Katz Group of Companies

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Katz Group of Companies
Type Private
Industry Drug Stores
Founded Edmonton, Alberta
1990
Founder(s) Barry Katz, Daryl Katz
Headquarters Edmonton, Alberta, Canada
Key people Daryl Katz (Chairman)
Frank Scorpiniti[1] (CEO)
Warren Jeffery (COO)
Revenue $7.000 billion (2012)[2]
Owner(s) Daryl Katz
Employees 8,500 (2012)[3]
Subsidiaries Rexall Sports
Website katzgroup.ca

The Katz Group of Companies operates over 1,800 pharmacies in Canada and the United States. It is based in Edmonton, Alberta. Daryl Katz is chairman of the Katz Group of Companies.

Foundation and history[edit]

In 1991, in a partnership with his father Barry Katz, Daryl Katz paid $300,000 for the Canadian rights to the U.S.-based Medicine Shoppe drugstore franchise which had over 1,000 stores in the USA.[4] His father was a pharmacist who founded the Value Drug Mart chain in Edmonton in 1978.[5] The newly founded company to obtain financing from Vencap Equities, a venture capital fund established by the Alberta government in support local entrepreneurs.[4] Daryl later stated: "If my father wasn't in the business and didn't have a history, I would never have succeeded in getting it."[4]

In 1992, the company opened the first Medicine Shoppe store.[4] In 1996, it purchased the fading Rexall drugstore chain in Canada which at the time, only consisted of several dozen stores.[4] By 1998, the Katz Group consisted of 80 Rexall stores, 30 Medicine Shoppe outlets, and a few smaller independent retailers.[4] In 1997, it purchased the Ontario-based, 143-store Pharma Plus drug store chain from the supermarket operator Oshawa Group for $100 million.[4]

In 1999, it ventured into the U.S. with the purchase of the money-losing Minnesota-based Snyders Drug Store chain, which had $300 million in sales. In 2001, it purchased the U.S.-based Drug Emporium big-box discount chain.[4] The Snyder's chain filed for bankruptcy in 2003 and its 25 stores were sold to Walgreens.[4] In 2004, Katz purchased the naming rights for ten years to the new $45-million Rexall Centre, a 12,500-seat tennis and entertainment complex on the campus of York University.[4]

On January 30, 2012, Katz agreed to sell its Drug Trading Company Ltd. to McKesson Corporation for approximately $920 million[6] Drug Trading Company is a marketing and purchasing arm for a network of over 850 independent pharmacies that primarily operate under the I.D.A. and Guardian brands, and Medicine Shoppe Canada Inc. The sale represented about 90 per cent of the Katz Group's assets, shrinking the group's network of corporate-owned and franchised stores to 450 Rexall-branded outlets (down from its peak of 2,000 stores).[4]

Katz Group Canada[edit]

Katz Group Canada Ltd. operates or franchises over 1800 pharmacies in Canada under the following brand banners:

  • Guardian*
  • Herbie's for Drug and Food
  • I.D.A.*
  • Medicine Shoppe Canada*
  • Meditrust Pharmacy
  • Pharma Plus
  • Rexall Canada (including joint brand Rexall Pharma Plus)
  • Super Drug Mart
  • Dell Pharmacies
  • ClaimSecure

Katz Group Canada's holdings also include Drug Trading Company Limited* (retail support) and ProPharm Limited (pharmacy-related computer systems).

* Sold to McKesson Corporation.

Pharma Plus[edit]

A Pharma Plus pharmacy in the North York neighbourhood of Willowdale.

Pharma Plus has its origins in the Tamblyn Drugs chain of drug stores which dates back to the early 1900s in Toronto. Tamblyn was owned by Loblaws grocers in the 1970s. Loblaws was unable to compete effectively with market-leader Shoppers Drug Mart, and sold the chain to the Boots Group, of the United Kingdom. Boots, however, was unable to apply its successful British formula to the Canadian market. Boots was unable to comprehend the geographic issues of Canada and the inventory management scheme of the time "one for show and one for go" crippled the stores by limiting the inventory on shelf.

In 1988, the chain was sold to the Oshawa Group, another retailer who controlled grocery and mass-market stores under the IGA, Food City, Drug City and Towers Department Stores banners. The chain was renamed "Pharma Plus Drugmarts". During the first two years of development, Pharma Plus repositioned itself away from the Boots image and re-invented the stores, being the first in Ontario to introduce patient waiting and consultation areas. Merchandising and advertising became more competitive with the larger Shoppers Drug Mart, offering now both a product and price alternative to the then market leader. Store designs made it easier for consumers to shop the stores and the brighter, less cluttered environment preceded today's accepted standards in retail. Merchandising and design foundations implemented during this time period continue to form the foundation for the evolution of the chain today. The chain grew through acquisitions and merging the Drug City stores under the Pharma Plus banner.

In a further attempt to differentiate the chain, a pilot program was launched for a Health and Wellness centre. These stores eliminated many of the product selections, limiting the consumer offering to higher margin products and focusing on "healthier" selections. It did not prove successful in the Ontario markets at the time and this similar concept attempted in California in the now failed Elephant Pharmacy chain. This costly investment reflected on the bottom line of the operations during the time period as millions of dollars were invested in the trial.

The current store designs were rooted in a 1995 internal prototype project in the Eglinton Ave store. Challenged with taking a failing location and re-inventing retail for the chain, the design and merchandising team created a new environment for consumers. While the store fell short of the original design offerings, it was the first store to change the main entrance to what is now the common entrance and the flow of merchandise that is in use today in many Rexall Pharma Plus stores. It continued to focus on developing service areas of the store, expanding the cosmetics and pharmacy services. The original prototype store continue to operate successfully.

Oshawa Group, looking to re-focus its energies, divested itself of the Towers chain and then the Pharma Plus chain of stores. The chain was acquired by Katz Pharmacies, a smaller company that operated under the Rexall banner.

Further acquisitions by Katz allowed the company to evolve into Katz Group of Companies which includes in Canada Rexall, Pharma Plus Drugmarts, Drug Trading (Guardian and IDA pharmacies), Meditrust, Herbie's and other discount drug outlets. The company now successfully competes with Shoppers.

2012 purchase of Dell Pharmacies, and sale of Drug Trading[edit]

On January 30, 2012, Katz acquired the 18-store Dell Pharmacies chain that operates in the Hamilton, Ontario area. Dell joined the Rexall chain effective with the announcement.[7]

On January 30, 2012, Katz agreed to sell its Drug Trading Company Ltd. to McKesson Corporation. National Bank Financial analyst Vishal Shreedhar suggested that “... Katz Group wants to exit the small pharmacy-focused independent/franchise business because it is most impacted by recent drug reforms. In contrast, Katz Group’s corporate store business (approx. 420 stores) benefits from stronger brand awareness, greater front store penetration and superior vendor support, making it a better growth platform.”[8]

Katz will continue to supply Rexall products to the independent and franchise pharmacies sold to McKesson. The sale is exptected to be closed in the first half of 2012.[9]

Snyder Drug[edit]

Snyder Drug is a pharmacy chain based in the Minneapolis-Saint Paul region of the United States. The company entered Chapter 11 bankruptcy proceedings in 2001 and exited in 2003 as it was forced to liquidate its Drug Emporium chain. The company was founded in 1928 by Max Snyder as a downtown Minneapolis, Minnesota cigar store. It began to sell pharmaceuticals by 1931. It was incorporated as Snyder Drug Store in 1939. The chain has about 60 corporate and about 60 independently-owned stores.

The company sells under the name Snyder Drug Stores. Western Drug was sold to CVS/pharmacy in the summer of 2008 and or closed. In early 2009 Snyder's closed 20 stores. The stores' script files were sold to other companies. Snyder's still operates a handful of stores.

It was announced on January 13, 2010 that all Snyder stores were being sold to Walgreens at the end of the month. Walgreens said they will continue to operate most stores while closing some and transferring the prescription records to nearby Walgreens stores.[10]

Rexall Sports[edit]

Rexall Sports is subsidiary of the Katz Group which owns and operates several professional sports franchises. Rexall-owned teams include the Edmonton Oilers (National Hockey League), the Edmonton Oil Kings (Western Hockey League), the Bakersfield Condors (East Coast Hockey League), and the Edmonton Capitals (Former North American League baseball team).

Sports venues with Rexall naming rights[edit]

Rexall Place in Edmonton, Alberta, in Canada is the home of both the Edmonton Oilers of the National Hockey League, the Edmonton Oil Kings of the Western Hockey League, and the Edmonton Capitals baseball club. The Katz Group of Companies purchased the naming rights to the arena. Daryl Katz, head of the Katz Group, is the owner of the Edmonton Oilers Hockey Club. The Rexall Centre tennis courts are in Toronto, Ontario also in Canada. Rexall is the title sponsor of the Rexall Edmonton Indy IndyCar race at Edmonton City Centre Airport.

See also[edit]

References[edit]

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