Rather than a national jack-of-all-retail trades, Shopko Stores concentrates on a select product range in small and rural areas of the US. The company operates around 150 Shopko discount stores, six Shopko Express Rx drugstores, and a few Shopko Hometown outlets in about a dozen states across the Midwest, Mountain, and Pacific Northwest regions. It also sells goods online. Instead of offering a watered-down selection of many retail categories, it pushes popular, higher-margin categories such as casual apparel, health and beauty items, and housewares. Most Shopko stores have optical centers and pharmacies. In 2012 Shopko Stores merged with Midwest chain Pamida. Both are owned by Sun Capital Partners.
The merger reflects Sun Capital's anticipation that the union of two retail chains is greater than the sum of their stores. Benefits from the combination include shared resources and merchandising expertise, and stronger buying power. Pamida, which operates more than 190 stores in 17 states, concentrated in the Mountain, North Central and Midwest regions, will adopt the Shopko banner.
Meanwhile, Shopko has begun testing a smaller store format designed for rural communities -- called Shopko Hometown -- at two locations in Wisconsin. The retailer plans to add eight Hometown stores in the near future, bringing the count to 10. The smaller stores, which fill the intermediate ground between full-size Shopko stores and the smaller Shopko Express format, sell convenience foods, consumable goods, home products, apparel, and more. They also house pharmacies and some have optical centers.
Pharmacies and optical centers are big business for Shopko, which fills more than 12 million pharmacy prescriptions and sells more than 500,000 pair of eyeglasses each year, making it one of the nation's top 15 optical companies. Its optometrists perform in-store eye exams and prescribe correctional lenses, most of which are made in the company's optical laboratory and in 80-plus in-store finishing labs. The retailer is also rolling out health clinics in select locations in a partnership with Medical Marts Group.
The company plans to spend some $80 million to convert the majority of Pamida stores under the Shopko brand. The conversion of the stores should be completed by the end of 2012.
Shopko competes with retail giant Wal-Mart in 97% of its markets. – less