Target Corp. may sell off prescription files from its Zellers pharmacy business, which it acquired this year as part of its plan to open stores in Canada, the company said Friday.
Unloading the customer files would give Target time to focus on remodeling the Zellers stores. If Target holds on to the prescriptions, it would have to keep filling them for customers while it closes the Zellers discount stores to convert them to Targets.
Zellers is Canada's second-largest chain of mass merchandise discount stores. Target acquired the leases of 189 locations earlier this year and it plans to open most of its locations in 2013.
While the sale of the files allows Target to concentrate on store conversions, analysts say Target is giving up a key part of the Zellers business. The prescriptions are estimated to be worth $400 million to $600 million.
"They are giving it to their competition," said Jim Danahy, CEO of CustomerLAB, which advises retail pharmacy chains. "You give those patients away, it's going to be real hard and real expensive to get them back."
Like in the U.S., the bond between pharmacies and customers is difficult to break because consumers don't want to bother with giving a new pharmacy all their information. In Canada, it is even more difficult to get customers to switch because the government subsidizes the cost of a patient's drugs, meaning pharmacies aren't able to lure customers with discounts and promotions.
"It's not like winning back customers for a pair of shoes or a dress. This is health care," Danahy said.
Canadian pharmacies compete for customers by lowering their fee for dispensing the drugs, but that cost is usually small, ranging between $4 and $12 for each prescription.
