Safeway, drugstore to compete.

Byline: ED RUSSO The Register-Guard

For the past 45 years, Hirons, a small drug-and-gift store, and Safeway, a grocery giant, have been mostly friendly side-by-side neighbors south of downtown Eugene.

That relationship is about to be tested. Safeway plans to open a pharmacy in its store at East 18th Avenue, between Oak and Pearl streets - a pharmacy that will compete with Hirons' pharmacy on the other side of the wall that separates the two stores.

Safeway's plans are part of a multi-million dollar renovation project for its store, which is expected to begin this spring and be completed by the end of summer.

Hirons owners John and Larry Hirons are pleased at the thought of a remodeled grocery store next door.

Sales have increased 25 percent at the Hirons on Franklin Boulevard in Eugene in the year since PC Market of Choice opened next door in a remodeled building, John Hirons said. So Safeway's project may have a similar effect, he said.

But the Hirons are not happy about the prospect of a Safeway pharmacy.

Safeway, like many of the nation's largest retailers, has embraced a strategy of helping customers and increasing profits by adding pharmacy and other specialty departments.

But for the two-store Hirons company, pharmacies are much more than a profit booster. Hirons relies on its drug department for more than 50 percent of its sales, the owners say. They add that they can't help but worry that the new Safeway pharmacy will siphon sales from the 18th Avenue Hirons.

John and Larry Hirons said they were so concerned that last year they met with Safeway's district manager to ask him to drop the pharmacy from the renovation plans.

"We wanted to discourage them from putting in a pharmacy," said Larry Hirons, a physician who leaves the day-to-day management of the stores to his brother and to his nephew, Stephen Hirons.

But the district manager's response was that Safeway's corporate philosophy was to open pharmacies in as many spots as possible, John Hirons said.

``We asked `Why do you need two of the same thing next to each other?' '' he said, referring to the possibility of adjacent Hirons and Safeway pharmacies. "What would they think if we put eggs, milk and yogurt in next to them?"

Safeway spokeswoman Bridget Flanagan said the 18th Avenue Safeway store will get a pharmacy because customers expect one.

"Our mission is to serve our customers to the very best of our ability, and we have demonstrated that pharmacies are appreciated by our customers," she said.

The 18th Avenue Hirons and Safeway stores are popular with students and faculty at the University of Oregon and South Eugene High School, as well as downtown area residents.

Safeway's move to open a pharmacy is not intended to damage Hirons, Flanagan said. The two stores have been neighbors since 1957, when they both opened.

"This is America, and it's the free enterprise system," Flanagan said. "Our goal is not to hurt anyone. Our goal is to continue on with our mission and be consistent."

Safeway is still working out the timing of its renovation, but the goal is to have the store remodeled and open by September, in time for UO classes, Flanagan said.

The renovation would be similar to the makeover Safeway did to its Coburg Road store last year.

"It's more than a remodel," said Keith Haggas, a building permit analyst for the city of Eugene. "They can tear down most of the store and rebuild it, except for a little bit of the back wall and the wall it shares with Hirons."

As with the Coburg Road project, Safeway will temporarily close the East 18th Avenue store during the work.

Safeway plans to expand the store by about 35 percent to the west with a 10,000-square-foot addition. When completed, the store will be 38,000-square feet, still smaller than the 55,000-square-foot average size of new Safeways. The store's exterior will get a new facade of masonry, windows and other treatments.

Besides the 536-square-foot pharmacy, Safeway will add a bakery, a natural foods department, a fish counter and a Starbucks coffee bar. Other departments, such as the deli and floral areas, will be enlarged.

Safeway has pharmacies in eight of its 10 Lane County stores. The only two Safeways without pharmacies are both in Eugene: the 18th Avenue store and another older outlet on River Road.

It's no mystery why Safeway - like Albertson's, Bi-Mart, Wal-Mart and other mass merchants - puts in pharmacies wherever it can.

Drugstore sales, particularly over-the-counter medicines, are more profitable than groceries, said Jonathan Ziegler, a retail analyst at Deutsche Bank in San Francisco.

California-based Safeway does not disclose how much of its $34.3 billion in sales last year came from its pharmacies, Ziegler said, but they are becoming an increasingly important part of its business.

That's why the chain now markets itself as Safeway Food and Drug, he said.

John and Larry Hirons say Safeway's pharmacy decision will not prompt them to close their business or put it up for sale.

Over the years, Hirons has survived two fires that destroyed each of their stores, and trends that drove other independent merchants out of business.

"We don't die easily," John Hirons said. "We have been around a long time, and we know what we are doing."

CAPTION(S):

Hirons' drugstore head pharmacist Ruby Letcher helps a customer inquiring about his prescription on Monday. The stores have operated side by side for decades.