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Vol. 41 No. 12 DrugStoreNews.com

FEATURES 8

Industry News

18 Top Women Highlights Photos from the recent Top Women in Health, Wellness and Beauty event

26 CBD Report: New Products 30 Products to Watch 31 Selfcare Roadmap Insights Insights into how upper respiratory consumers shop, powered by GMDC | Retail Tomorrow’s and HRG’s Selfcare Roadmap tool

32 Focus On: Pharma Logistics 34 Cover Story: DSN Pharmacy Innovator of the Year — Publix DSN takes a deep dive into what makes Publix’s pharmacy operation a standout, including its investments in technology, relationships, specialty pharmacy and talent.

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34 COLUMNS 6 Editor’s Note 20 One-on-One with Procter & Gamble’s Damon Jones

22 One-on-One with Wasson Enterprise’s Greg Wasson

24 One-on-One with Designer Greetings’ Steven Gimbelman

28 Counter Talk with Global Cannabinoids’ Ryan Lewis

58 Last Word with David Orgel Consulting’s David Orgel

INSIDE BEAUTY 50 CBD in Vogue Executives from beauty and personal care CBD companies discuss the opportunity and challenges of the segment

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56 Counter Talk with DSN Beauty Director Laura Fontana

57 News

SOCIAL

20

Facebook.com/ DrugStoreNews

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Twitter.com/ DrugStoreNews

DSN (ISSN 0191-7587) is published monthly 12 times a year by EnsembleIQ, 8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631. Subscription rates: Manufacturers, schools, libraries and all others allied to the field $119. Canadian subscribers $129. Foreign subscribers $225. Periodicals postage paid at Chicago, IL, and additional mailing offices. POSTMASTER: Please send address changes to DSN, Circulation Fulfillment Director, P.O. Box 3200, Northbrook, IL 60065-3200. Canada Post: Publications Mail Agreement #40612608. Canada Returns to be sent to Bleuchip International, P.O. Box 25542, London, ON N6C 6B2. For change of address, six weeks notice to Drug Store News, P.O. Box 3200, Northbrook, IL 60065-3200 is requested. Give old and new address and zip code. If possible, enclose address portion from cover on previous issue. Subscription changes also may be emailed to drugstorenews@omeda.com, or call 847-564-1468. Vol. 41, No. 12, December 2019. Copyright © 2019 by EnsembleIQ. All rights reserved.

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December 2019 DRUGSTORENEWS.COM

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EDITOR’S NOTE

Price Isn’t Everything Retailers need to balance price points with the value they actually bring to consumers By Seth Mendelson

Y

ou get what you pay for. At Dollar Tree, a leading dollar store chain that operates under the Dollar Tree and Family Dollar banners, the desire to keep prices low appears to be getting them into trouble with the Food and Drug Administration. In mid-November, the FDA issued a warning letter to the chain for receiving adulterated over-thecounter items produced by foreign manufacturers. According to CNN, the letter outlines “multiple violations” of manufacturing practices at those contract manSeth Mendelson Editor in Chief/ ufacturers used to produce Dollar Tree’s Assured brand of Associate Publisher over-the-counter drugs, as well as other drug products sold at Dollar Tree and Family Dollar stores. The FDA, in the letter, requested that Dollar Tree implement a system to ensure that it does not import adulterated drugs. The retailer also was cited for not testing raw materials or finished drugs for pathogen and quality. In response, Dollar Tree executives said that they are cooperating with the FDA and plan to meet with officials at the agency. To me, at least, I see this as a case of getting caught with your hand in the cookie jar. While I have no proof of intent here, it appears, if these allegations are true, that Dollar Tree officials are so focused on keeping price points down that they turned — intentionally or not — to sometime unsavory characters to help them reach their goals. In the end, cutting corners never works. The short-term benefits of doing business with these manufacturers always are countered by the long-term effects of their practices. Consumers, and sometimes even government agencies, can be fooled some of the time. But, in the end, it is important that retailers realize that a short-term gain may end up costing them big bucks and, perhaps even worse, bad publicity that can have a lasting and potentially fatal impact on the business operation. All retailers are under intense pressure to keep price points lower than their competition and to offer their shoppers the best possible value for their merchandise. But, there comes a point where the potential immediate savings can end up costing that retailer — or manufacturer — big time. I like to think that the retailers I know are in this for the long run and want to do everything they can to make their customers feel comfortable with the products purchased at their stores, especially their private label and store brand items, so that they will keep coming back time and time again. Price does matter. But having a consumer base that has confidence in your stores — and the products inside — is much more important. dsn

In the end, it is important that retailers realize that a short-term gain may end up costing them big bucks, and, perhaps even worse, bad publicity.

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An EnsembleIQ Publication 8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631 Senior Vice President, Publisher John Kenlon (516) 650-2064, jkenlon@ensembleiq.com Editor in Chief /Associate Publisher Seth Mendelson (212) 756-5160, smendelson@ensembleiq.com EDITORIAL Managing Editor David Salazar (212) 756-5114, dsalazar@ensembleiq.com Senior Editor Sandra Levy (845) 893-9573, slevy@ensembleiq.com Desk Editor Maria Manliclic (212) 756-5093, mmanliclic@ensembleiq.com Online Editor Gisselle Gaitan (212) 756-5138, ggaitan@ensembleiq.com SALES & BUSINESS Beauty Director Laura Fontana (440) 724-4369, lfontana@ensembleiq.com Northeast Manager Alex Tomas (212) 756-5155, atomas@ensembleiq.com Regional Manager Steven Werner (312) 961-7162 swerner@ensembleiq.com Brand Marketing Manager Mary Ellen Magee (856) 419-8411, mmagee@ensembleiq.com Production Manager Jackie Batson (224) 632-8183, jbatson@ensembleiq.com PROJECT MANAGEMENT/PRODUCTION/ART Vice President Production Derek Estey (877) 687-7321 x 1004, destey@ensembleiq.com Creative Director Colette Magliaro cmagliaro@ensembleiq.com CUSTOMER SERVICE Having a problem with your subscription? Send us full details with the mailing label of the last copy you received, along with your telephone number. Write to: Circulation Fulfillment Director, Drug Store News, P.O. Box 3200 Northbrook, IL 60065-3200; email drugstorenews@omeda.com; or call (847) 564-1468 CIRCULATION LIST MANAGER Elizabeth Jackson MeritDirect (847) 492-1350 x 318. REPRINTS PARS International, LF-Reprints@parsintl.com, (212) 221-9595 x435, tinyurl.com/LF-reprints. Single copy price is $20 for a regular issue and $100 for a statistical issue. PERMISSIONS For permission to reuse material from Drug Store News/DSN (ISSN 0191-7587) please access www.copyright.com or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, (978) 646-2600, (855) 239-3415. CCC is a not-for-profit organization that provides licenses and registration for a variety of uses.

CORPORATE OFFICERS Chief Executive Officer Jennifer Litterick Chief Financial Officer Dan McCarthy Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several

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INDUSTRY NEWS

Coty Acquires Majority Stake in Kylie Cosmetics After speculation that Coty was considering taking a stake in Kylie Jenner’s Kylie Cosmetics, the beauty giant and the upstart brand have come to an agreement. The companies have entered a strategic partnership in which Coty will acquire 51% ownership for $600 million, with the aim of expanding the Kylie Cosmetics and Kylie Skin businesses. “We are pleased to welcome Kylie into our organization and family,” said Coty CEO Pierre Laubies. “Combining Kylie’s creative vision and unparalleled consumer interest with Coty’s expertise and leadership in prestige beauty products is an exciting next step in our transformation and will leverage our core strengths around fragrances, cosmetics and skin care, allowing Kylie’s brands to reach their full potential.” Coty said it expects the transaction to be accretive to the net revenue growth of its core fragrance, cosmetics and skin care portfolio by more than 1% per year over the next three years, the company said. “I’m excited to partner with Coty to continue to reach even more fans of Kylie Cosmetics and Kylie Skin around the world. I look forward to continuing the creativity and ingenuity for each collection that consumers have come to expect, and engaging with my fans across social media,” Jenner said. “This partnership will allow me and my team

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Good Culture Launches Wellness Probiotic Gut Shots

to stay focused on the creation and development of each product, while building the brand into an international beauty powerhouse.” Also, as part of the agreement, Coty will have the overall responsibility for the portfolio’s development and act as a licensee for skin care, fragrances and nail products. The acquisition is expected to close in the third quarter of fiscal year 2020, and all beauty categories within the new partnership will continue to be sold through leading luxury retailers, as well as owned digital channels, the companies said.

Good Culture is looking to make gut health easier. The Irvine, Calif.-based company has debuted its Wellness Probiotic Gut Shots, which combine the probiotics found in cultured kefir with such ingredients as turmeric, matcha, chaga and collagen. “Probiotic shots are an emerging category, and we saw a void in the space with an opportunity to merge functional ingredients with probiotics,” said co-founder and CEO Jesse Merrill. “Good Culture is built on the mission to deliver healing foods made with clean ingredients. As we looked to expand our portfolio of pasture-raised cultured dairy products, we wanted to offer an easy on-the-go way to get your daily dose of gutfriendly probiotics. With our kefir shots, we’re excited to provide consumers with an option that is both delicious and functional.” The probiotic shots come in four varieties, which include: • Pineapple + Turmeric, which is meant to aid brain function and joint health; • Vanilla + Collagen, designed to help strengthen hair, skin and nails; • Chai + Matcha, meant to help create calm and focused energy for the mind and body; and • Chocolate + Chaga, designed to assist in boosting energy and improve immunity. Lightly sweetened with sweet potato juice and coconut sugar, the kefir shots are free of synthetic hormones, preservatives, gums and artificial ingredients, the company said. The 3.4-oz. Wellness Probiotic Gut Shots currently are available at Whole Foods Market locations nationwide.

December 2019 DRUGSTORENEWS.COM

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INDUSTRY NEWS

Quest Products Acquires Welmedix’s Burn, Sun Care Brands Quest Products has grown its portfolio with a recent acquisition. The Pleasant Prairie, Wis.-based company has acquired the SunBurnt and First Degree brands of burn and sun recovery products from Welmedix Consumer Healthcare. The Promus Equity Partners portfolio company said SunBurnt’s products, which are stocked by such national retailers as Walgreens, CVS Pharmacy and Rite Aid, are the top-selling items in the sun recovery segment of the sun care category. The brand and First Degree join Quest’s brand lineup, which includes OraCoat, Clinere, Alocane, ProVent, AlcoHawk and Copper Fixx. “We are very pleased to add SunBurnt and First Degree to our portfolio of category-leading brands,” said Mike Brennan, president of Quest. “These brands offer unique solutions for consumers in self-care treatment of burns and sunburns, and we are excited to offer these products to our retail partners and expand the distribution domestically and internationally.” Welmedix president Bruce Lifka said, “We are happy to have these brands move to the Quest portfolio, where they can grow to their full potential. Quest has shown great success in growing brands from infancy to market leadership.”

Nature’s Truth Employs TRU-ID to Test Botanical Ingredients Piping Rock Health Product’s wholesale division, Nature’s Truth, is debuting a unique approach to ensuring quality in its products. The Ronkonkoma, N.Y.-based company has partnered with TRU-ID to verify and identify botanical ingredients using its DNA certification technology. “Nature’s Truth was built on a foundation of quality, innovation and technology,” said Kimberly Vigliante, senior vice president of wholesale sales and marketing at Piping Rock. “At Nature’s Truth, we are dedicated to providing our consumers with the highest-quality products, and ensuring truth in labeling is at our very core. By partnering with TRU-ID to DNA test our plant-based products, we are ensuring the purity and authenticity of these supplements. With DNA testing, there is no second-guessing.” TRU-ID was established in 2014 as an independent DNA certification program based on research from the University of Guelph in Ontario, Canada. Nature’s Truth is partnering with the organization as part of its efforts to certify the purity and authenticity of its herbal supplement, as well as to set them apart in the category, the company said.

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Almond Pro Foods Unveils Nondairy Powdered Coffee Creamer Almond Pro Foods, a brand known for its almond protein powder, is expanding its portfolio with a nondairy creamer product. The Miami-based company’s Almond Coffee Creamer, which is low in calories, sugar and carbohydrates, is able to cater to consumers who abide by keto, paleo or vegan lifestyles, the brand said. “Our goal was to deliver a truly healthy product that addressed customer concerns of clumping, poor taste and unhealthy ingredients” said Caulen Foster, founder of Almond Pro Foods. “I really feel we accomplished that with this. It’s literally a powdered creamer made from ground almonds and coconut milk that dissolves in your coffee. Frankly, it’s the best nondairy creamer I’ve ever tasted, and we’re really excited to bring it to the natural foods community.” Made from California almonds and ethically sourced coconut milk powder that the company said gives it a creamy texture, the product mixes into coffee, and can be frothed in 15 to 20 seconds using a spoon, the company said. Available in vanilla and hazelnut flavors, the creamer retails for $24.97.

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INDUSTRY NEWS

FDA OKs Camber’s Generic Bentyl Camber has received the Food and Drug Administration’s approval for its generic Bentyl (dicyclomine hydrochloride for injection). The generic of Allergan’s branded product is indicated to treat functional bowel or irritable bowel syndrome. “Camber has had a remarkable track record of launching oral solid and oral liquid ANDA products successfully in the U.S. marketplace,” said Camber vice president of business development Arun Nataraj. “Now, with the launch of our first injectable product, Camber is transitioning into the more complex generics space. We plan to launch more injectable products in 2020 as part of our growth and product diversification strategy.” Camber’s dicyclomine hydrochloride injectable is available in 20 mg/2 mL single-dose vials.

Gillette Marks Apollo 11 Anniversary with Razor Collection Gillette celebrates the 50th anniversary of the moon landing last July by unveiling its Apollo Collection by RazorMaker, a 3-D-printed razor inspired by the Apollo 11 spaceflight. Featuring an exclusive moonscape handle design that’s adorned with the historically inspired “ … one small step … ” boot imprint on the front, the limited-edition collection also features the iconic and period-accurate NASA “meatball” insignia on the back. The brand noted that the collection comes full circle as Gillette was there during the first trip to the moon in the Apollo 11 astronauts’ personal hygiene kits, each of which contained a Gillette Techmatic Razor. Each Razor Maker handle is printed at the company’s Boston headquarters, using stereolithography printed technology from Formlabs. Available exclusively on Gillette’s website, the razor retails for $55.

The Mane Choice, MAV Beauty Brands Form Strategic Partnership The Mane Choice, a brand known for its hair care solutions and styling products, has teamed up with MAV Beauty Brands. Founded in 2013 by Courtney Adeleye, The Mane Choice’s products already can be found across many drug, mass and specialty retailers, but partnering with MAV Beauty Brands will allow it the opportunity to expand across North America to a wider range of consumers, the company said. “I made this move to expand the company’s reach and ultimately create more opportunities for my community, so they can get on a path to creating advantage and wealth,” Adeleye said. Alongside the partnership, Adeleye also is launching the Generational Advantage Fund, which will focus on providing financial literacy programs to communities in need. To launch this initiative, Adeleye personally has committed to contributing $30 million to support business capital, mentorship program and scholarships among other initiatives, the companies said. MAV Beauty Brands is a global personal care company dedicated to providing consumers with premium quality, authentic and

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differentiated products, the company said. Its portfolio currently includes such brands as Marc Anthony True Professional, Renpure and Cake Beauty.

December 2019 DRUGSTORENEWS.COM

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INDUSTRY NEWS

Teva Intros Generic Jadenu Tablets Teva Pharmaceuticals is introducing its generic Jadenu (deferasirox) tablets. The generic of Novartis’ branded product will be available in dosage strengths of 90 mg and 360 mg. The drug is an iron chelator indicated to treat patients age 2 years old and older with chronic iron overload due to blood transfusions. Teva’s generic comes with a boxed warning for renal failure, hepatic failure and gastrointestinal hemorrhage. The product is available in 30-count bottles in both dosage strengths.

Teva, Celltrion Debut Rituxan Biosimilar Truxima Teva and Celltrion are introducing Truxima (rituximab-abbs) injection. The product is the first biosimilar to Genentech’s Rituxan (rituximab). “We are excited about the first FDA-approved biosimilar to rituximab in the United States,” said Brendan O’Grady, Teva’s executive vice president and head of North America commercial. “Teva’s commitment to biosimilars is focused on the potential to create lower healthcare costs and increased price competition. This focus is consistent with Teva’s mission of making accessible medications to help improve the lives of patients.” Truxima currently is indicated for the treatment of adult patients with various types of non-Hodgkin’s lymphoma, as well as certain types of chronic lymphocytic leukemia, typically in combination with other chemotherapy agents. “We are pleased to announce the launch of the first rituximab biosimilar, Truxima, with our marketing partner Teva in the United States,” said Celltrion vice chairman Hyoung-Ki Kim. “We believe that the introduction of Truxima into the U.S. market will contribute to addressing unmet needs of U.S. patients, as well.”

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December 2019 DRUGSTORENEWS.COM

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DSN TOP WOMEN IN HEALTH, WELLNESS AND BEAUTY 2019

M

ore than 300 retailers, manufacturers and other industry officials feted the recipients of the inaugural Drug Store News Top Women in Health, Wellness and Beauty awards on Nov. 20 and 21 at the Fairmont Hotel in Chicago. Among the more than 140 award winners, two Career Achievement winners also were celebrated — Judy Sansone, senior vice president of front store business and chief merchant at CVS Health, and Mary Reno, CEO of Innovation. The first night of the event featured a cocktail party and award presentation dinner. On day two, attendees heard keynote addresses from best-selling author Kelly McDonald and Kristin Shane, senior vice president of merchandising at PetSmart. dsn

Stacey Roberts, Teri Schanck, Shelly Boyle, Mary Miller, Summer Kerley, April Hopper and Karen Staniforth of Rite Aid all received awards.

Judy Sansone of CVS Health, winner of a Career Achievement award

Matt Davala, Gary Glew, Jeff Olson, Sharon Henkels, Amy Estes and Clark Brown of Advantage Consumer Healthcare

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Marcela Vargas and Amy Centrella of Anda, Emily House of Walgreens and Vicki Mangus of Anda

Career Achievement award winner Mary Reno of Innovation

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John Kenlon of Drug Store News/EnsembleIQ with Mary Reno and James Reno of Innovation

Beth Potere, Michael Rudolph, Kimberly Vigliante, Scott Rudolph and Tina Dobush of Piping Rock Health Products

Marsha Garcia and Martin Pett of Doctor Easy Medical Products

Maisha Webster, Keris Clark, Michelle Battello, Jamie Connell, Elisa Eobstel, Amy Alt and Stephanie Robertson of Procter & Gamble

Seth Mendelson of Drug Store News/EnsembleIQ with Stephanie Trachtenberg of Clio

DRUGSTORENEWS.COM December 2019

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DSN TOP WOMEN IN HEALTH, WELLNESS AND BEAUTY 2019

The first panel of the day was focused on hurdles women overcame to succeed in the industry.

Author and consumer trend expert Kelly McDonald (left) gave a keynote address and moderated a panel (center) about how to succeed through alliances, sponsors and mentors; Kim Feil (right) spoke about how the Network of Executive Women works to help women build a network and rise in the ranks.

Women from CPG companies and retailers discussed how women in the industry can support one another, find mentors and mentor others.

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PetSmart senior vice president Kristin Shane closed out the event with a keynote address.

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ONE-ON-ONE

Into the Fold P&G is making big commitments to diversity and inclusion

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amon Jones, vice president of global communications and advocacy at Procter & Gamble, said that the company has made a strong commitment to advancing social and environmental causes. And, he noted, company officials want to use their position in the retail industry to further these causes. Jones sat down with DSN to talk about what P&G is doing and how it has thus far impacted retail. Drug Store News: What does it mean when P&G says, it’s “a force for good and a force for growth?” What does that include? Damon Jones: Beyond delivering superior products, making meaningful societal contributions is an integral part of how we run P&G — and one that has a direct impact on our bottom line. We believe doing good is good business. Consumers not only expect, but reward brands that advance social and environmental causes. These actions build trust and drive loyalty that set P&G, our brands and our leaders apart. Like all areas at P&G, this approach is validated by real-life experience. Compelling, authentic, values-based communication builds brands. Always, through their “Like a Girl” campaign, grew sales, share and brand equity. Secret continues to see business growth behind its efforts to drive women’s equality. SKII, P&G’s fastest growing brand, has led numerous efforts to tackle societal taboos in a way that has engendered consumer love in multiple countries around the world. Drug Store News: Tell us more about your diversity and inclusion commitments. What do they consist of? What are some recent key initiatives? DJ: At P&G, we aspire to create a world free from bias with equal representation and full inclusion of all people regardless of race, gender, ability, identity or religion.

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Damon Jones, vice president, global comm-unications and advocacy, Procter & Gamble

“We believe doing good is good business. Consumers not only expect, but reward brands that advance social and environmental causes. These actions build trust and drive loyalty that set P&G, our brands and our leaders apart. Valuesbased communication builds brands.”

A core focus of that work is raising awareness of bias, both individually and systemically, across many areas, including media, education and health care. Once we’re aware of bias, we can do something about it. With that in mind, we’re using our talents as storytellers and our voice as a leading advertiser to inspire people to reflect on these issues, have constructive conversations, challenge their own biases and become advocates for change. One of our current efforts is focused on racial bias. Our short film, “The Look,” (talkaboutbias.com) illustrates conscious and unconscious bias as experienced by black men. It’s a provocative campaign that challenges people to rethink stereotypes of black men and builds empathy for all people who are sometimes seen as “other.” Using the film, we’re creating

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forums for understanding across the country and online. Gender equality is another area of focus. We’re tackling gender bias in advertising and media by ensuring fair and accurate portrayal of women — and all people. Too often, women are inaccurately portrayed through stereotyping, objectification or diminished characters. We can shift this by setting a positive example in our own content, and by leading efforts across the industry to ensure more women have leadership roles behind the camera. To do it, we’re fueling efforts like Free the Work and See All 2020, which connects women and under-represented minority directors, producers and other artists in advertising and entertainment, ensuring their talent and potential are not overlooked. We’ve also committed that half of P&G’s television commercials will be directed by women in the next few years — a very tangible goal that will lead to even more compelling content and greater economic inclusion. P&G is also helping to remove barriers to women’s economic empowerment and girls’ education. We do this by spending with women-owned businesses, partnering with UN Women to support women entrepreneurs around the world, helping the Sesame Workshop develop programing, and through the Always Keeping Girls in School program. Of course, all these efforts are built on a foundation of doing the right thing every day in our own house: paying men and women equally for equal work and performance; recruiting and developing employees from all walks of life; and ensuring an inclusive environment that embraces the individuality we each bring to our work. Drug Store News: How do your retail partners benefit from this? DJ: Everyone benefits from a more equal world. If women, blacks and Latinos were paid equally, our economies would have hundreds of millions more in spending power. And that’s not just good for society in general, it’s especially beneficial for companies like P&G and others in our industry. It will also lead to stronger communities and more creative, diverse and innovative workplaces. Retailers are large advertisers and can benefit from the insights and resources we’re

“The Look,” a film highlighting bias as experienced by many black men in America. Procter & Gamble is using the film and its website, talkaboutbias.com, to create forums for understanding across the country and online. developing through initiatives like the Alliance for Inclusive and Multicultural Marketing. This will help enable them to create more compelling advertising that resonates with diverse audiences, tapping into markets that have significant spending power — Target, Ulta and Walmart are already members. Drug Store News: How would you like to see other manufacturers get involved? DJ: There is no standard playbook. Everyone needs to find their own voice and use it authentically. Not every brand can engage on every issue. Public advocacy must be grounded in true commitment from senior leadership and linked to the values and long-term goals of the organization. It’s also about progress, not perfection. For example, P&G is committed to 50/50 representation of men and women throughout our organization. While we’re making progress, we’re just closing in on 48%. We’re not letting that 2% get in the way of our advocacy, but we’re also transparent about our goals, our plans and our commitment. Consumers and stakeholders recognize and appreciate that transparency. Inclusion is fundamentally about cooperation, not competition. We’re a part of many groups where companies can

collaborate and learn from one another. One of them is the CEO Action for Diversity & Inclusion, a coalition of leading organizations that are committed to sharing insights from their diversity and inclusion journeys for broad learning. Drug Store News: What is next for P&G in this space? DJ: Building further on our racial equality efforts, we’re highlighting bias that exists in our justice systems where poor, over-policed communities suffer disproportionately from discriminatory practices, such as money bail. This system penalizes unconvicted individuals and their families and communities simply because they cannot afford to pay bail, perpetuating poverty cycles. Working with organizations like Global Citizen and Color Of Change, we’re drawing attention through documentary films and other actions that will change this system. dsn

DRUGSTORENEWS.COM December 2019

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ONE-ON-ONE

Investment in Automation Greg Wasson discusses why a consortium of investors has backed Innovation

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n November, high volume pharmacy automation technology and software company Innovation signed an agreement with a consortium of investors led by Greg Wasson, president and co-founder of Wasson Enterprise, to acquire a majority stake in the company. Drug Store News spoke with Wasson about the recent developments and his vision for Innovation’s future growth. Drug Store News: Why did the consortium believe that this was a good time to invest in Innovation? Greg Wasson: It starts with the healthcare industry at large. There is a huge need in our country to improve access to high quality and affordable health care. Pharmacists are one of the most successful and accessible healthcare providers, and advanced automation and technology can help free pharmacists up to spend more time with patients on medication compliance and additional services. There are two things that we found during our diligence over the past year. It’s pretty clear that the pharmacy industry at large is in the late innings of acknowledging that automation and the fulfillment process, and other areas of the dispensing process, is an opportunity, but they are in the early innings of adoption of centralization and automation. There is a real market acknowledgement and desire to begin to look at ways to reduce costs and to free pharmacists up through automation. The second thing we found during a year of diligence in looking at different companies is that Innovation is absolutely viewed as the market leader. They design, manufacture and integrate pharmacy automation technology with many of the pharmacy providers across all sectors. They have a comprehensive software solution for high volume workflow management. There are industry tailwinds as pharmacy providers begin to look for automation for centralization of prescription fulfillment. Now is the time.

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Greg Wasson, president and co-founder, Wasson Enterprise

“What pharmacists have done for years is help people stay compliant to their medications. There is data that shows that lack of compliance on medication can cost the healthcare system $200 billion to $500 billion. Freeing pharmacists to spend more time with patients, to help those who are on chronic medications stay compliant, can really help the healthcare system at large.”

Drug Store News: You’ve said that the consortium and Innovation share a vision for the future of pharmacy. What would you say that vision is, and what role does automation like Innovation’s play in it? GW: Certainly, freeing pharmacists up to be able to spend more time with patients by potentially removing 40% to 50% of the prescriptions that are filled either in a hospital pharmacy, a retail pharmacy, a pharmacy benefit or mail service facility, and allowing for pharmacists to spend more time with patients. What pharmacists have done for years is to help people stay compliant to their medications. There is data that shows that lack of compliance on medication can cost the healthcare system $200 billion to $500 billion. Freeing pharmacists to spend more time with patients, to help those who are on chronic medications to stay compliant, can really help the healthcare system at large. Drug Store News: What are your initial goals after the transaction is completed? GW: Innovation has a great team. It is a familyfounded company. They are viewed as the leaders in technology and automation. They come from a manufacturing background, so they are an R&D team. The advanced robotics that they have, which can dispense hundreds of thousands of prescriptions in an eight hour shift is industry leading. When we come together, we can bring our consortium’s strategic operational and financial resources to help accelerate the expansion and the offering to pharmacy providers at large, as well as continue to invest in R&D, so they continue to be the leaders in automation and technology. We are beginning to see the industry look at more centralization of high- volume prescription environments so they can leverage scale. The resources we will be able to bring will help accelerate and continue to invest to remain the leader in automation. dsn

December 2019 DRUGSTORENEWS.COM

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ONE-ON-ONE

It’s in the Cards Designer Greetings’ Card$mart Store-In-A-Store concept focuses on value

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bows and ribbons, all in a variety of sizes and shapes to suit every customer’s need. Designer Greetings is proud to employ a staff of talented artists from around the globe. The attention to detail that they give their awardwinning cards satisfies customers and meets the needs of every important occasion. From year to year, Designer Greetings’ product has been awarded the industry’s highest honor, the “Louie Award”. This award recognizes the most outstanding greeting cards, invitations and announcements in the United States.

mong the offerings that Designer Greetings provides for its retail partners is its Card$mart StoreIn-A-Store, which offers a gift destination within an existing store. Drug Store News spoke to Designer Greetings president and CEO Steven Gimbelman about what the offering can do for retailers who want to commit the space. Drug Store News: What are the advantages for pharmacies and drug stores across the United States when they decide to install the Card$mart Store-In-A-Store concept? Steven Gimbelman: A top advantage for pharmacies and drug stores is that Card$mart outvalues the national drug chains. Most national drug chains sell their cards at full price. Recently, card prices have risen dramatically and the discerning shopper is discouraged. With Card$mart, the shopper can purchase cards all the time at 50% off the published retail price, without sacrificing quality. Such appealing pricing drives traffic to the store, creating new customers. This is one of the only products an independent drug store retailer can buy that outvalues national retail drug chain stores. In addition, data has shown that the Card$mart customer will purchase more units of cards, ultimately improving the retailer’s profit, an advantage every retailer is seeking. Drug Store News: Why should an existing store think about giving up prime space in their location? SG: Card$mart Store-In-A-Store is a huge traffic driver. Card$mart is one of the only programs that an independent drug retailer can buy that outvalues the national chains. While the cost to the customer is half the price, Card$mart greeting cards do not sacrifice on quality. Card$mart products are equivalent to the competition’s high end full price card lines. Moreover, while the customer will

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Steven Gimbelman, president and CEO, Designer Greetings

receive quality product at a value price, the likelihood that they may purchase more units ultimately drives up retail sales, bringing new customers to the store. Drug Store News: What products are offered in Card$mart Store-In-A-Store? SG: CardSmart’s primary vendor and parent company, Designer Greetings, offers the most extensive title selection in the industry, with over 23,000 card titles. In addition, Card$mart provides a Preferred Giftware Vendor Program, which is an exclusive benefit to the retailer, whereby the store owner gains access to top gift vendors across multiple gift categories. In addition, part of Designer Greetings’ array of product is its premier gift wrap line, known and recognized nationally as the branded Glitterwrap program. This program includes the essential gift wrap items, such as gift wrap, roll wrap, gift bags,

“Card$mart is one of the only programs that an independent drug retailer can buy that outvalues the national chains. While the cost to the customer is half the price, Card$mart greeting cards do not sacrifice on quality.” Drug Store News: What separates Card$mart from the other card and gift companies? SG: For more than 25 years, Card$mart has been the only nationally recognized value brand of card and gift shops in America with the attractive and successful value proposition of “50% off cards, everyday” concept. Having a nationally recognized value brand not only entices customers to view the location as a destination shop, but also helps attract new customers seeking to purchase high quality cards at a value price. This unique shopping experience offers buyers multiple options within a single drug store. While the pharmacy industry boasts revenues in the billions, despite what many people believe, the greeting card industry holds its own as a healthy $7.5 billion industry. dsn

December 2019 DRUGSTORENEWS.COM

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CBD REPORT: NEW PRODUCTS

Medically Correct Unveils TruPura CBD brand

Sh’nnong Beverage Debuts Má Functional Iced Teas New company Sh’nnong Beverage is unveiling its first product line, Má Functional Iced Teas. The line of three ready-to-drink teas, which contain CBD and natural botanicals, has launched at 500 The Vitamin Shoppe stores. The teas are rooted in the tea made by China’s Emperor Shennong, who combined tea with organic hemp and botanicals for his original Má brews. The Sh’nnong Beverage drink varieties, which start with green, oolong or bai mudan teas, are available in Detox: Emperor Spice Cleanse, Focus: Oolong Peach Spark and Relax: Lavender Berry Chill selections. Focus: Oolong Peach Spark contains ginkgo biloba, gotu kola and rhodiola rosea, as well as 40 mg of caffeine; Relax: Lavender Berry Chill includes blueberry-infused, caffeine-free bai mudan tea, chamomile, lavender, lemon balm, elderflower and passionflower; and Detox: Emperor Spice Cleanse is a caffeine-free brew meant to help purify the body with green tea, lemon, chamomile, schisandra berry and dandelion root. All of the varieties also contain CBD. “We founded Sh’nnong Beverage on the principle of creating plant-based, better-for-you beverages, leveraging not only the benefits of CBD, but also those of natural botanicals, adaptogens, herbs and spices,” said co-founder and CEO Jill Beraud. “This is CBD plus. CBD plus is about the combined benefits of tea, hemp CBD and carefully chosen botanicals for an overall more powerful effect. Our mission is to help everyone live their life in balance and achieve total Má.” Beraud previously was president of Starbucks and Lipton joint ventures at PepsiCo. She said she sees big potential for the new line of products in the growing CBD category, particularly given its placement in The Vitamin Shop stores. “When my business partner, Charlie Herbstreith, and I originally discussed this idea, it reminded me of my time at PepsiCo when kombucha and coconut water were just emerging. However, given the far-reaching benefits of CBD, this is a much bigger white space,” Beraud said. “The Vitamin Shoppe is the perfect launch partner for us. They are establishing themselves as CBD central across multiple categories and have tremendous in-store expertise in health, wellness and nutrition.”

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Medically Correct, a Denver-based hemp company, has debuted its new brand TruPura CBD. The brand includes six product categories that are made with CBD from Americangrown hemp, the company said. “We are like a start-up with nine years of infused food experience under our belts,” said Bob Eschino, founder and president of TruPura. “The quality and consistency we’ve delivered for nearly a decade is reflected in TruPura CBD, and consumers can feel confident they are getting high quality CBD products made from certified hemp and containing no THC.” TruPura’s products include chocolates with 300 mg of CBD per bar; gummies with 500 mg of CBD per jar; a tincture with 3,000 mg of CBD per bottle; bath salts with 500 mg of CBD per bottle; soft gels with broad-spectrum hemp oil in three formulas for everyday use — sleep support and anti-inflammation; and a salve with shea butter, beeswax, essential oils and 500 mg of CBD per bottle. “There has been a huge spike in consumers searching for information and safety when it comes to CBD,” said Derek Cummings, co-founder/research and development for TruPura. “Having suffered from chronic pain for many years and experiencing relief from infused products, I have been motivated to help develop wellness products that can provide the same therapeutic relief to people who need it. TruPura CBD offers products that can be experienced in a variety of ways.” TruPura initially launched in Colorado in November and is expanding nationally in December.

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COUNTER TALK

Tip of the Iceberg CBD isn’t the only cannabinoid that could help consumers By Ryan Lewis

C Ryan Lewis, CEO, Global Cannabinoids

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urrently, the hemp industry is experiencing an explosion of interest in the cannabinoid of the moment, cannabidiol, or CBD. It is fast becoming the trendiest ingredient across multiple channels from nutraceutical and skin care to animal health and sports supplements. But CBD is just the tip of a very large iceberg of cannabinoids that are about to sweep across the nation and the world. Hemp is a plant that has hundreds of medicinally powerful compounds within it, and each one of these has major implications in the health, wellness and beauty categories worldwide. Although CBD is traditionally the most abundant cannabinoid found in hemp, new varieties of hemp are producing other rarer cannabinoids in higher amounts. Cannabinol, or CBN, is a cannabinoid that you probably haven’t heard of yet, but will very soon. CBN currently is showing some incredible benefits related to sleep that seriously could shake up the multibillion-dollar sleep industry. Our company, Global Cannabinoids, is the first to produce CBN in bulk quantities for distribution to manufacturers using this unique and potent compound in various formulations related to sleep. Another exciting cannabinoid is cannabichromene, also known as CBC. CBC is another rare cannabinoid that could prove to be more effective as a pain reliever than any other naturally occurring cannabinoid discovered thus far. The team at Global Cannabinoids is focused on the extraction and isolation of this compound and expects to have bulk quantities available for distribution before the end of 2019. Cannabigerol, or CBG, is gaining in popularity at a rapid pace. This is mainly due to the fact that certain varieties of hemp can produce this cannabinoid in high amounts, which makes extracting it commercially viable. CBG produces an uplifting and almost energizing effect. This cannabinoid is being used in various formulations related to energy and alertness. Global Cannabinoids is one of the largest

producers and distributors of CBG isolate and CBG-rich oils. Full-spectrum products currently are viewed as being “more effective” due largely in part to the “entourage effect” or synergy of compounds found within a whole plant extract. More and more brands are promoting their products as full spectrum, which can be defined as having the full plant profile and would always include THC at less than 0.3%. These products tend to produce a more sustained effect and arguably are better than an isolate-based product. The problem with full-spectrum oil, however, is that it is consistently difficult to produce the exact same extract every single time since every plant is different. Testing at certified laboratories also is a necessary piece of the supply chain puzzle. Ensuring that your cannabinoids are free of contaminants is critical. Hemp is used in phytoremediation, which means the plant literally can suck the toxins out of the soil. Not all labs are reliable, so it’s imperative to test each sample multiple times at different labs. At Global Cannabinoids, we require a third-party test before it leaves the extraction facility. We then perform testing in house at our own lab, and then we send out once more for another third-party test. By testing our concentrates extensively, we have the most accurate information as to potency and correctly can dose each product we are formulating and manufacturing. The future of the hemp/CBD/cannabis industry will be the ability to recreate an experience or effect consistently every time. In order to achieve this, products will need to be made consistently, using isolated cannabinoid compounds in precise formulations that can be recreated over and over again. Global Cannabinoids is currently building the largest inventory of hemp-derived cannabinoid ingredients intended to supply the brands of the future. Combining cannabinoids and other compounds in precise formulations will be critical to the success of the industry as more and more products begin to crowd the space. dsn

December 2019 DRUGSTORENEWS.COM

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PRODUCTS TO WATCH

Standing out from the Crowd HRG’s product team highlights five new products

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Zicam Nasal AllClear Swab

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CeraVe Acne Foaming Cream Cleanser

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Cetaphil Ultra-Healing Lotion with Ceramides

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Dr Teal’s Aluminum Free Deodorant, Lavender

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L’Oréal Elvive Total Repair 5 Protein Recharge Leave-in Conditioner

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December 2019 DRUGSTORENEWS.COM

o far, 2019 has brought a slew of new products each month, and the penultimate month of the year was no exception. Hamacher Resource Group’s new product team assessed 278 novel items, with the lion’s share (68%) coming from the beauty category, 30% coming from wellness and 2% representing OTC. Here are the five that stood out from the rather crowded pack. L’Oréal’s first of two products that stood out in November joins its growing roster of condition-specific products that complement its existing core cleansers. The foaming cleanser is designed to be extra gentle, using 4% benzoyl peroxide to clear pimples and blackheads, as well as restore the skin’s protective barrier. As aluminum in deodorants becomes a sticking point for ingredient-conscious consumers, Dr Teal’s is looking to appeal to them with its magnesium-based product that is scented with essential oils. The deodorant is designed to protect against odor and wetness, while also being free of parabens and phthalates.

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Matrixx Initiatives is growing its Zicam offerings with the addition of a triple-action formula designed to cleanse, protect and soothe nasal passages, particularly when allergen and pollutant exposure is high. The cold and allergy product also is drugfree and not saline based. Galderma Labs is adding to its Cetaphil brand by capitalizing on a big skin care ingredient trend with ceramides. Besides ceramides, the new lotion also contains sunflower seed oil and amino acids in an effort to help smooth and sooth dry, flaky skin for 24 hours.

With a focus on five signs of everyday damage — split ends, weakness, roughness, dullness and dehydration, L’Óreal’s new leave-in conditioner is designed to increase strength and flexibility. The product also is meant to help protect hair from heat damage, while reducing breakage. dsn

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SELFCARE ROADMAP INSIGHTS

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his month, Drug Store News is presenting additional insights from the GMDC | Retail Tomorrow Selfcare Roadmap. Developed in partnership with Hamacher Resource Group, the tool identifies opportunities, revealing how next practices can reshape the brick-and-mortar shopping experience, inspire new merchandising and service models, and provide impact across all aisles. The tool, which only is available to GMDC | Retail Tomorrow members, demonstrates how to optimize shoppers’ health, beauty and personal care, and wellness experiences, as well as how to drive new avenues for profitability by offering more than 140 insights and infographics that can be sorted by category of self-care occasion. For this month’s category, DSN is previewing insights around upper respiratory management taken directly from the Selfcare Roadmap tool. dsn

Upper respiratory

BASKET SIZE

ADULT VS. CHILDREN’S PRODUCTS BASKET SIZE IN COLD AND FLU SUBSEGMENT

GEOGRAPHICAL BREAKDOWN

Upper respiratory

INTENTION: MANAGING UPPER RESPIRATORY Northeast

ADULT

COLD AND FLU

$8.36 AVERAGE UNIT PRICE

16%

Southeast

30% West

30%

CHILDREN’s

Midwest

COLD AND FLU

24%

Key insight: Across all regions, the top three subcategories upper respiratory shoppers intend to purchase from are: allergy/sinus relief, cough-cold, and nasal sprays.

Upper respiratory

$8.30 AVERAGE UNIT PRICE

CONDITION INSIGHTS RETAIL PRICE COMPARISON HBW AVERAGE PRICE $5.73

$4

Key insight: The average unit price for adult and children’s cold and flu products are almost identical.

UPPER RESPIRATORY AVERAGE PRICE $7.86

$6

$8

$10

Key insight: Adult upper respiratory average retail unit prices are 37% higher than the average HBW retail unit price.

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FOCUS ON: PHARMA LOGISTICS

Keeping Things Moving Pharma Logistics’ speed in paying retail partners is one of the reasons it continues to thrive BY SETH MENDELSON

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hink of it like money in the bank — and who does not like that? That is what Michael Zaccaro wants the retail pharmacies his company, Pharma Logistics, works with to focus on. Along with a number of services, the Libertyville, Ill.-based reverse pharmaceutical distribution company can guarantee its retail partners, who participate in its Rapid Credit Program, payment in as little as 14 days on their returned pharmaceuticals through a program that puts the onus on Pharma Logistics, not the pharmacy. “The bottom line is that we can accelerate payment to our customers,” said Zaccaro, who founded Pharma Logistics in 1996 and now serves as its president and CEO. “In an industry where the standard for payment is about one year, and some retail pharmacies can wait up to two years for payment, our Rapid Credit Program gets them their much-needed cash in hand in about two weeks. And, that allows them to do what they need with the money, including quickly reinvesting it back into the company or perhaps meeting payroll.” The key, Zaccaro said, is that Pharma Logistics’ experienced

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reconciliation team is able to quickly and accurately value the worth of the returned pharmaceuticals and then send the customer a check for that value. “The bottom line is that our retail partners do not have the time to do this, or might leave money on the table due to changes in manufacturer policies,” he said. “So, we assume the risk. We give them the fair value of the product and then we work with the manufacturer to recover the credit. We remove all the burden from the pharmacy, which allows them to be more focused on patient care and making more money from their own operation.” “There is no downside for the retailer. While our expedited service fee might be a bit higher than the traditional service fee, in the end, our retail partners come out ahead because we get them all of their expected return value, and we get it to them in a very timely manner as opposed to having them wait for months or even years for their money, which in the end might be as little as 50% of what they expected.” Knowing the business seems to play a huge role in Pharma Logistics’ success. Zaccaro and his team have years of experience working with manufacturers and wholesalers, and are able to weave

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their way through the bureaucracy that can hold up payments. Plus, the company’s relationship with companies — large and small — allows team members to determine the value of the products and work to get any money due. Alleviating the burden on retailers, who are under more and more pressure as fees increase, competition increases and drug prices fluctuate, seems to be the focus for Pharma Logistics and its 200 employees. What started as a regional company in the basement of Zaccaro’s home in northern Illinois nearly 24 years ago has blossomed into a company that services more than 7,000 independent and small retail pharmacy locations in all 50 states and Puerto Rico. Compliance is another big area that Pharma Logistics can help retail pharmacies with. “We have expertise in that area and can help relieve retailers of a lot of responsibility and, again, let them concentrate on what they need to do,” Zaccaro said. To that end, the company is hosting an event in Rosemont, Ill., called “Navigating the EPA: Compliance not Confusion,” on Oct. 6 and 7, 2020 to educate pharmacies about such issues as Environmental Protection Agency regulations, regulating pharmaceutical waste, controlled substance returns, and waste management and hazardous pharmaceutical waste enforcement. Zaccaro and Pharma Logistics’ nearly 24-year journey, he said, has been an interesting one. “Basically, I needed a job,” Zaccaro said about the time when he founded the company. “I had some experience working with pharmaceutical inventory, so working out of my basement for about three years, I did it all — selling, service, processing and accounting. My first big break came when I signed up a pharmacy called Ross Pharmacy in Highland Park, Ill., and Ballin Pharmacy in Chicago in my first week. Growth was slow and steady. The company was able to move into a 2,100-sq.-ft. facility in Mundelein, Ill., around 2000, and eventually into a 40,000-sq.ft. facility around 2010 when it inked a deal to provide its services to the U.S. Department of Defense. Now, with its focus on its Rapid Credit Program, as well as the traditional on-site and boxand-ship services that ensure compliant, efficient pharmaceutical return services, the company is in the process of expanding again. Zaccaro said that it is building a 126,000-sq.-ft. headquarters and processing facility in Libertyville that should open in the first quarter of 2020. “What were our other big breaks?” Zaccaro said. “Frankly, we caught a ton of breaks, which all added up for us. The Department of Defense deal, for example, doubled our business and forced us to expand our facilities and staff. Getting a group of 35 pharmacies in the Midwest when the company was only a few months old was another big break.” The company also is growing through acquisition. In October, Pharma Logistics purchased the pharmaceutical reverse-distribution division of Stericycle, adding more than 1,000 pharmacies, including about 600 in Puerto Rico, to its growing list of retail clients. “We are happy to welcome Stericycle’s returns customers into the Pharma Logistics family,” Zaccaro said. “The strategic acquisition of Stericycle’s pharmaceutical reverse-distribution division will further strengthen our position as the leader in the independent retail market,

in addition to expanding our international service footprint to include the island of Puerto Rico. Our Rapid Credit Program will continue to accelerate much needed cash flow for these pharmacies, while also providing them with safe and effective pharmaceutical disposal options.” Zaccaro said that box and ship and on-site Stericycle customers will see no interruption in service, with the processing of these returns moving immediately to the Pharma Logistics’ processing center in Libertyville. Pharma Logistics’ Customer Advocates will work closely with the former Stericycle customers to ensure a smooth transition, he said. Even with the retail pharmacy world in a state of constant evolution, Zaccaro said the future looks bright for Pharma Logistics. “With an increase in automation, we think our role will shift to helping retailers to better manage their pharmacies and get a better handle on where their money is going,” he said. “We think we can work closely with retailers to help them maintain and grow a profitable business. We will help them continue to operate.” dsn

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COVER STORY

Relationship-Based

PHARMACY Publix delivers on patient care through investment in technology and partnerships By David Salazar

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hat does it look like when a regional power player gets serious about its pharmacy operation? Just ask the team at Publix. The employee-owned company already had been in business for nearly 60 years when it opened its first pharmacy in 1986. Despite the late start, and with a great deal of knowledge and experience, Publix has managed to grow its pharmacy operation into one that goes beyond simply providing a place for shoppers to fill a script while they pick up their weekly groceries. From investing in technology and offering free and discounted medication to building out an accredited specialty pharmacy arm

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and positioning itself as a health-and-wellness partner — not just for its patients, but for payers and health systems — Publix has excelled at a time when pharmacy has become a tough game to even stay afloat in, let alone get ahead. Publix’s dedication to its patients, embodied in its focus on strategic investments and partnerships aimed at improving healthcare access and outcomes — coupled with its sterling reputation among both patients and workers in the areas it serves — are the reasons the company has been named the 2019 Drug Store News Pharmacy Innovator of the Year. One of the company’s strengths, according to vice president of pharmacy Dain Rusk, who joined Publix in June 2018, is its focus

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COVER STORY on becoming a health-and-wellness resource for people who might not automatically associate the purveyor of their favorite sub sandwich with the pharmacy, as well as building loyalty through personalized care. “I think the strategy has been pretty consistent, namely, how do we allow our pharmacists to be more customer-facing and provide better patient access to the point where we can become a healthand-wellness destination pharmacy versus just the traditional pharmacy?” Rusk said. “The landscape is definitely changing. It used to be about just filling as many prescriptions as possible. Now it’s really about trying to help people achieve their healthand-wellness goals.” In the time since he joined Publix, Rusk said he and his team have been refining the strategy to focus on three key pillars: investing in innovation, driving the prescription business and building out an omnichannel offering. Publix’s innovation focus is the key driver to both of the subsequent pillars of the company’s strategy, particularly because of the unique way that Publix defines innovation. “Innovation for us is both technology, as well as strategic partnerships that we’ve established,” Rusk said. “Innovation for us is how we’re improving access for patients, whether that be using unique solutions to drive better adherence or even using technology to improve efficiencies. Additionally, it’s also about strategic relationships and how we look at collaborating with other healthcare providers to improve access to high-quality, affordable health care.” On the technology side, Publix has invested in one of the largest central-fill facilities among grocery operators. The company’s Orlando, Fla.-based central-fill facility services all of its 733 Florida locations with pharmacies, from the Florida Keys to the panhandle, and features state-of-the-art automation from Innovation. It plays a key role in keeping Publix patients adherent, while also improving pharmacy workflow, taking refills of common maintenance medications — or particularly costly, less commonly prescribed medications — out of the store entirely. “Because of our medication synchronization program, we’ve really been able to manage the workflow in the pharmacy and know when patients are coming in for their medication, so that those drop into a workflow before they’re due,” said Katie Petti, Publix director of central and specialty pharmacy. “It gives the pharmacies plenty of time to get them filled centrally and sent back to the store, which has enabled our pharmacists to carry out clinical rather than administrative work, which allows them to personally engage with patients.” “As a pharmacy department, we’re really focused on taking care of customers and their health and well-being,” said Toan Do, Publix director of retail pharmacy operations. “I think the key is we allow pharmacists to be pharmacists. They actually feel that they can be engaged and, as leaders, we support that. We want to ensure that they’re able to provide immunizations or engage in the aisles when patients are looking for vitamins or cough and cold remedies to provide them expertise on what products to select.”

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“Innovation for us is both technology, as well as strategic partnerships that we’ve established.” — Dain Rusk, Publix vice president of pharmacy While technological innovation can help improve patient adherence and build loyalty, Publix’s innovative partnerships are designed to improve convenience and gain new loyal patients simultaneously. The cornerstone of the company’s partnership innovation is its working relationship with health systems throughout Florida and in South Carolina. At the center of its health system partnerships is Publix’s “Meds to Beds” program, through which Publix uses retail pharmacies located inside hospitals to fill prescriptions for patients being discharged. Once discharge becomes an option, the on-site pharmacy receives a patient’s prescriptions and insurance information, fills the prescription, and has the medication taken to patients by delivery specialists who answer any questions before the patient leaves the hospital. “It gives the patient a sense of comfort that their prescriptions are being filled by a reputable, well-known pharmacy in the area, and we are there to help during their transition back to home, so we provide that continuity of care,” said David Kirkus, Publix director of pharmacy administration. “Also, what is

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COVER STORY strategically important for us is the fact that it makes Publix part of the consideration process for a patient who may have never even thought of Publix pharmacy before.” The partnerships are very beneficial for Publix and the hospitals, as well as patients. “By ensuring patients are leaving the hospital with their medications in hand prevents any delays in patients getting their prescriptions filled upon discharge and decreases the likelihood of future hospital readmissions due to better medication adherence,” Kirkus said. “In providing our hospital partners with this important service, there is a positive financial impact for them, as well as better customer service and clinical outcomes for the patients.” Publix also conducts follow-up calls from its central facility to ensure it has seen its primary care physician and checks that it has refills. “We’re making sure there are no gaps in care whenever possible,” Kirkus said.

The track record of success is something that plays into both Publix’s and its partners’ strategies, namely patient care. Filling gaps in care also is the motivation behind another element of Publix’s health system partnerships — telehealth clinics. More than 36 Publix locations house health system-branded telehealth consultation clinics, which virtually connect patients with physicians for acute medical needs. Consultation rooms are adjacent to the pharmacy and a pharmacy technician walks patients through the consultation process as needed. Patients have access to medical devices for selfexam, while guided by the physician. It’s a service that’s convenient and affordable for patients, while allowing the physicians to be located remotely and oversee multiple clinic locations. The track record of success is something that plays into both Publix’s and its partners’ strategies, namely patient care. “It puts us in a position to work on things that are beneficial to both Publix and our health system partners,” Kirkus said. “Ultimately, our goal is to improve access to lower cost, high-quality healthcare services for the broader patient population that we are both serving.” Dedication to patient care also has informed the development of the company’s specialty pharmacy offering, which enables patients who are prescribed a specialty medication to receive it in a setting they are familiar with. Petti, who worked to build out the company’s closed door specialty pharmacy in Orlando, Fla. that houses support staff and inventory, said that it has helped bolster its pharmacists’ clinical role, providing counseling on how to administer the drugs and answer any questions they may have. “We want to empower our pharmacists to know that we’re going to be able to take care of those patients with specialty needs,”

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Petti said. “So, of course, growing our access to payers and limited distribution drugs is what we’re going to continue to work on so that we are able to address all of our patients’ pharmacy needs.” Beyond pharmacist care, Publix has worked to make the patient experience seamless when preparing to visit the store. “Obviously, in today’s world, technology plays a key role,” Do said. “We focus on offering tools and services that our customers can utilize that allow them to better manage their health-and-wellness needs, beyond being able to fill a prescription, to be able to monitor their profiles, interact with us digitally, and remind them take their medications as prescribed.” Rusk also said that the company has been moving toward allowing online payment for prescription pickup and creating express lanes for patients who have paid online. All the elements of Publix’s pharmacy ecosystem have been built with one thing in mind — supporting the relationship between pharmacist and patient. “We have invested in technology and in these health-system partnerships ultimately to make the pharmacist’s job less production and process oriented, and more where they can be customer facing,” Rusk said. Foremost in achieving this for the company has been its ability to decide on a strategy and stay the course, while being agile enough to achieve its goals. “We’re not approaching our strategy like a yo-yo,” Rusk said. “We’ve looked out and said, ‘This is what our three-year strategy looks like. I think we’re very committed to where we believe we need to go. We don’t have a different strategy every year. We have clear direction where tactics may deviate a little each year, but the pillars we’re driving toward aren’t going to change, and that’s very important.” And Publix is just getting started. “The company has invested heavily in pharmacy, which has allowed us to do some creative and unique things,” Kirkus said. “And I think we’re really at the beginning of how we plan to continue to innovate — not anywhere close to the goal line.” dsn

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COVER STORY

STAYING CENTERED

Publix’s central-fill facility is key to enabling its commitment to patient care By Sandra Levy

Before 2013, Publix’s central-fill pharmacy decidedly was low tech. Working in a space the size of a conference room, Publix associates manually filled a few thousand prescriptions a week for its 733 Florida stores with pharmacies. Fast forward to today, in the past several years, Publix has established a robust, largely automated central-fill operation in Orlando, Fla., that fills more than one-third of the pharmacy prescription volume for its Florida pharmacy stores. The Orlando facility has state-of-the-art robotics and employs almost 90 associates to support this complex business. From the expansive floor of the facility, you can hear the humming of technology from 5 a.m. to around midnight — 2 a.m. on some nights — churn out hundreds of thousands of prescriptions a week. Prescriptions are received from stores until 7 p.m. and are delivered back by 1 p.m. the following day. Katie Petti, director of central and specialty pharmacy, and a 12-year Publix veteran, said that the impetus behind the chain’s initial foray into central fill was inventory management. “We started by pulling high-dollar, slower-moving NDCs into central pharmacy,” she said. “Our initial strategy was to minimize waste. We didn’t want 20 of our stores to have a partial bottle of medication on hand. Today, we still support high-dollar drugs, but we’re able to support fast-moving drugs, including a list of medications that Publix provides for 40 40

free to help support stores with large volumes. A lot of the processes were developed through that manual process. As we saw how efficient it was, we decided that we could add automation and expand this to support the faster-moving drugs that aren’t necessarily high dollar and improve efficiencies within our pharmacies.” Stacy Burke, who has worked for Publix in Georgia as a front-line pharmacist for six years and then as a supervisor for 10 years, came on board last November as the senior manager of central pharmacy. He described the benefits accrued by automated central fill as an amazing time-saving process that enables Publix to put pharmacists in front of patients more often. “Our goal with this entire facility is to take some of the workload off the store so our pharmacists can be working at the top of their degree, giving immunizations, counseling patients, and not doing the tasks that can be done centrally by the team here,” he said. The central-processing side of central pharmacy provides additional support to the stores, notably through prior authorization support. Publix has centralized its prior authorization process to support its entire chain, using onsite staff at the central pharmacy to service its stores in Florida, North Carolina, South Carolina, Tennessee, Virginia, Alabama and Georgia. At the central-fill facility, technicians complete tens of thousands of authorizations a month, which saves the chain the cost of having to train thousands of

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COVER STORY technicians in its stores. When the stores indicate that a medication requires a prior authorization, central fill queues that up for the techs who push it to McKesson’s CoverMyMeds, a leader in electronic software that automates the prior authorization process. A follow-through process, which includes reaching out to physicians, ensures that the prior authorizations are done as expediently as possible. Publix’s central-fill site also has a team that conducts pharmacy DUR, or Drug Utilization Reviews, and pre-verification for busier stores. It also has a patient care center that initiates outbound calls for its medication adherence program and other medication therapy management opportunities. “Because of our medication synchronization program, we’ve been able to manage the workflow at the pharmacy. We’ll work with our patients on adherence, while simultaneously helping us manage workflow,” Petti said. “If the patient has 10 medications, and we know they are coming into the store in five days, we have time to get prior authorizations. We fill the prescription here and get it to the store in time for the patient, without the pharmacists or techs calling the same day and saying, ‘I’m out of this or that.’” The medication synchronization and auto refill programs also help stores that may be impacted by unexpected emergencies, such as when Hurricane Dorian hit Florida in September. “With the sync program and auto refill program, in situations like hurricanes, we can say, we will push those medications into workflow early because we anticipated people would come early to get their prescriptions,” Petti said. “We sent text messages to all of the impacted patients to say, ‘You may be impacted, we’re getting your prescriptions ready ahead of time.’ Our customers are our stores. We’re here to serve the stores to make sure their days are as smooth as possible.” Since most of the pharmacists at the central-fill facility have worked in Publix stores, they understand the importance of teamwork during emergencies, Burke said. “We were able to pull a Saturday crew in and redirect their focus as the hurricane threatened. Even if the stores were closed, we did the functions so the stores could open. We were doing workload balancing, data entry, and managing all of the things a pharmacy would manage,” he said. Central pharmacy also supports pharmacies that provide “Meds to Beds” prescription delivery, including outpatient pharmacies that are branded as Publix and are operated on site in hospitals. Publix collaborates with several health systems to provide the service that delivers prescriptions to patients before they are discharged from the hospital. “The associates here are doing as much of the work as they can to streamline those prescriptions so they’re filled as quickly as possible, getting them queued up and then taking them to the patient’s room, and putting them in their hands before they leave the hospital. The turnaround is about 45 minutes from the time they get the discharge prescriptions to the patients’ bedside,” Petti said. Publix’s central-fill operation also supports its pharmacy acquisitions. “That is such a hectic time with patients and the pharmacy. We help to smooth things over to make that the best experience we can for the patient when they come in,” Burke said. If that were not enough, the central-fill operation also has a manual-fill section for high-cost branded drugs that might not be prescribed as often, and thus not stocked in Publix stores. “Every night, even though we are closing out, someone will fill those 10 42

or 15 scripts to make sure those medications hit the stores,” Burke said. “The pharmacists who work here in central fill know how important it is if someone comes into a store and they don’t have a drug. We have a big responsibility to make the extra effort to ensure those drugs get there.” The central fill facility, which uses the same drug vials and labeling as its retail stores to maintain consistency for patients, is always looking for new ways to improve the patient experience. Within the next 18 months, Publix plans to add additional robots, as well as collation robots, which will be able to place several bottles in one bag. “By adding collation, it opens up extra sortation spots for us as well,” Petti said “The collation robots have a multipurpose: to improve customer experience, improve customer experience for our retail teams, and to help us expand capacity without having to break out the walls. Additionally, by making these enhancements, it will enable us to increase the number of scripts filled to over 50% of the total volume.” This move also is beneficial in that Publix provides certain drugs for free and offers “next best thing to free,” which is a 90-day supply on 28 NDCs for $7.50, Petti said. “We move through those drugs very quickly. We are replenishing the 2-liter canisters all the time. The new robots have an 8-liter canister, which will help remove the number of trips we have to take to replenish those canisters for fast moving drugs.” Besides cost-savings efficiencies, Toan Do, director of retail pharmacy operations, believes that one of the greatest advantages of Publix’s centralfill operations is that it frees up pharmacists so they can play a greater clinical role. “In the retail environment, the associates are leveraging the capacity of central pharmacy because it allows them more time to engage with patients,” Do said. “When the pharmacist is providing immunizations, such as the flu shot, it takes time away from verifying prescriptions. When central fill can verify and send the prescription back, ready to be sold, that provides more time to our teams to engage with the customer in a way that is more meaningful and impactful from a service standpoint.” Petti noted that the future holds potential for Publix to bring central-fill capabilities to other states. “Our goal is to provide premier care to our patients every day,” she said, noting that Publix plans to expand central fill in some capacity to support its stores in Georgia next year. “By having this type of innovation in place, our pharmacists are more capable of providing that premier engagement each and every time.”

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COVER STORY

THE SECRET SAUCE How Publix finds and keeps top talent By David Salazar

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ain Rusk, Publix’s vice president of pharmacy, often is the first to point out in a room with his colleagues that he’s the odd man out, simply because he joined Publix from another company. The 89-year-old grocery chain has a reputation for being a place where employees can start as baggers and end up as CEO — the career path that Publix’s current chief executive took to his present role — and where a lot of promotions come from within. A key ingredient to what the company calls its “secret sauce” are its dedicated associates. Publix is successful in attracting and retaining talent because it is privately owned, largely by its employees, who are given stock eligibility after a certain amount of time with the chain. “We’re unique as a chain pharmacy that has an independent mentality because our associates own the company,” Rusk said.

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“Oftentimes, you hear the phrase ‘Think like a customer, act like an owner.’ We actually can live that every day because of our employee ownership.” As a result, employees are inclined to provide a higher level of service. “When you think like a customer and act like an owner, you tend to give an experience that’s much more differentiated than elsewhere,” Rusk added. “And most customers will recognize this difference and leave feeling very satisfied with our concierge service, and we see it often.” It may not be surprising, then, that among many job-seeking pharmacists, Publix is an employer of choice in the seven states it serves. Stacy Burke, Publix’s senior manager of central pharmacy, has been with the company for more than 17 years. Burke, who started as a front-line pharmacist and worked his way to supervisor, can attest

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COVER STORY

A key ingredient to what the company calls its “secret sauce” is its dedicated associates. to the appeal among prospective employees. “I recruited in Georgia for 10 years,” he said. “Whenever we would post an opening, we would receive dozens of resumes.” Rusk said one of the main attractors of talent is the fact that Publix has many opportunities for advancement, as well as everyday opportunities to do the job that they were trained to do. “What pharmacists want to do is have the opportunity to live that dream that they thought they were getting when they went to pharmacy school, which is to be very clinical, to be extremely customer oriented and customer facing,” he said. “I think in a large portion of the industry, that’s not something that’s realistic.” Publix also fosters talent once someone is part of the team. Kathy Leonard, Publix’s Miami pharmacy operations manager, is an example of how talent can be developed to create a longtime employee. Leonard started more than 28 years ago as a part-time cashier when she was in high school, and her manager placed her at the pharmacy counter, sparking her interest in the practice. She worked for Publix through college and pharmacy school, becoming an assistant pharmacy manager after graduation and ultimately ending up in her current role. “When I tell that story or I see other associates telling a similar story to other associates in our stores, I think it resonates with them where they can see the potential for upward progression,” Leonard said. “They can see ‘I don’t have to stay in a store, I can pursue other things’ like clinical opportunities or even a specialty role.”

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Katie Petti, Publix’s director of central and specialty pharmacy, said that beyond the efforts the company makes to ensure there are clinical opportunities, “the leadership layers within our pharmacy department all have retail pharmacy experience, which fosters acceptance and buy in from the pharmacy teams.” Toan Do, Publix’s director of retail pharmacy operations, said the company also is committed to listening to what its pharmacists have to say. “It is important that we’re out there visiting our stores, engaging with our associates and soliciting feedback,” he said. “We strive to never leave without asking, ‘What can we do better for you?’ I think creating an environment where associates feel they are being recognized, supported and heard is critical to our success.” Do also said that the company is highly focused on succession planning to cultivate talented employees’ abilities. “We have developed an emerging leader program that really challenges and identifies our high potential associates so that we can mold them, develop them, provide them the confidence and the training to really be a successful leader for us in the future.” The key to keeping this culture is finding people who connect with it, said Leonard, who visits pharmacy schools to talk about the company. “It sells itself,” she said. “My job is very easy when I speak with students because there’s so much to be proud of at Publix. And, I think when you own something, you take better care of it.” dsn

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COVER STORY

FROM THE

GROUND UP

Publix builds out a differentiated specialty-at-retail model By Sandra Levy

Publix delved into the specialty pharmacy space when it opened an outpatient pharmacy at the Moffitt Cancer Center in Tampa, Fla., in 2013. Through this venture, Publix gained insights into specialty pharmacy and the complex journey of specialty pharmacy patients. At that time, the Lakeland, Fla.-based chain realized that many specialty patients walked into their retail pharmacies daily. In an effort to ensure these patients received the care they needed, Publix created a mini specialty call center at its central-fill operation in Orlando, Fla. It also created an indicator in its software system, alerting its pharmacists to call the center when a patient presented a prescription for a specialty drug. “It really empowered the retail pharmacists to own that prescription, and to get the drug filled for the patient,” said Katie Petti, director of central and specialty pharmacy. In October 2015, coinciding with the emergence of several hepatitis C medications, the call center was receiving a growing volume of calls from its pharmacists. Publix realized that it needed a more robust offering. With Petti at the helm, it created a closed door specialty pharmacy in Orlando, and has since obtained licensures from 49 states and the District of Columbia, as well as Specialty Pharmacy accreditation from URAC and ACHC. Publix strives to provide a seamless experience for all of its patients’ prescriptions needs. The comprehensive specialty pharmacy services, coupled with the retail footprint, helps Publix differentiate itself from 48

other specialty pharmacies, Petti said. Often, when a patient goes to a retail pharmacy with a specialty prescription, the pharmacist may not even recognize the medication because the drug is a limiteddistribution product. “The patient says, ‘Why can’t you help me?’ We put different edits in our system, so if someone comes in with a prescription that is limited distribution, the pharmacy is empowered to say, ‘I can help you,’” Petti said. “They can call us and we can take over, but for the patient, it’s still Publix taking care of them. The patient knows us. The prescription continuously lives with the Publix Pharmacy.” Initially, patients get counseling from a Publix pharmacist, either face-to-face at retail or telephonically from the specialty pharmacy’s pharmacist or nurse. “Because we are a closed-door facility, we also utilize our retail footprint and assist stores if they run into an issue with a specialty medication. They can reach out to us for support. We follow up with patients and reach out to tell them about our services,” said Julie Anne Lalicon, senior manager of specialty pharmacy, who has been a part of the specialty pharmacy team since 2015. One of the critical services the specialty pharmacy provides is obtaining prior authorizations so that patients can start their therapies quickly. “The specialty pharmacy team provides true concierge service to the doctors’ offices,” Petti said. They fill out forms and follow up on prior authorization requests. If the prior authorization gets denied, they help with appeals or recommend alternatives so there is no delay in therapy.” The specialty pharmacy’s clinical assessments and onboarding of patients ensure that patients receive their medications as soon as possible. These capabilities also have helped Publix’s specialty pharmacy to gain access, from manufacturers to many limiteddistribution drugs. Because access to drugs does not always mean patients can afford them, Publix specialty pharmacy also connects patients with foundational support, which is crucial in helping patients afford expensive specialty medications. Even if an insurance company approves coverage for the drugs, co-pays can run well into the thousands of dollars, Petti said. Dain Rusk, Publix vice president of pharmacy, said, “If you really want to say that you’re a health-and-wellness pharmacy destination, it’s important to ask, ‘How are you creating access for patients who need these drugs, which can cost as much as $20,000? Through heroic efforts, we are gaining foundational support and co-pay assistance from manufacturers for patients who say, ‘As much as I want to take the treatment to cure my diseases, I won’t be able to afford it.’” Finally, with specialty drugs projected to be as much as 50% of all pharmacy spend in the next few years, Rusk said that a specialty pharmacy offering will become extremely important for all companies. “Having the ability to build out a closed door specialty pharmacy has enabled us to gain access to limited distribution drugs, as well as entry into specialty networks,” he said, “and without this facility, that would not have been a possibility.”

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Talking it Out Brand leaders discuss how they’re bringing CBD into beauty and personal care By Seth Mendelson

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ith more mass retailers looking into the possibilities of selling CBD-based health and beauty care products, the overall industry is ramping up for an explosion of products, not to mention marketing and other support systems to propel the segment. Total sales of hemp-derived cannabidiol products are expected to reach $646 million by 2022 from $49 million in 2014 — expanding at an annual rate of 38% over this period, according to a 2018 study called “The CBD Report” from Hemp Business Journal, a division of New Frontier Data. That creates tremendous opportunity for any retailer looking to build larger sales in the beauty segment of the CBD business. November insights from Coresight Research, titled “Coresight on Cannabis: The CBD Consumer,” reveals that currently the most used products are oils and tinctures, while beauty and personal care products are less popular. Coresight suggested this is because the major benefits that have been communicated to consumers on CBD is its utility in tackling stress and pain. Many indications signal that this is about to change. An analysis of Google data from machine intelligence platform Spate and Landing International showed monthly cannabis beauty searches have jumped almost 90% to an average of 1.5 million. That makes cannabis the fastest-growing ingredient in

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online beauty ingredient searches. The searches show that consumers still need to know more about cannabis beauty ingredients. In beauty, a path to gaining traction could be to educate about CBD and benefits as far as inflammation, acne and aging, according to Landing International and Spate. Further support comes from studies published in October by The Benchmarking Company. Its “CBD & Beauty” series of infographics showed

that 46% of 7,000 beauty consumers polled don’t know the difference in full spectrum, broad spectrum or isolate CBD. Only 27% said they know how to distinguish between hemp and CBD oil. With the market wide open and a lot of opportunities for education in the space, DSN met with several key CBD manufacturers to get their opinions on the CBD industry, particularly how it will impact the beauty category.

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Drug Store News: Why is there such a buzz around CBD? Is it an extension of the natural and, more recently, of the wellness revolution? Will CBD have staying power? Michael Law, chief commercial officer, Eagle Labs, maker of impirica CBD: There is no category I’ve seen in my 30-year career in CPG that has this potential. Rx-to-OTC switches drive growth in OTC sales, but took dollars from prescriptions down by 90%. I have not seen a category with this kind of early consumer acceptance, brand loyalty and repeat purchasing behavior in my career. CBD is at the intersection of wellness, self-care and natural products. It also crosses demographics very well with strong opportunity from millennials to baby boomers. I’m very excited to be a part of such an industry-changing category. Nancy Duitch, CEO and founder, Sera Labs: CBD has had an air of mystery surrounding it due to the overwhelming positive health-and-wellness benefits. The critical mass appeal, which continues to expand, is due to the fact the consumer is anti-pharma, wants to feel healthy and do what they can to live a better life, and CBD offers a natural alternative. While we can’t make any quantitative health claims about CBD, we have all heard how inflammation is one of the root causes of many health issues, and most consumers believe CBD is a natural solution. DSN: On that note, is there a typical consumer? Dean Neiger, vice president of business development, SkyOrganics: There is no typical CBD

consumer. A schoolteacher is just as likely as a veteran or banker to use CBD — regardless of gender, race and age. DSN: Can you tell us about your company and your different businesses, as well as your distribution? Ellen Saksen, director of marketing, Criticality: Criticality is an integrated North Carolinabased agricultural hemp company that takes a science-based approach to the extraction, refinement and formulation of high quality, transparent industrial hemp derived products. Criticality partners with Pyxus International — a provider of responsibly produced, independently verified, sustainable and traceable agricultural products, ingredients and services — to source, process and produce industrial hemp and hemp products under North Carolina’s Industrial Hemp Pilot Program. Korent Hemp is Criticality’s consumer-facing brand and Korent Select is our higherconcentration CBD brand, curated specifically for healthcare partners and professionals. We started our business with healthcare providers in mind, formulating with high concentrations. From there, we are now expanding distribution into independent pharmacies and regional chains with the desire to expand even further in 2020. DSN: Are consumers still confused about CBD, or are we beyond that? Duitch: I believe the consumers, while loving the concept of CBD, are still confused. What brand should they trust? What is the right amount of CBD to use topically or for

ingestible use? What is the difference between isolate, full spectrum or broad spectrum? There is always chaos and confusion in an explosive growth industry, but time and trust for the brands delivering true quality products will win over time. Law: Consumer education about CBD is improving every day, but there remains a lot of confusion about CBD and THC. As more and more brands have jumped into the category, and many of them with questionable pedigree, consumers are looking for brands that can be beacons of trust. Eagle Labs launched a brand based on this market gap to help unlock greater consumer trial in the category. Impirica is the most tested CBD brand, with testing throughout the manufacturing process and with two separate third-party lab tests for all finished goods. DSN: Following that line of questioning, what is the biggest confusion point? Neiger: That CBD is unsafe and will get you high. In reality, there is growing database of medical research supporting its use and bereft of benefits. CBD is nonpsychoactive, containing low if any THC. DSN: So how can retailers tackle the challenges facing the growth of CBD? Kate Lynch, vice president of marketing and product strategy, Curaleaf: CBD products are popping up everywhere in drug stores, natural and health stores, gas stations and more, but not all CBD is farmed and

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CBD ROUNDTABLE

sourced equally. Retailers and consumers should be looking for products that are made with high-quality ingredients, manufactured in a quality manner and rigorously tested. They should choose CBD products from companies like Curaleaf Hemp that are fully transparent with where their hemp is farmed and the ingredients used to manufacture their products. Curaleaf Hemp aims to educate our customers about our products. We test our CBD before formulation and all our products are batch tested before distribution. We share these test results on our website at curaleafhemp.com and on our unique QR code holograms printed on our tamper-proof stickers. Transparency and education ensure our consumers and retail partners are confident in the high quality of our products. Duitch: I believe the biggest challenge is trust. Differentiating between what to purchase and who to purchase from are the biggest challenges. Therefore, customer service is critical as is full transparency and delivering a quality product that will make a difference. The bad actors selling hemp seed oil, low-quality products and making outrageous disease claims make it difficult for those of us selling a high quality product and following the Dietary Health and Education Act. Saksen: As this category continues to grow, more and more brands are entering the market. Retailers will need to feel confident with suppliers around safety, transparency and quality. Being able to educate not only the retailer, but the consumer is paramount. DSN: If you could sit down with a retailer now, what would you want to explain about CBD products? Lynch: Curaleaf Hemp was developed by an experienced team of product engineers and scientists. Our line of high quality, nonintoxicating products meet the strictest standards in the industry, while supporting a better quality of life. All products are derived from hemp farmed wholly in the United States and are infused with beneficial essential oils. Curaleaf Hemp has partnered with trusted cosmetic manufacturers

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with a history of supporting top-selling cosmetic brands to develop these new products. Combining Curaleaf’s cannabinoid expertise with cosmetic formulation experts has resulted in one of the best CBD skin care brands on the market. Neiger: CBD is only risky if you make outrageous claims about its benefits. The market shows that demand and profits for CBD are rapidly growing. Experts state the market will surpass $20 billion by 2024. Sky Organics holds a huge customer base and is expanding quickly. We’ve achieved this success through transparent marketing, with simply formulated products, and regularly engaging with our consumers. We plan to use these same techniques that are making Sky Organics successful with our CBD line. Law: CBD is not going away — repeat purchases and brand loyalty in this category are very high. Consumers are buying it because it is delivering on an unmet need. Choose your suppliers carefully. Consider where the brands you want to carry are manufactured and with what kind of process. Impirica and all products made by Eagle Labs have 26-page batch records and manufactures all of our products in an FDA-registered facility. An extremely high focus on quality will ensure your consumers have nothing but a great experience when they try the category. Work with suppliers that have extensive experience in CPG retail. Understanding retailer needs on both

the branded and private-label side is critical to any supplier partnership. Duitch: Selling into retail is great, but selling through is the endgame. We understand branding and how to drive foot traffic. We stand behind our products with proper testing, efficacious products, an aggressive advertising campaign, and are always in product development in order to deliver the right products to the consumer. DSN: CBD has been big in topicals for pain, etc. Do you see potential for more beauty use — facial masks, foundations? Saksen: We will continually expand our pipeline built on consumer and category trends. We believe the beauty market is a natural fit for CBD products and we are excited to launch some innovative items in that space early in 2020. Law: Therapeutic topical skin care for consumer complaints like pain will continue to be a very important segment to target for CBD brands. FDA regulation will help this segment significantly by helping to define the appropriate ingredient profile and application guidelines that can be supported by research. Beauty is also an important segment and Impirica has an expanding line of products in this segment, including an eye serum. Eagle Labs makes a wide variety of beauty products both with and without CBD. Again, research will be key to building this segment.

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Combining CBD with other wellrecognized ingredients that have established skin care benefits can help drive consumer adoption. Right now, anything with CBD on the label is hot, but a lot of the products that don’t perform to consumer expectations will find their way to the clearance endcap quickly. Brands need to be careful not to get lost in the rush to market for segments or formulas that will disappoint consumers. These “cash grab” items will only hurt the credibility of the category, and retailers can play a key role in filtering these out before they hit their shelves.

positioned to be one of the biggest in the market. Makeup infused with CBD is an upcoming segment for the market. With CBD being enriched with beneficial vitamins and fatty acids, the possibilities of makeup with this ingredient is endless.

Neiger: We see CBD in wellness all the time, but only recently is it starting to be incorporated into beauty. With interest and research around CBD growing, it is becoming a product that’s not just important in the beauty space, but being demanded to be there by consumers. Down the line, we do have plans of expanding our CBD line and getting more creative with products — making sure that CBD always works in conjunction with the desired applications.

Saksen: At this point, it makes sense to have a designated CBD section to help consumers easily navigate this new and sometimes confusing category. We think we are still a long way out from placing CBD into specific sections in the store relative to need states.

Lynch: CBD is enriched with vitamins A, D and E, as well as essential fatty acids — all elements that are good for the skin. Infusing CBD oil into skin care products will give your skin care routine a much-needed boost. Consumers are becoming more aware of the ingredients in their favorite products and how they are manufactured, and, with this increasing awareness, the CBD beauty segment is

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DSN: Do you recommend merchandising CBD in one spot or breaking out by category? Neiger: For now, the best route with CBD merchandising is one spot. We need time for consumers to get more educated and familiar with CBD before breaking out.

DSN: Are mass marketers behind prestige in CBD for beauty? If so, how can they advance? Law: Brick-and-mortar retailers can be split into three segments: The first are the ones who market with strong brand assortment and consumer education; the second are the ones who market with “toe in the water” execution; and the third group are the retailers who are waiting for regulation. Most of the category sales are via online/ direct to consumer today, and with independent retailers that have invested in assortment and consumer education growing rapidly. Anecdotal feedback from some large

brick-and-mortar retailers is that they are underwhelmed by the performance of the CBD category so far. We believe this is more likely related to the commitment to the full category versus just topicals, and the lack of in-store education for consumers interested in trying CBD. Consumers need to experience the category and have a chance to engage with an in-store expert in order to drive conversion for at least their first few purchases. Broadly speaking about the category, our recommendations to retailers are that they play the long game, but get started now. Consumers build their purchasing habits early in the launch of a new category, so ensuring your shoppers know you are supporting this category will be important to ensure you capture the lifetime value of your shoppers’ purchases. Also, they need to make a statement in CBD if they are going to sell it. Don’t dabble with a few items on the shelf or an endcap. We recommend retailers keep CBD products all together in one primary location, and they break secondary display into other home locations as the category gets more established. And, finally we encourage them to vet their suppliers carefully. Duitch: It appears the major drug chains and the grocery trade are front and center with CBD topicals, including beauty. While the mass marketers are behind in all aspects of CBD, due to consumer demand, they will not be able to ignore this category

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CBD ROUNDTABLE

with CBD. The mass retailer would be able to follow the FDA Cosmetic Act rules and have a much safer launch with CBD, and choosing the right vendor partners who understand the rules of engagement with regard to testing, packaging and marketing will make the difference. Neiger: DTC has the advantage of not having to wait retail cycles. However, mass has tremendous resources and technology at its disposal to help bring exposure to CBD and eventually catch up and surpass DTC.

for much longer. I understand taking caution with ingestibles, but beauty is one of the safest CBD categories as there are so many great active ingredients, which work

DSN: What are your company goals for 2020? Neiger: Right now, a lot of CBD marketing is dishonest. Companies are making widely unsubstantiated claims that CBD can cure depression or cancer. By 2020, our major goal is to be a lead competitor in retail space, provide transparent, honest information to

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our consumers about CBD, and, most importantly, maintain a reputation for having safe, quality products at accessible price points. Saksen: Everything we do comes from experience and transparency. We hope more retailers, of all sizes and geographies, commit to working only with reputable CBD companies that can guarantee the efficacy and trustworthiness of their products. If they do that, then the Korent Hemp brand will continue to grow. Duitch: Our goals for 2020 are to be one of the leaders in the CBD space, launching innovative targeted products with solutions to remedy immediate problems for the customer. We have a very aggressive marketing/advertising strategy, which we believe sets us apart from the pack. Standing out in a crowded market is critical for Sera Labs. dsn

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COUNTER TALK

Reflecting on the Year As the year comes to a close, the beauty industry remains at an important crossroads. Here are some of the key issues facing the industry in the months ahead. By Laura Fontana

Laura Fontana, DSN beauty director

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rands with a purpose. Beauty from the inside out. CBD. Strategic Partnerships. As the mass retail industry looks back and reflects on 2019, these are just some of the themes and trends that come to my mind, and stood out to me as those that made an impact this year within the beauty and personal care category. Let’s take a quick look at how each stacked up. First, there is no doubt that consumers are not as brand loyal as they once were. With the evolution of digital influences in their everyday lives, shoppers want to have a deeper connection with a brand and are not shy trying a new alternative if they feel the brand they buy does not support the same types of causes they do or have a purpose to live by. Purposedriven brands look to their customers as more than just consumers of their product, but as stakeholders who invest their time and money into a mission. More than ever, suppliers must ask themselves how their brand ranks in terms of their emotional connection with the stakeholder.

There is no doubt that consumers are not as brand loyal as they once were. With the evolution of digital influences in their everyday lives, shoppers want to have a deeper connection with a brand and are not shy trying a new alternative if they feel the brand they buy does not support the same types of causes they do or have a purpose to live by. Beauty from the inside out is a growing issue, too. Walmart was extremely successful with its partnership with Bobby Brown on the Evolution 18 line. Pharmavite, Nature’s Bounty and Olly, along with newcomers Brandable and its Grow Girl line, Harmony Proteins and Reserveage all have emerged this year with products touting to help improve skin health and provide stronger hair and nails, as well as feature keratin boosting and collagen-infused properties. These products

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are not going away anytime soon as healthy lifestyles are no longer a fad, but a way of life. As the industry looks back on 2019 and its emerging trends, CBD-infused merchandise is one that is at the forefront. New players rapidly entered the marketplace over the last year, joining other more established brands and creating a boatload of excitement in the mass retail space. Skin care, hair care, external analgesics, supplements, candy, snacks and pet food are just some of the categories that have been inundated with CBD products. Yet, where will this category be headed in 2020? Many retailers, including Sephora, Ulta Beauty, Walgreens, CVS Pharmacy, Rite Aid, Kroger, Giant Eagle and Southeastern Grocers, took on the CBD challenge this year. Others, including such regional players as H-E-B and such national chains as Costco, remain cautious, waiting for more guidance from the Food and Drug Administration before they decide to make the leap into the category. Will 2020 be the year that CBD takes off at retail? Which brands will be able to survive, and how will federal regulations impact the distribution channels? Acquisitions and strategic partnerships continued play out on the beauty stage in 2019. Coty took a $600 million, 51% stake in Kylie Jenner’s beauty enterprise, consisting of both Kylie Cosmetics and Kylie Skin. It is being marked as one of Coty’s key milestones in its ongoing transition. Earlier this fall, Shiseido acquired privately owned Drunk Elephant for more than $800 million. This prestige brand was founded by a stayat-home mom of four looking for products that were natural and safe for her skin. I think you will see many more acquisitions like this moving forward as brands like Drunk Elephant and direct-toconsumer brands are more nimble and can move faster, than the large powerhouse giants that traditionally have made up the beauty marketplace, and are thus faster to respond to consumers wants and needs. Lots of activities in the past 12 months, and the promise for more action in the year ahead. Get ready for an exciting new year. dsn

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NEWS

CoverGirl’s Exhibitionist Mascara Goes Uncensored CoverGirl has unveiled a new way to help lashes pop. The beauty brand is expanding its popular Exhibitionist line by unveiling the new Exhibitionist Uncensored Mascara. Featuring long-lasting 24-hour wear that lasts from day to night, the mascara does not flake or smudge and is infused with coconut and jojoba oils. The product contains a vegan formula free of phthalates, mineral oil, formaldehyde and talc, the company said. Available in extreme black, extreme black waterproof, black and black brown, CoverGirl’s Exhibitionist Uncensored Mascara launched exclusively at Target in November and is set to hit other retailers in January 2020.

Schmidt’s Releases Deodorant Co-created with Justin Bieber Bieber fever is hitting the personal care aisle. Schmidt’s released its natural deodorant co-created with international star Justin Bieber. The Grammy Award-nominated artist helped select the fragrance for Here+Now and co-designed the packaging as well, the Englewood Cliffs, N.J.-based Unilever brand said. The deodorant packaging features the words “Be Kind. Stress Less. Hug More.” as a means to inspire a conversation around wellness, as well as optimism for the future, the company said. “At Schmidt’s, we believe in the power of self-care, and each and every one of our products is crafted based on that passion, including Here+Now,” Ryu Yokoi, CEO of Schmidt’s Naturals, said. “We’re thrilled to introduce a natural deodorant that is not only effective, but also serves as a call to mindfulness and living in the moment. As a co-creator, Justin has been integral in the development of Here+Now by bringing his own personal journey with self-care to the table.” Here+Now also is a sensitive-skin version of Schmidt’s activated charcoal deodorant that is enriched with magnesium. Free of baking soda, the product neutralizes odor and offers an essential oil derived by spicy citrus and a warm floral scent, the company said. Like other products from the brand, the new launch is plant based, certified vegan and cruelty-free. Here+Now also is formulated without the use of aluminum or artificial fragrances. The product is available at CVS Pharmacy, Target, Walgreens and Whole Foods Market in the United States, and at select retailers in Canada.

Manscaped’s Essentials Kit Debuts at Target The men’s grooming aisle at Target just grew its selection. Manscaped, a brand known for its below the waist grooming products for men, announced that its Essentials Kit will hit retailer’s shelves nationwide. Products in the kit include the Manscaped Lawn Mower 2.0, a precision engineered electric trimmer that features a 6,000-RPM motor; an anti-nick SkinSafe and QuietStroke technology; the brand’s signature ceramic blade; and the Crop Preserver, an anti-chafing deodorant meant for use below the waist with aloe vera and 24-hour active pH control. “Manscaped started and continues to lead the manscaping revolution, and offering these popular products in Target stores will no doubt spread the evergrowing popularity of men’s below the waist grooming across the country,” said Paul Tran, Manscaped’s founder and CEO. “We are thrilled to have our products available at Target so that every man can experience the confidence and refinement that Manscaped provides.” Manscaped products range from $9 to $74.

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LAST WORD

What’s in Store Five ways retail will change in 2020 By David Orgel

I David Orgel is an awardwinning business journalist, industry expert and speaker. He is currently the principal of David Orgel Consulting, delivering strategic content and counsel to the food, retail and CPG industries.

t’s predictions season. This year’s forecasts carry the extra burden of looking ahead to both a new year and a new decade. That said, it’s not so hard to make predictions in this fast-changing retail industry. The real challenge is making forecasts that are actionable. That’s what I try to do here, with 2020 predictions on topics from e-commerce to health care. Some of my points are curated from other industry forecasts, and I’ve credited those accordingly.

are stepping up sustainability efforts on the food side, making it more central to their missions and consumer communications. Likewise, sustainability now is a bigger deal on the beauty side, as well as a driver for trial and brand switching, according to a September 2019 Forbes article by Pamela Danziger. The sustainability stakes in 2020 for retailers will become greater because it’s their younger customers who are the most insistent.

1. Technology Transforms Technology advances will bring about more unique consumer experiences, from stores to homes. Especially on the radar now will be advances from augmented reality and 5G technologies, as Nielsen states in its forecasts for 2020. One result, as Nielsen pointed out, is that “try-before-you-buy will come into consumers’ homes.” Retailers need to be ready for all the impacts of these technologies. For example, the in-home trial phenomenon will give new meaning to the concept of sampling, and smartphones will become more useful in-store tools as consumers shop.

4. Health Care Accelerates Retailers have made large commitments to in-store health care, from pharmacies to clinics. A recent DSN article outlined stepped up retailer commitments to in-store services, ranging from optical to lab work. Many retailers further will need to accelerate and upgrade such efforts in the coming year or two because retail is on the front lines of making health services more available. Walmart’s recent launch of its “Pharmacy of the Future” pilot is a great example of how to combine technology, services and customer experience into a meaningful effort.

2. E-commerce on Steroids Consumers are ramping up their expectations about the speed of product deliveries, now insisting on one-day or same-day delivery service, and even within hours. These expectations are fueled by strategies from players ranging from Amazon to Uber Eats, as noted in an August 2019 Forbes piece by Daniel Newman of CMO Network. All this puts huge pressures on retailers trying to meet customer needs. Retailers should ask themselves essential questions: Will customers pay for the extra services? If not, do we need to make these investments anyway just to remain competitive?

5. Physical Gets Experiential By now, it shouldn’t surprise anyone that e-commerce is changing the future of brick-andmortar retail. In some cases, that will mean fewer stores, but just as important is how in-store strategies will change. Shoppers still want physical stores, but increasingly they want different experiences than before. We’re already seeing new store sizes, layouts and personalized retail approaches. But here’s the thing, no retailer has yet cracked the code on what brick-and-mortar retail will need to look like. It’s probable 2020 will bring new and innovative lessons for how in store can transform in the age of e-commerce. One last point: Predictions don’t help if they aren’t actionable. Retailers can take action on each of the five points I’ve made here. This can lead to competitive advantages in the quickly transforming retail arena. dsn

3. Sustainability Grows Up Consumers are demanding more sustainable products, and this trend has moved well past fad status. A few months ago, I wrote in DSN about how such retailers as Kroger and Walmart

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