What they’re thinking: Lil’ Drug Store Products CEO on company’s growth

There's more to the story of Lil' Drug Store Products, CEO Chris DeWolf likes to say, than its name implies.

'We have a highly descriptive name ... but, the reality is, we're not little anymore, we sell more than drugs (and) we don't have any stores,' DeWolf said.

Lil' Drug Store has announced plans to build a new, $13 million office and distribution space in southeast Cedar Rapids, moving from its current location hidden among Rockwell Collins' buildings along Continental Place NE.

The Cedar Rapids-based company started more than 40 years ago distributing just four drugs. Now it sells more than 450 products, mainly to convenience stores, and expanded into the healthy snack market. The business also has put a heavier reliance on analytics and data since 2004.

'Cedar Rapidians shop our products every day. They probably don't know it,' DeWolf said.

DeWolf and Marketing Director Doug Marquardt sat down with The Gazette to discuss Lil' Drug Store's business and its expansion plans.

Q: Since you're tied to physical locations, does that limit company growth?

CD: 'No. 1, I don't know of very many companies that can say they're in 135,000 locations. It's not much of a limitation factor. ... What I would typically say is, people think about our business as a drug supplier, and that's a key component of it, but if all we were doing was providing drugs, the runway would be pretty limiting. ... Our asset is really our knowledge of the channel and really how to get products into it.'

Q: What do you mean by 'knowledge of the channel?'

CD: 'All the initiatives that you see being driven by convenience stores are to get the customer to stop there deliberately on a regular basis. It's less about being on the road. It's more about being a destination. Our entire growth model, though, is to say, 'What are the trends, what are the products, what are the brands that should be in convenience stores, but are not, or are in convenience stores but are undeveloped with what they can be?' We wrap our analytics and our sales and marketing teams around those and we launch programs to build the business.'

Q: Why jump into the healthier snack market?

DM: 'In the case of healthy snacks, people, I think, for years have just thought of convenience stores as being a place to buy chips and candy bars and sodas, but the consumer tastes are changing. Especially in the last five to 10 years, there's a lot of interest in better-for-you snacking and eating natural ingredients. Convenience stores aren't known for that, but they have shoppers walking in their door everyday looking for those products and they're not finding it.'

Q: What is driving that change in consumer demand?

DM: 'The millennial shopper, the 25- to 35-year-old shopper, is emerging as a consumer group and that group's interest is in better-for-you ingredients, more natural foods. They're also prime convenience store shoppers, they go into convenience stores more often than other groups and they're also more interested in snacking than other groups.

Q: How big a part does analytics play in the company's future?

CD: 'If you look at the way we sell, particularly to more sophisticated chains, it's analytics first and the products follow. We are positioning ourselves as a long-term adviser. We believe that if the retailer grows, we will grow along with it. ... We are focused on growing the retailer sales and profits. The only way to do that is to dig into the data.'

Q: Why build a new facility?

CD: 'I think it's an opportunity to invest in the business ... in the community ... in our employees. Simple as that. Clearly, the business has continued to grow and that has put pressure on our current operation, but the more macro themes are the investment in the people and the community and the business.'

l Comments: (319) 398-8366; matthew.patane@thegazette.com