children under 10. These two groups are the fastest growing segment of the American population. The 65-and-older age group uses an average of 12 prescriptions per person, at any given time. The increased availability of generic substitutes for expensive, brand name drugs has increased the overall market for pharmaceutical products. Another important factor is the trend toward self-medication, which is increasing purchases of OTC medications (Encyclopedia of American Industry). Other factors that had an impact on prescription sales are drug price inflation, the introduction of new drugs, and an increase in the number of individuals participating in third-party insurance programs. The increased traffic in drugstores has also resulted in increased sales of higher margin products such as OTC medications and non-pharmacy items (front-end merchandise)(Standard & Poors Industry Survey).An increasingly important contributor to the profit margin of chain and independent drugstores is the sale of “front-end” items. These items are non-pharmacy goods ranging from snacks to hardware to gift items and greeting cards. The margins on this merchandise run at least ten percent higher than those carried on third-party prescription sales (Standard & Poors). As increased drug prices and the emphasis on lowering health care costs continue to cut into profit margins on prescription sales (currently averaging 2 percent), sales of front-end items will be an increasingly important contributor to drugstore profits. Accordingly, many drugstores, especially those occupying their own building with convenient parking, are positioning themselves to compete with convenience stores. The convenient parking and easy-in, easy-out features, when compared to a typical grocery store, provide a shopping experience almost as hassle-free as stopping at a corner convenience store. The larger store size allows the drugstore to carry a wider variety of con...
