CEDAR RAPIDS, Iowa — A year after its acquisition of Convenience Valet, Lil’ Drug Store Products Inc. (LDSP) is poised to take full advantage of the combined strengths of the two companies in a quickly recovering economy bringing new life to the on-the-go marketplace. With the acquisition, Lil’ Drug enhanced its presence in convenience stores, extended its reach into other retail channels and expanded its product offerings.
Lil’ Drug, Cedar Rapids, Iowa, acquired Glendale Heights, Ill.-based Mechanical Servants LLC, doing business as Convenience Valet, in August 2020.
“In spite of pandemic-related challenges, we’ve made great progress in aligning our two business cultures to the advantage of our combined roster of customers and brand partners,” Chris DeWolf, CEO of Lil’ Drug Store Products, tells /ital/CSP/ital/. “With the economy on a strong rebound, customers and brand partners are now experiencing the benefits of our combined strengths.”
“We don’t want our partners to be confused. Now we’re turning the page and focusing on aligning systems and the overall product portfolio. Our goal over time is to present ourselves as one company to the marketplace.”
Lil’ Drug has expanded its reach by adding 25,000 retail locations that include hotels and resorts, hospitals, airports, cruise lines, micro markets and specialty retailers. It now serves approximately 160,000 retail locations with on-the-go products in categories such as health, beauty, automotive, sunglasses, snacks and more. Meanwhile, Convenience Valet’s relationships with companies in the club and dollar channels have enhanced Lil’ Drug’s previously more limited access to these markets.
Traditionally, as the top two companies in a field of half a dozen or so competitors, retailers partnered with either Lil’ Drug or Convenience Valet. As a result, innovation has been limited to the ideas, insights and product portfolio of one company or the other. Now, operating as one company, retailers have access to a complete lineup of established and emerging solutions, DeWolf says.
Lil’ Drug has expanded its portfolio of over-the-counter drugs, health and beauty care (HBC) products, cell phone accessories, auto supplies, sunglasses and private-label products. Prior to the acquisition, it launched a six-count drug program, up from a four-count offering and is marketing this program of larger-size products to the entire industry. Also, through Convenience Valet’s expertise, Lil’ Drug has designed and launched a travel-specific cellular accessory program.
“LDSP has grown into a business that keeps investing and bringing value and new ideas to the on-the-go market,” says DeWolf. “With the rapid consolidation of the industry, the evolution of consumer preferences, the increased sophistication of our customers and the rapid economic recovery, we have to be—and want to be—much more than a supplier of products for our customers and brand partners. We continue to invest in our capabilities and capacity to innovate and grow with our partners.”
Pharmaceutical companies are partnering with Lil’ Drug to supply a complex and fragmented market in which their direct experience is more limited, DeWolf says. GlaxoSmithKline (GSK), for example, is working with Lil’ Drug in a more strategic manner, launching Advil Dual Action last July through Lil’ Drug. Also, its smoking cessation product, Nicorette, has become a growth engine in convenience because of the merger of Lil’ Drug and Convenience Valet, according to Scott Breisinger, national broker sales manager for convenience stores for GSK Consumer Healthcare, Warren, N.J. Lil’ Drug is also working with GSK on its digestive health products, among others.
“By Lil’ Drug and Convenience Valet merging, they have become the leader in health and beauty care in the industry, and from GSK’s point of view, it has been highly successful in a short, one-year term,” says Breisinger. “They’re doing a nice job in the transition, and they have only just begun. They have a lot more they’re going to conquer.”
The increased scale and scope of Lil’ Drug’s industry presence has also helped its brand partners, which include Alcon, Carmex, NoDoz, Ricola, Johnson & Johnson, Associated Distributors, Harvest Snaps and many more. Carma Laboratories, makers of Carmex lip balm, has been a Lil’ Drug strategic partner since 2008, yet has had limited success in the travel market, according to DeWolf. Now, by leveraging Convenience Valet’s expertise, Carmex is being broadly introduced to travel locations, he says.
Providing the expertise of field service representatives is also a growing part of Lil’ Drug’s strategy. Through its partnership with Associated Distributors, which began in January 2019, LDSP has access to more than 40 merchandising professionals available to act as the eyes and ears of the retail operation, to help determine and meet their sales and growth needs, and to help set stores, audit plan-o-grams, write orders, sell seasonal items, organize displays and more.
With the acquisition, Lil’ Drug is also putting an additional focus on data-driven merchandising and category management. Over the past 18 months, Lil’ Drug has partnered with an additional 9,500 retail locations for its category management services.
DeWolf’s father-in-law, Dennis Oldorf, created Lil’ Drug—and the repackaging industry—in 1974 when he had the idea to sell small packs of pain relievers instead of full bottles, distributed across multiple channels at the “point of need” where people wanted them “right now.”
But beyond the trial-size market, the company has expanded its strategy to encompass larger sizes as well. “We started with pills, and that continues to be a really important element of our business; however, over the years, we’ve certainly broadened our portfolio,” says DeWolf. “Historically, in a transactional mode, we would buy pouches of drugs from pharmaceutical companies, repackage and sell them. And that’s still an element of our business; however, over time, what we’ve been able to demonstrate to these companies is that oftentimes, we can be very successful with their business and their brands not only in trial-size versions, but also in larger-size versions.”
“We’ll continue down the path we’ve been on, which is to be quite inquisitive and to be quite partner-oriented so that we can bring new ideas to the channel.”
About the merger with Convenience Valet, DeWolf says, “The first year is a tricky time to buy a business as it relates to building culture and aligning the organization. Our key focus over the past year has been to welcome our new colleagues and to align and streamline the functions or pieces of the organization that are externally facing—sales, customer service, marketing, procurement—and we’ve made really nice progress there.
“We don’t want our partners to be confused. Now we’re turning the page and focusing on aligning systems and the overall product portfolio. Our goal over time is to present ourselves as one company to the marketplace. That will take time. But I think we are taking the necessary steps to accomplish this.”
The company is also focusing on aligning and streamlining the product offerings. “We’ve got a lot of products that were overlapping, and then we had a lot of products that were not. We’re going through the effort to make sure the portfolio represents the absolute best of the best,” he says. “We’re also leveraging each other’s knowledge and experience.”
Convenience Valet has traditionally been much stronger with travel consumers than Lil’ Drug, says DeWolf, “and as we’ve gotten to understand their business, we’ve been able to create unique displays and unique offerings by leveraging Convenience Valet’s experience in the travel business. So the early part of this acquisition focused on structure and alignment, and we’re moving into products and new services.”
Lil’ Drug is not resting on the success of the first year of aligning its operations with Convenience Valet’s. “We have probably a good year’s worth of work to continue to integrate these businesses and make sure that we don’t trip up, and the expectations that our customers are setting for us are our own expectations,” he says. “We have been very aggressive over the years at partnerships and acquisitions in order to diversity and be more value-add.
“We recognize that this industry is consolidating, and as a result, our customers are expecting more from their suppliers and their partners. We’ll continue to acquire and partner with businesses that can supplement our service offerings, our data analytics capabilities, our insights team and add product to the portfolio that are interesting, growing, creating new opportunities for our customers. So we’ll continue down the path we’ve been on, which is to be quite inquisitive and to be quite partner-oriented so that we can bring new ideas to the channel.”