five years, Skorman and his partners must convince a skeptical real estate market to gamble on the concept.

Skorman and co-founder Anthony Harnett hope to capture a sliver of the $165 billion big-box retail pharmacy category by appealing to the segment of the market most like themselves: older, holistic-minded customers who have begun to have health problems. "Us Baby Boomers need a drugstore," said Skorman, 54, who recently began taking the cholesterol-lowering drug, Lipitor.

The first Elephant Pharmacy opened in Berkeley, Calif., in November. The 13,000-square-foot store has all the features that a shopper might expect from a Walgreens or Longs Drug. However, Elephant's aisles are stocked with the top naturals brands in every category—from cosmetics and body care to supplements, homeopathic remedies and soda pop—as well as mainstream brands. A classroom that doubles as a book section and reading room separates a Traditional Chinese Medicine pharmacy from the regular pharmacy.

Start-up real estate costs for the Berkeley store were steep, beginning with a $1 million payment to terminate a sporting-goods store's lease and heading up from there. Skorman, who sold his chain of New England video stores to Blockbuster Video for $5 million and and the Reel video store in Berkeley, Calif., to Hollywood Entertainment for nearly $100 million, sees the Shattuck Avenue store as Elephant's flagship. Skorman and Bread & Circus founder Harnett are Elephant's primary investors. The pair is also backed by Mrs. Gooch's founder Sandy Gooch and her husband Harry Lederman, among others.

Despite the deep pockets behind him, Skorman said it would be easier to nail down Elephant's next location—likely in a downtown neighborhood of New York City—if he were selling a proven concept and he knew he didn't have to make the same massive cash investment all over again.

Geoffrey Keys, owner of Keys Commercial Realty, which does retail leasing in Colorado and Southern California, estimated finishes for an Elephant-type store at $40 to $50 per square foot. "Landlords typically in the retail sector aren't willing to part with those kinds of tenant finish costs for an unknown concept and an unknown player in the retail market," Keys said.

"It sounds like a good concept, especially if you pick and choose the markets you go into carefully," he said. "Still, it's a very difficult climate now to get new retail going."

Natural Foods Merchandiser volume XXIV/number 1/p. 16

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