Historicist: "The city that nobody loves"
Elsewhere in the Ist-a-Verse
Taking a page out of the Walmart book, Shoppers Drug Mart wants to overtake independently-owned drug stores to expand stores and last year's $1.7-billion sales profits. Sound too evil to be true? Shoppers' CEO Glenn Murphy puts it this way:
"When they're ready - and this is not being forced upon them by our business - independents are given the choice to either join us as a business or when they're ready to retire and monetize the equity in the business they can sell to us, we can control the scrip file and move it into a Shoppers Drug Mart store."
In other cities (if you count Calgary as a city), communities actively protest these predatory practices. Here, it's just another chance to get Optimum points.
In related 'Shoppers is taking over the city and no one cares' news, there are currently two Shoppers storefronts directly across the street from one another at Mt. Pleasant just south of Eglinton. How agitating! The store is upgrading from 732 Mt. P to 759 Mt. P, the former address of Contact New and Rare Books.
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Unnecessary Calgary attack!
FYI, I had not one Starbucks latte yesterday, but two!
I don't get it... how is offering to buy someone's business "evil"? I don't see any mention of moving in across the street from independents that choose not to sell - just an offer to buy those that would like to sell. If I was running a small drug store and looking to retire, an offer like that would be good news.
One person buying another person's business is not evil (presumably). One corporation buying another person's business is evil, notwithstanding the near-certainty that the independent pharmacist has incorporated his business, and is therefore evil too, since all corporations are evil. A chain corporation set to expand its holdings is evil, and is even eviler if they achieve this objective by buying out independent, non-chain corporations. Nevermind that the chain corporation has a greater variety of products and more efficient business operations (and therefore offers products at lower prices).
Us, we're deprived the dubious cultural value arising from independent drug stores (they may source toothpaste from a non-Colgate source, one gathers). You see, franchises are bad (except for franchise ad-supported blogs. They're great).
My response to this post: good. Can Shoppers start with the terrible Guardian on my corner that has never once had the drugs on hand to fulfill any prescription I have ever had, is dank and creepy, is stocked with expired merchandise, has about four square centimetres of counter space at the till (because it's so crowded with boxes of ginseng bottles and keychains and shit) that is manned by a dude who spends our entire transaction talking on his bluetooth cell phone? Great, thanks.
i didn't see 'sweeping,' 'absorbing' or 'targeting' independent pharmacies as positive actions. but i suppose you're right, "aggressively expanding" the chain would be good for all those independent pharmacy owners who are aggressively retiring.
Josh: Now I see. You opened your business 101 textbook to "offer of purchase and sale" and someone had scotch-taped "expropriation by force" over the relevant paragraphs. Those "agressively retiring" (cute phrase, that) are doubtlessly pleased to (a) cash out their investment in a low margin business; (b) retire on the above-market premium they extracted from an expansion hungry competitor; or (c) reinvest the capital in something with higher returns ("May 1st, 2006: TORONTO (CP) - Prescription drug sales and mild weather helped Shoppers Drug Mart Corp. (TSX:SC) increase its first-quarter profits by 16 per cent, the retailer said Monday."...).
I know we are supposed to believe the yarn about the poor besotten store owner forced into penury and a basement apartment by the big bad corporate behemoth. I apologize for my departure from your group-think orthodoxy.
uh, x_the_x, this wasn't a public service announcement. your friend glenn murphy wasn't saying these things to ease the concerns of a group of would-be retirees or poor begotten store owners, he was saying it to shoppers drug mart investors. he was essentially promising to expand by taking over independent pharmacies. this is perfectly fine if it's amicable, but i haven't seen any indication of that. are they offering 'above-market premiums'? are pharmacy owners are looking to cash out their investment en masse? i'm skeptical, in case you couldn't already detect that.
besides that, i'm not happy that there are a decreasing number of independently-owned pharmacies and an increase in shoppers f-ing drugmarts in general. i would prefer drugs to be in the hands of pharmacists, who generally own these independents, rather than corporations, who own shoppers.
Lets go back to first principles:
(1) Above-market premiums
If a participant in a market generally announces to the market that it is a buyer, sellers will hold out for a premium. Your argument assumes that independents are being forced into making these deals (see my rebuttal above), but there isn't a scintilla of evidence that supports this (such evidence could be found, for instance, if Shoppers was buying their leases out from underneath them, a la Starbucks and Dooney's, but that hasn't happened here (though, in the spirit of fair play, I concede that an absence of evidence is not evidence of absence)). Since you say that takeovers are "perfectly fine if they are amicable", we are in agreement on this point.
(2) Pharmacy owners looking to cash out en masse
Logic tells us that, when someone agrees to sell something for a certain price (absent coercion, fraud, etc.), they believe they are getting fair value in return. Those pharmacists who do not wish to sell are certainly entitled not to cash out en masse, and your beloved independents will survive. If they do cash in en masse, it means, as I suggested above, that they are happy to dump their stinker businesses and monetize their investments. And, frankly, if that is the case, they don't really care who torontoist prefers to operate their pharmacies.
(3)drugs in the hands of pharmacists and not corporations.
Its a near certainty that every pharmacist who runs his or her own shop does so through a corporate entity. Aside from the obvious liability issue (which, I note in passing, is why the owner of this blog is incorporated as an LLC - why no "I would rather the blogs be in the hands of the writers rather than the corporations" rant?), a small business corporation in the province of Ontario gets taxed at an effective rate of 16%. The top marginal rate in Ontario for individual taxpayers is 46.5%. I will assume you can do the math.
Leaving aside the error in the premise of your argument - which now reads, "I would rather drugs be in the hands of small business corporations [which contribute less to the public good through a lower tax burden] than a large public corporation [which contributes to the public good through higher and greater taxes and contributes to the wealth its numerous shareholders, who too are taxed on that income, and employ thousands of people who get to share in the profits of the business], your objection is that in the former case, a pharmacist/human being is being remunerated, and in the second, a "corporation". Which again, makes no sense. Behind the corporation are 100,000s pharmacist/human beings/retirees etc. who are all being remunerated. How can you look past the corporate vehicle when romaticizing the pharmacist-owner, but not in condemning the public-shareholder-owner?
Your argument is nothing but a flinty-eyed dislike of public companies. Which is fine in itself - many of us dislike things for no particular reason, based on whim, misinformation, or injested ideology - but try not to pretend it is anything more than that. The same story you have told above (and elsewhere, ad nauseum) is reduced to "I don't like public companies. Therefore, I don't like [fill in blank]." To me, that is a pretty facile worldview, but you are entitled to it.
i detect some real vehemence here, to a degree which i do not believe i deserve...perhaps you should stick to your business theories as an underpinning to your nonsense instead of what you refer to as logic - mainly because logic does not support your nonsense. here goes:
1) glad we're in agreement.
2) logic has lied to you, or you are operating without it. it is not and never has been the case that any set of pharmacy owners in toronto retires or sells at the rate which shoppers drug mart has expanded since 2004. (if you can produce a two-year period whereas the rate of pharmacists retired/sale of assets matches the rate of shoppers drug mart expansion, i will withdraw this point.) if and only if pharmacy owners retired/sold at such a rate as explained above, glenn murphy's desired expansion rate will be achieved (keep in mind he says he wants to expand at a greater rate than 2004-06). given that it has never happened before, and it is unlikely it will happen now, glenn murphy's desired expansion rate will never be achieved by means of retirement/selling.
3) corporate control of drugs in the marketplace is dangerous. for instance, emergency contraceptive pills are vital in our present society - and this is true even if you are right wing, religious, a nutcase, whatever. wal-mart is a corporation that has banned these drugs. in places where wal-mart has driven out independent pharmacies (and there are such places) this is a serious situation demonstrating the need for diversity and independence in the pharmaceutical marketplace (not manufacturing drugs but selling).
and finally, regarding your ad hominem attacks on this website, you must be aware of the way media operates. there will be ads and publishers in virtually every form of media (at least at this size). editors and writers control the content, just like owners of pharmacies decide what drugs to sell. if torontoist was expanding across a very small market, ie. buying out other blogs in the city and putting our content on them, you would have every reason to be concerned. just like i have every reason to be concerned in the case of shoppers drug mart in toronto.
so to review, the premise of the post was that shoppers seems to be taking over the pharmaceutical marketplace in the city and there is not much visible opposition. and it is agitating. and that concludes my involvement on the comment board of this inconsequential post.
These independents could offer products that people want at a price that meets or beats Shoppers. Their dispensing fee on pharmaceuticals could be less than Shoppers. But they are not. So people go elsewhere. Why blame Shoppers? Is the problem that people have the freedom to choose?
Back to the Shoppers on Mt. Pleasant...the new location comes as a surprise, as the current one was renovated a year ago. Reminds me of my sister's story about a Shoppers in suburban Windsor - they built a brand new location in LaSalle, then a year or two later closed it and built another new store less than a kilometre down the road. Talk about disposability of buildings...
One other thing about the new Shoppers - the current one was next to a seniors residence. The new is across the road, close to a funeral home!
(I'm still not the biggest Shoppers fan since they bought out the Big V chain in the 90s and ditched most of what was good about that company)
Independant of the above conversation, I'm happy to see someone point out that small businesses are often also corporations. (Even I have a corporation of one and am not, by definition, creeping or evil.) This gets lost in many arguments all over the media.
However, I'd also like to add that the wide-open editorial independance of this web site makes it a poor comparison to corporate structures like that of Shoppers, as does its relationship to its competitors.
Greg, I think the problem is that the illusion of choice now will come at the expense of actual choice later if Shoppers succeeds in either smothering or amicabally acquiring enough of its present competition.
Generally speaking, the larger the chain, the greater the economy of scale, the weightier the influence to broker bigger purchasing deals, so bigger operations like Shoppers can more easily offer lower prices than the little guy, not the other way around.
The failure of small business to be able to compete with big business in the marketplace is not due to a failure to observe and react to changing conditions. It's a losing battle, and one which only benefits consumers on the short term.
Right. Competition is bad. Everything big was once small and competing to get bigger (and getting bigger to compete) is just so unfair to those who don't have the drive, determination, innovation and skill to do the same. So, how do we stop it?
If that was intended as a response to my point, Greg, please note that I did not state that competition was bad or that big was automatically bad.
I said that when a businesss grows enough to replace enough of the competition, the consumer is left with less choice.
That's an observable economic phenomenon, and one I felt compelled to highlight only because you are mainly concerned with the choices available to you as a consumer.
Although growth might benefit the driven and connected, it won't necessarily benefit you or me personally as we drive towards our own goals, regardless of what anyone posting here might think of it.
You don't have to worry about stopping it if you prefer less choice. That's another one of your choices. But I think it's quite understandable why this phenomenon might make others uncomfortable. Their qualms are not ridiculous and can't be dismissed with sarcasm alone.
My point was not about available choices but about choices that are made by us. We all, as consumers, determine who wins and who does not. Being pushed out of business because people shop elsewhere, is an outcome that any consumer business faces and, if not foolishly blind to this possibility, is accepted as a risk. People lament big business squeezing the little guy. But we squeeze the little guy by making a choice to go elsewhere.
To argue that there will ultimately be less choice is debateable (what phenomenon is this and where has it been observed? The biggest businesses seem to offer too much choice). Maybe all the shopping centres etc start to have many of the same stores, but the range of what is available grows all the time (if its a question of reduced differently owned places to shop, then its true this will happen, but its impact on consumer welfare is less of a concern). People don't oppose the expansion of the Big Boxes because they think they will lose choice. Its something else - opposition to unbridled capitalism, opposition to the aesthetics, to US style shopping, a preference for the small stores.
In any case, what can you do to stop people making choices that ultimately lead to outcomes you do not agree with such as shopping at Wal-Mart or Shoppers rather than a local independent merchant? You have to make the choices unattractive or illegal for consumers or stop businesses from making their offering more attractive (at some or all times) than that of the competition. People need to think about what the implication of their opposition is - what is the prescription? Unless the point is to simply complain about businesses getting bigger.
Nicely said, Greg.
"what phenomenon is this and where has it been observed?"
- as just one example, earlier in this thread, Josh cited the example Walmart's takeover of all pharmacies in an area, followed by their refusal to sell certain drugs, resulting in the total unavailability of the drugs to the area.
Josh:
No vehemence, just frustration. I will keep my comments brief, avoid ad hominem attacks (although I never did attack you personally, but your ideas and what I consider to be fundamental misunderstandings and misconceptions), and will attempt not to re-hash past comments.
Here is where we depart:
You see the purchase (by shoppers) and a sale (by independent) as somehow unfair to the independent (you conceded it was amicable, but all your comments suggest you don't really see it that way). This is demonstrably false. They are getting fair price for the business, or by definition, they would not choose to sell. (You seem to think this is some obscure piece of business theory or right-wing ideology (I am a proponent of neither); this is a fundamental tenet of liberal society stretching back to the writings of Artistotle (himself, I concede, no liberal) (I can provide a citation if you doubt this)).
re Shoppers 2004 expansion: here is an analogy: we haven't seen the rate of purchase and sale of real estate in, say, cabbagetown, that we saw in 2004 before either: the reason for increased volume of business is simple: motivated buyers offering attractive terms to sellers. If shoppers wants to pay a premium to increase its market share, and the independents are willing to accept the price offered, I don't see any room for the rest of us spectators to question the fairness of the transaction (again, absent duress, fraud, etc.) (as opposed to the result, which I address below). Because one of the parties is a public company and the other is a private corporation doesn't change the ethics of the bargain. This is the gravaman of my frustration: your failure to acknowledge that the particular form of investment vehicle used in the purchase and sale is benign, and an absolute red herring for your dissent.
If your objection really is, as Jill's is, that the result is undesireable (loss of independent drug stores), then this really has nothing to do with Shoppers corporate status at all. In the article you link to regarding the Calgary protest, the organizer concludes that the point of the protest is that: "We’re trying to show that there is no public support." By definition, if there was no public support for a Shoppers in Kensignton, or a Starbucks in Leslieville, or a WalMart in Maple Leaf Gardens, the ventures would fail and there would be nothing to protest. Rather, the real anger is that the public does support these ventures, over the vaunted independents. Like a foodie decrying the unsophisticated pallette of the Burger King addict, your objection is that the elite tastes of a small minority (which believes the cultural value in having independents is a higher order good than the superior selection, upkeep and innovation of the big box retailer) are being diluted or cancelled out by the tastes of the plebes ($2.99 Dep Gel, baby!). As has been discussed by Greg and Jill, this can lead to a perceived lack of choice for consumers.
While I get the Jill/Josh argument in the context of, among other things, restaurants, cd stores, cafes, etc., i have no idea how one can be outraged to a same or similar degree when the topic is pharmacies who, by and large, stock the same products (with the only obvious difference being shoppers offers greater product selection at lower prices). Exactly nothing is lost - including choice - when shoppers takes over an independent, and the gains are clear. Josh seems to recognize this in putting forward the argument that placing the drug supply in the hands of one corporation is "dangerous" because of the WalMart example he provides from the States. Yet the disanalogies between his example and Canasdian reality are easy to list: (1) Shoppers ain't WalMart and has no social conservative political agenda; (2) There exists no constitutency in Canada of any political importance at all who would support such a ban; (3) In Canada the drug supply is heavily regulated and nominally controlled by the government, who has shown its ability to regulate this sphere and override the decisions of individual corporations (for example, regarding the export of drugs); etc. Josh's argument is a classic slippery slope; I will join you Josh in protesting Shoppers if and when it cuts off access to contraceptives. Short of that, it seems like a poor reason to interfere with market outcomes that result from considered consumer choices that a greater and better product supply and lower prices have more "value" than the benefit of having independent chains because certain people don't like public companies. There is no room for a "choice" argument here.
And as for restaurants, cd stores etc. where the choice argument does apply, it is highly doubtful that any intervention is required. Urban centres like our dear Toronto have proven to be quite hospitable to the Rotate This's and MUSA's of the city. There exists a sizeable enough population in these areas to support these ventures. And really, this is why we all choose to live in urban areas, isn't it, because our elite choices of cultural products are shared amoung a dense population and are therefore successful ventures.
Pauper's Drug Mart,
Ya would not supprize me. I worked for them when I was 19 years old, unfortunatley I can't get that time back. It actually started off really nice but the longer I stayed - the more money I earned and we all know 6.85 h/r in 1990 was "quite a chunk of change" [for those of us not so witty like Shopper's management I am being sarcastic]. One sweltering hot day I was delivering 24-cases of Cola cans down a conveyor belt it must of been 30-32 degrees outside and at least 1000 cases inside with an open door. I was so hot that I took one can and thought nothing of it. What a mistake that was, management almost fired me. It's true I should of asked but don't get your knickers in a knot. At Shoppers they were soooo obsessed with shrinkage and theft that they constantly had floor-walkers everywhere. I would always watch those idiots run outside the store in hot persuit of yet another looser stealing. In my professional life now at 34 working for a mutual funds company in IT I get coffee for free, spring water for free, and not to forget Coke for free. We go to free luncheons, dinner etc.
So I guess you could say things are different because I'm a professional and a mooch, but is it different? Shoppers Drug Mart makes probably as much if not more than my employer. When I go to a Shoppers which is only if everything else is closed I often remenise at those careless days. Those paupers selling drugs, the dirty signs, the stupid cashiers I once worked with and the misfits that used to come in and buy products like suppositories and tampons. I actually once met my retarded ex-boss at another location, what should I of told him, that I have a REAL job assuring data for pentioned people is acurate and timely, not poisoning them with over-priced junk.
Bill