"The Most Profitable Store"? A small parapharmacy in Paris has found the right formula to generate tremendous sales in small space. Is there a message here for the giant hypermarkets? Alan L. Klein, The Marketing Agency The Marketing Agency continues its exploration of Europe to identify innovations & offer insights for the American marketplace. Update: store expansion (see below)

Women's Wear Daily recommends our featured Paris parapharmacy in the City Guide for Fall 2005, following our press release

To begin, quick definitions: Parapharmacies were created in France to open the independent drug store channel to discount pricing on non-Rx products. Personal care and nutritional brands that were once exclusive to pricey pharmacies and department stores became available in the new parapharmacies. Some are independent pharmacies who have added the "para" to remain competitive; others were opened as self-standing units within hypermarkets. an independent parapharmacy

So what's a hypermarket? In countries like France that historically lacked big supermarkets and mass merchandisers, the hypermarkets evolved to combine both concepts under one roof. Go to a Carrefour or Auchan and you can load groceries, a car battery and a flat screen TV into your shopping cart. One hyper can cover 350,000 square feet, with staff scooting around on roller skates. On a busy Saturday, there may be over 100 checkouts in operation. parapharmacy within a hypermarket

Now, back to our busy parapharmacy. In a space not much larger than a traditional, small pharmacy, City-Pharma, in the left bank St-Germain quarter, is like a customer magnet. It has about 1800 square feet of space on each of two floors. Ground level is packed with displays of every better quality brand of personal care product (hair care, skin care, bath and body from Vichy, Roc, & Nuxe to Elancyl, Galenic, & Neutrogena); all the top brands that used to be found at much higher prices in the traditional independents.

Upstairs is where you find nutritionals, and the Rx counter, since City Pharma remains a real pharmacy, despite its move to discount parapharmacy status (but there are no discounts on medicines; that's the law in France).

There are 4 cash registers on the ground floor and another -get this- 11 upstairs. When things get busy in the afternoons, and on Saturday, all 15 registers are in high gear. You may even have a short wait.

Update: Spring/Summer, 2005 expansion: City-Pharma has just taken over an adjacent store, & knocked the walls down. It is now up to 300 square meters (about 3000 sq. ft.) on the same 2 floors, with 23 cash registers, a staff of 25 pharmacists and assistants, 10 skin care advisors & 3 dieticians (who float thru the store), and a separate staff of 15 who restock shelves (a key function given the rates of turnover).

And the store is still crowded. The added space and staff has encouraged even more traffic! Readers are cautioned against Saturday afternoon visits. Go during the week when it's calmer at Citi-Phama. (closed Sundays)

What's going on here? There are dozens of retailers selling the same quality brands in the neighborhood, but none gain the consistent flow and volume that City has snared.

There are 3 reasons that become apparent: Location, presentation, and especially (as you will see) price.

The location on the corner of the rue Bonaparte and the rue de Four is about as central as you can get in this trendy left bank neighborhood. Because of its proliferation of boutiques and cafés, it attracts a large middle and upper class clientele in every age range. Afternoons are very active; on Saturdays the streets are packed with shoppers and browsers.

Presentation of the products remains upscale, regardless of pricing policy. City Pharma has an elegant interior and maintains full shelves, neatly packed into numerous display units that fill most of the floor space. Customers negotiate the tight aisles, but don't complain, because every brand is organized by function and is easy to find. A busy staff keeps the shelves stocked and readily offers advice and recommendations.

But price prevails here; price advantage is by far the driving force of City Pharma's success. Everything costs less. Comparison of some of the popular items: Roc day care facial treatment, Nuxe "Prodigious Oil," Mustela Baby Care and Klorane Shampoos, reveals a 30% to 40% savings compared with traditional pharmacies nearby. Similar savings are noted for most brands. (The prices are featured in City's windows too, but with no comparatives, since that too is not permitted in France.)

And perhaps more impressive is the price advantage vs. the powerful hypermarkets. Compared to City, these same brands were averagely 20% more costly at the parapharmacy nestled within a huge Carrefour on the edge of Paris, as well at other giant stores we audit.

City Pharma appears to be making money. Observation of transactions suggests an average sale around $20 every 1-2 minutes at each register. Even with discounts, there are appreciable margins in these product categories.

In any times, but especially in tough times, everyone loves value. When the lowest prices come with no compromise in quality, environment and convenience, it's as the French say, "le slam-dunk."