Pharmacy U

Kohl & Frisch – 100 years of hitting the pharmacy sweet spot

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What’s Kohl & Frisch’s secret? How does a privately-owned Canadian company reach the century mark, going strong, growing smarter, and looking ahead to the next 100 years?

 

By Jane Auster

Photography by Brandon Gray

Part of the growth has been organic, while strategic acquisitions, like the 2013 purchase of AmerisourceBergen Corporation’s Canadian business, have also helped to propel Kohl & Frisch into a market leadership position in the pharmaceutical wholesale industry). Kohl & Frisch, with deep roots in a small, downtown Toronto tobacco and confectionery wholesaling business founded by Moses Kohl, now numbers nine distribution centres across Canada, state-of-the-art automation technology, and always-changing innovations of its program and service offerings.

We recently visited Kohl & Frisch Limited’s headquarters in Concord, Ont., sat down with owner, president and CEO Ron Frisch (son of Irving Frisch, one of the original partners), as well as Ron’s son, Vice President of Corporate Development Matthew Frisch, the third generation to join the family business.

How does being a family business change the way you interact with your customers?

Ron: I think it plays into things in different ways. First, I hope we are able to convey to our customers that because we are a family business, we care about every single thing. We are not driven by a quarter end. We are not driven by stock market analysts saying, “You know, you’ve got to cut your costs, so dispense with some service you provide.”  We’re not beholden to any of that; we’re beholden to what is good. Oftentimes in the past I’ve met with store owners and they have the same range of responsibilities that we have here: payroll, overhead, people showing up on time, your backup plan if the power goes out. By virtue of being family-owned, obviously I have to care and want to care about every single thing, every single day. There is no issue too small to ensure that we address it. I have long-time customers who still will phone me and talk about something, and that’s fine because it’s owner to owner. It’s my name on the door.

What’s the Kohl & Frisch difference?

Ron: The best thing about our system? We’re allowing (pharmacists) to rely on us to such an extent they don’t even think about it, and they’re spending time counselling their patients…which is what they’re supposed to be doing. So instead of ordering from this one and that one, they’re ordering once a day, and they get it the same time every day. It’s accurate; it’s complete.

Matthew: It also extends beyond just the logistics, ordering, and delivery. Part of what this company has done over the last number of years is evolve and progress to where we’re not just supplying the pharmacies, we’re also helping them run their businesses which, as an independent owner/operator in particular, is a huge need.

I think a lot of independents feel sometimes that they have no choice but to join a banner, for example, because that’s how they get those services provided to them. We’ve evolved to a place where an independent can get a variety of services and programs, and yet retain their independence, which  is an increasingly unique thing in the market, and I think it’s very much appreciated.

Your main competitor owns banners and has gone a very different route. Has that approach ever appealed to you?

Ron:  We never wanted to compete with our customers. We never wanted our customers to think that we had an agenda other than being the best business partner we could be for them. We thought it had value, we thought it differentiated us, and we thought a lot of people liked it. I am fairly certain that many retailers appreciate the fact that we don’t compete with them.

Matthew: The question about banners is a very complex one. The reality is that independents are not a homogenous segment. Everyone is different. You have independents who want to be entrepreneurial and make all the decisions and have the control, and then you have independents who want to run a business, but they want to have a lot of the details taken care of by someone else, by an office.

K&F is trying to adopt a model to offer the market where we’re providing most of the services, the programs, the value-adds that you get in a banner without having to join a banner. For the really savvy independents, I think that’s the best option in the marketplace today.

How has your business changed over the past five years?

Ron: We are geographically better positioned across Canada than we were five years ago, before our acquisition of the Canadian distribution business of AmerisourceBergen Corporation. We have more distribution centres, therefore we are closer to the customer, and closer to the customer means more customer-friendly cut-off times for placing orders for delivery.

Matthew: If we’re going to be able to sustain the independent segment – and I think frankly we are one of the most pivotal companies in the country when it comes to supporting independents – we need to allow them to be successful as independents, and that’s easier said than done. If you just are supplying products to them, and not helping in other ways, they may not be able to stay independent.

Is there a risk in hitching your wagon to independents?

Matthew: There is if you don’t have the right approach. You know, the blessing and the curse of a lot of the banners is really one and the same. It’s that they are saying to independents, “Come to us. We’ll do everything for you.” That’s very attractive to a lot of independents, and that’s why these banners are growing. But the flip-side is, none of that is for free. It all comes at a cost.

That may show up in a fee you’re paying to your banner or the way the banner seeks to influence in-store decisions such as purchasing or what providers are being used. If you are a savvy, business-minded pharmacist, you might understand that it’s not the greatest deal in the world, especially in terms of how it’s advertised. So I think the opportunity for us is if we can go in and say, “Hey, we can give you a lot of those same value-adds and a lot of those services, but do it in a way that allows you to maintain that independence and flexibility.” That’s a sweet spot that I think is very significant in the marketplace right now.

What sets your approach apart?

Matthew: Ours is a multi-stakeholder partnership model. That, I would say, is unique in Canada, and I think that’s where we hope there will be a lot of interest. But it only works if independents and other market actors appreciate it. If they value it, then it can be successful.

Ron: If you’re an independent with a store anywhere in the country, the goal of Kohl & Frisch is to ensure the continued success of that store. We want to have a customer for life because that’s our business model. I believe part of the goal of others would be, “How can we convert that store into our banner?” Our approach is, “You want to stay completely independent, negotiate your own deals, or ask us to partner up – we’ve got that covered.”

Matthew: People don’t stay with us just because the company’s been around a hundred years and it’s Canadian. It’s because when they add up the dollars and cents they understand that it’s more than just what their wholesale deal is; it’s about the totality of their business. They want to retain their independence and flexibility, be able to make business decisions and negotiate with their vendors.

In a period where people feel this financial and business pressure to consolidate (and join banner programs), ironically, I think in many ways the best business move is to go the other way and revert to a more independent model.

Is innovation a constant focus for you in terms of new services and offerings?        

Ron: It’s an ongoing process of evaluating how we can be better. We are approached many times a year with different opportunities, and we evaluate them case by case to see if there’s a fit. It matters a great deal to us who our business partners are. Just as we want our customers to rely on us, we want to be able to know we can rely on them. In our world, if their allegiance is to us, we’re going to support them.

We market ourselves as tailoring our business offerings to the needs of the customer. At a first meeting, I’ll often ask, “What would you love to have that you don’t have today?”

Sometimes, you can’t accommodate what somebody asks, but I love the challenge when they say, “Could you do this?”

What about the role new technology plays in your business?

Matthew: One of the things my father has done a really nice job of is making sure that we’re investing in the business in terms of technology, automation, and equipment. Allowing yourself to be as competitive as you can on the logistics side is really important.

Then there’s what I would call softer innovation. How do you add different offerings, programs, services, etc., that help to grow your business? A lot of those ideas wind up coming from your partners, whether it’s working with manufacturers on seasonal programs or with independents on some specific need they have that maybe we wouldn’t have thought of.

We now provide continuing education support to pharmacies; we provide different administrative and accounting services; we have disease state programs and clinical programs. We have a new diabetes program that started in Western Canada that we’re rolling out to independent pharmacies. Those are examples of things they maybe could not do on their own, so that in addition to being their supplier we also almost become their office support team.

Ron:  Throw us a good challenge, and if it makes sense for us economically and structurally, we have the latitude as a privately-held Canadian company to go in one direction or another. Over the years we’ve strengthened ourselves. We think we earn our place with our customers. We’ve got Walmart and Costco on our customer list. The two largest retailers in the world trust us to do their Rx in Canada, and we’re very proud of that. But we’re equally committed to the independents who all started small. After all, Kohl & Frisch started small.

 

Kohl & Frisch timeline

 

1916: Moses Kohl founds a wholesale business on Major St. in the heart of old Toronto, selling tobacco and confectionery.

1938: Irving Frisch joins the business at age 22 and becomes partner in 1951. Company name changed to Kohl & Frisch Limited.

1955: Moses Kohl sells his interest in the company to Irving Frisch.

1980: Ron Frisch joins the company.

1989: Kohl & Frisch moves to its current headquarters, on Keele Street in Concord, ON.

2013: Kohl & Frisch acquires AmerisourceBergen Canada Corporation.

2016: Kohl & Frisch, with operations in nine locations across Canada, celebrates its centennial anniversary.