SDM Jumps Into Electronics With Both Feet

Over the past couple of weeks, Shoppers Drug Mart has made three quiet announcements that could open up a whole new line of revenue for this growth hungry retailer.

Partnerships announced with Rogers Communications, Sony & Fujifilm are aimed at revitalizing sales in the centre of the store – which will undoubtedly put space pressures on the categories already occupying that space, including many CPG companies.

The Rogers deal will see SDM selling Rogers and Fido Smart Phones and Rocket Sticks in a 30-store test market (yet to be named) starting in July.

According to the Sony deal, SDM will stock approximately 50 video game products under the popular PS3 and PSP gaming platforms in approximately 700 stores.

And under the Fujifilm deal, comes new in-store kiosks, new on-line options, social imaging and other differentiated photo services.

These moves are interesting in light of how Shopper’s business is likely to be impacted by drug reform laid out recently by the Ontario government. Can SDM recoup lost generic drug profits with digital gizmos?

Of course, London Drugs has been selling electronics in their stores in Western Canada for years. However with their 1200+ stores, Shoppers could become a very big player in electronics very quickly if they are able to transfer the credibility and service standards they have built in other categories in the store – particularly pharmacy and beauty.

With this move, SDM also adds Future Shop, Best Buy, Gamestop and others to their ever-growing list of competitors. The question is will consumers want to shop for electronics in a drugstore and can SDM offer competitive value and achieve their high margin targets with this new category?

If successful, SDM’s new slogan could legitimately be “Everything You Want in a Drugstore – and More”.

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