P
ProHub
English 简体中文 繁體中文
Medium Profitability

Drug Store Profitability

#Retail #Pharma
ProHub Comment

This case tests a candidate's ability to structure profitability problems across three key dimensions (product mix, store mix, and location) while incorporating brainstorming. The interviewer guides candidates through a discussion format rather than direct questioning, pushing them to draw insights from retail industry experience and identify both opportunities and execution risks.

Estimated Time 15 minutes
Difficulty Medium
Source UCLA
50 / 100
Our client is a drug store chain, similar to CVS, they have been losing profits for the last few years. Can you help us identify the reasons and means to improve the profits?

Clarifying Information

  1. Stores are typical to CVS, located in several areas.
  2. Stores have three key business areas: Pharmacy, Health + Beauty, General Merchandise
  3. Pharmacy: $20,000 Sales/Sq Ft, 5% Profit Margin
  4. Health and Beauty: $10,000 Sales/Sq Ft, 20% Profit Margin
  5. General Merchandise: $5,000 Sales/Sq Ft, 10% Profit Margin
  6. 60% of the stores are located near hospitals, in areas with heavy competition and in high crime infested areas – these stores make 10% loss
  7. Remaining stores make 25% profits