July 18, 2007
Mysteries of Life After Woolworth II Posted by Joshua Zeitz at 12:25 PM EST Fred Smoler raises an interesting question about yesterday’s lead feature (which I authored) on the rise and fall of Woolworth’s. Fred writes, “What puzzles me is why a decade ago modern Manhattan could not support a Woolworth’s, but now it can support an apparently infinite number of chains of what are nominally pharmacies—Duane Reade, Rite Aid—that seem to me to be not entirely unlike the Woolworth stores of my childhood, minus the lunch counter and the needles and thread.” One answer might be that prescription drugs have become a boom industry since the introduction of Medicare in 1965 and in light of steady postwar advances in the medical sciences. In late 2006 the International Business Times reported that Walgreen Company, America’s leading pharmaceutical chain, saw its revenues climb by 17 percent, largely on the strength of drug sales. Fully two thirds of Walgreen’s revenue comes from the sale of pharmaceuticals. Along similar lines, I found this industry analysis, which explains that while “front-store merchandise typically yields higher profit margins than prescription drugs,” prescription and over-the-counter drugs account for about 61 percent of the industry’s revenues. Perhaps Woolworth should have branched out into pharmaceutical sales. Less chewing gum, more antibiotics. Fred will be pleased to know, however, that one can buy needles and thread at CVS.
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