Building a Better Elephant

Elephant Pharmacy wants to take its holistic approach nationwide. But getting to that point has not been pretty.

Alicia Rodgers still remembers the help-wanted ad that first inspired her to seek a job at Elephant Pharmacy. “It said something like: ‘Be a part of the next Berkeley revolution,'” she recalled.

Rodgers learned the nature of that revolution once she secured an interview at the company’s red brick corporate headquarters. Elephant Pharmacy would be a drugstore experiment, a coming together of Eastern and Western medicine. Its mission was to build a truly great store by promoting an agenda of herbal remedies and alternative healing. It would be, as one of its slogans puts it, “The drug store that prescribes yoga.”

Elephant hired the 22-year-old UC Santa Cruz graduate in September 2002 and swiftly dispatched her to Shattuck Avenue to assist in the frantic rush to open the store before the holiday shopping season. There, she joined other young liberal-arts types who, like her, were inspired by the company’s perceived anticorporate ethos.

Elephant’s ever-present founder, Stuart Skorman, often spoke to them about “breaking the stranglehold” of the major pharmacy companies. “You are a part of something that’s going to revolutionize the pharmacy world,” Rodgers remembers him saying.

Skorman was very visible in those days. Dressed in his usual dark blazer or sweater atop a button-down shirt, khakis, and loafers, he would go down the block each day to Saul’s Restaurant and Delicatessen and return with coffee for the start-up crew. In fact, the wiry 56-year-old talks so fast it’s as if he’s constantly jacked on caffeine. Skorman regaled his young colleagues with tales of, his first Berkeley success story. He told Elephant workers that if they helped make his latest revolution a success, they stood a good chance of being rewarded with stock options, just like his employees at

But the young workers’ primary motivations were not monetary. In fact, most seemed happy to put in long shifts for just $8 to $9 an hour. “We were working long, long days — heavy manual labor,” Rodgers said. “Everybody got sick from working so much. They were handing out Wellness Formula, because everyone was just dead.” Still, the food was plentiful and the music blared as they worked, joked, and danced together. “You should be excited to be here,” Skorman told them. And excited they were.

The young workers were emboldened by management’s promises of authenticity. The first employee handbook listed the company’s core values: “No judgment, no bias, conscious choice, quality, integrity, respect, and customer- and team-member care.” A company pledge to workers read: “Our organization will genuinely care for its employees, giving them what they need to take care of them.” And one of Skorman’s favorite quotes from George Orwell’s 1984 was prominently paraphrased on the handbook’s cover: “In a time of universal deceit, telling the truth is a revolutionary act.”

But integrity, respect, and truth are not the words that a group of ten former employees now use to describe their experiences at Elephant during its turbulent first two years. Even Skorman tells a different story about the early months of his pharmacy experiment. By all accounts, the birth of Elephant Pharmacy was a painful collision of start-up growing pains, youthful naïveté, and bad management decisions.

Elephant Pharmacy has rebounded financially, and now appears well on its way to building a nationwide natural-pharmacy chain. But the store’s evolution came at the cost of the good feelings between its founder and many of its employees.

When Elephant Pharmacy swung open its doors for the first time on November 25, 2002, it clearly was something new. The calming wooden tones, exposed ductwork, and open ceiling provided an immediate contrast to the brightly lit, sterile surroundings of its big-box chain-store competitors. Elephant is housed in the old Copeland Sports store in Berkeley’s tony Gourmet Ghetto, but the 10,000-square-foot storefront was completely remodeled.

In its first two years, Elephant has undergone several wholesale changes, adding and subtracting entire lines of products. Today, it could almost be eleven separate businesses under one roof. It’s a traditional drugstore that also features photo service, video rental, and a no-Hallmark card store. But alongside the usual over-the-counter medicines and prescription drugs, shoppers also find herbal supplements, natural cosmetics and body-care products, eco-friendly household cleaners, natural and organic foods, and a well-stocked wellness bookstore.

Walking past the large flower stand and into the Cedar Street entrance, Elephant at first appears to be a natural-foods store. Nearly a quarter of the floor space is dedicated to organic produce, healthy frozen foods, organic chips and cereal, juices, and upscale wines. Past a couple aisles of natural and biodegradable household items, Elephant’s alternative-medicine identity becomes more apparent. There are four rows of herbal remedies, antioxidants, and homeopathic medicines fronting both the bookstore and what has to be one of the largest bulk-herbs counters anywhere — staffed daily by a certified herbalist.

In the center of the store are five aisles of natural cosmetics, shampoos, and skin- and body-care products. Traditional pharmacy items then make up the back third of the store, from first-aid items to over-the-counter pain and cold remedies and greeting cards. Behind them is the prescription drug pharmacy. On the far side, up a couple of stairs from the massage area, is the DVD section and classroom.

Elephant’s wide range of free classes is what truly sets it apart. Customers can learn about everything from yoga and massage to diabetes and dream interpretation, or attend workshops on subjects such as doing arts and crafts with their kids. “The free classes are our heart and soul,” Skorman said in an interview. “People really want wellness, not just disease management.”

Two typical classes were offered during a recent afternoon visit on what Elephant calls a “Healing Alternatives Monday.” In one sixty-minute class, herbalist and acupuncturist Anna Landauer gave basic lessons on fighting colds and the flu with Chinese herbs, from using huo xiang to combat stomach ailments to swallowing pe min kan wan to dry up your sinuses. The six attentive students also learned about “warm heat” and “cold heat,” and how some herbs are considered “warm,” while others are “cold.” Choosing which to ingest is all about returning your body to its naturally balanced state. If you’re sick and feeling chilled, then you would take a warm herb, and vice versa if you’re overheated with a fever.

During another one-hour class on “mind-body tonal therapy,” therapist Shira Stone told students that vocal sounds, from grunts to growls and more, can help restore balance to a body in pain. During part of the class, the six of us stood hand-in-hand in a circle and tried to focus on segments of our bodies that were feeling out of sorts. We then attempted to give voice to that pain. Customers who heard us groaning loudly for several minutes must certainly have said to themselves: “This is so Berkeley.” It certainly was not an orthodox approach to selling drugs.

But then Skorman has often favored an unorthodox approach to things throughout his entire adventurous life, whether biking across the country or swimming with dolphins several times in the ocean. He has traded commodities and meditated in monasteries, driven a cab and managed a blues band, and once spent two years bouncing around the gambling circuit playing professional poker.

Above all else, Skorman loves selling, ever since his days growing up in Akron, Ohio, debating the ins and outs of retailing with his father. In 1977, he got his first taste of what would become his life’s passion when he joined a grocery store start-up, Bread & Circus, near Boston. It eventually was bought by the natural-foods chain, Whole Foods, which now serves as an inspiration for Elephant Pharmacy.

In 1985, Skorman launched his first start-up, pouring his entire $100,000 inheritance into a New England video store that eventually grew to a chain of six outlets. Nine years later, he sold the chain, Empire Video, to Blockbuster and took home $6 million. He then funneled his earnings into a new Berkeley-based online venture, Not long thereafter, he opened a single video store under the Reel name on Shattuck Avenue. It quickly became, and remains, a favorite among film buffs because of its huge selection. Although the Web site never made money, Skorman sold it and the store to Hollywood Video in 1999 for $100 million, personally pocketing $17 million. But not all of his start-ups turned out so well. His online continuing education company, Hungry Minds, went out of business in 2001, and he said he lost $10 million while his investors lost twice that.

From selling natural foods to renting videos and DVDs to reeducating adults, Skorman views Elephant Pharmacy as a natural evolution in a whole career spent marketing to baby boomers. “Now they’re getting old,” he said. “So now I have a drugstore.”

The upscale boomers who flock to Elephant tend to be looking for far more than Prozac and Lipitor to cure what ails them. And the customers appear to love all of it. “I’m a sucker for all this stuff, all this organic stuff,” said Bella Portman, an Oakland resident. “I’ve been shopping here since it opened.”

The customers aren’t the only ones who responded to Elephant. The young employees who worked there in its first year flourished too. They could pierce their bodies, display their tattoos, and wear trendy clothes, as long as they weren’t over the top. They say they loved coming to work, and were dedicated to a cause they believed in. Many became instant friends. On the bulletin board of the employee break room, they posted fliers about music events or going to see one another’s art exhibitions or music shows.

Daniel Wolfe exhibited all the qualities of the quintessential Elephant employee. The New Mexico native’s first job at the store consisted of sitting on the corner of Shattuck Avenue and Cedar Street, strumming his guitar, peddling organic apples, and trying to convince passersby to check out the new addition to the green revolution. Over time, the 25-year-old worked in several departments at the store, but it was the weekly class he created that turned him into a minor celebrity.

Wolfe and his wife, Anastassia Shaitarova, who also worked at the store, presided over “Groove Time” at Elephant, a wild and fun drum circle for kids and adults that quickly became the most popular free class in a store overflowing with free classes. “Every Friday, about thirty to forty people would come in for ‘Groove Time,'” recalled Jennica Murray of Berkeley, another co-worker at the time. “There was something really wonderful about that.” When customers walked in the door, heard the syncopated rhythms, and caught a glimpse of kids laughing and shaking maracas, they knew Elephant was not a typical pharmacy.

“It felt really good at first,” recalled Shaitarova, a 24-year-old Russian émigré who started at Elephant just before it opened. “There was this community, this family. Everybody was ready to do something extra — even for free. We were singing, dancing around, and working real hard. All the people who were there were artists — thinking they were contributing to something beautiful.”

In addition to their shared mission, they also were enthused by their supervisors’ apparent interest in their opinions about what Elephant should be. “They told us: ‘We care about what you think,'” recalled Murray, who was twenty when she started at Elephant. “It was like you were an essential part of the store. They said: ‘We want people here who want to be involved.'”

Workers regarded the head of their family, Skorman, as a visionary genius of retailing. “There was this minor cult of Stuart,” Wolfe said. Young workers viewed him as a wealthy yet sensitive benefactor in touch with his feelings. He was genuine with them, they said, such as when he talked about deciding to go into the health-food and pharmacy business after his own wife became seriously ill with Lyme disease.

“He was like our papa,” Shaitarova said. “It seemed like you could talk to him. He seemed like this crazy rich person who had enough money to achieve his dreams — mixing Western medicine and Eastern medicine. He liked to talk about what the store meant to him, what the revolution meant to him, and he would tear up and start to cry.”

But behind the scenes at Elephant, there were plenty of other reasons for Skorman to shed tears. Given the novelty and scale of what they were trying to create, he and his managers were initially unsure about what combination of products would sell, and what was the most effective way to display them. Store managers first placed over-the-counter medicines on shelves alongside herbal remedies. After customers complained loudly, the items were separated, but employees were still clueless about how much Tylenol or Kleenex they would sell for every Chinese herbal immunity booster. And even months later, company managers were still trying to iron out the operation’s kinks, as hundreds of items on store shelves still lacked prices and unsold merchandise started to fill a large storeroom.

“We were in chaos the first four or five months,” Skorman admits. “We made so many mistakes.”

Elephant was bleeding money, too. According to company financial statements supplied by Skorman for this story, Elephant lost an average of $337,000 a month in the first half of 2003. By late summer, the store had swallowed most of his original $11 million investment. “The truth was, my ass was on the line,” Skorman said.

But starting about June 2003, Skorman and his staff began to get a handle on Elephant’s financial problems. That’s when the company hired Brian Emkjer, a new controller with an extensive corporate background at General Motors and the chemical giant Tenneco. In a recent interview, Emkjer recalled his first impression of Elephant’s finances. “It was a mess,” he said. “They hadn’t closed the books once.”

Once Elephant’s executives began to understand the company’s true losses, they realized that they soon needed additional investment if their experiment was going to grow. After all, Skorman’s mission was not just to create a single great store in Berkeley. It was to turn Elephant into a giant New Age drugstore chain, with possibly as many as five hundred stores nationwide. Skorman’s true goal is to spread Elephant’s vision to the masses, not unlike the way Starbucks and Whole Foods respectively introduced gourmet coffee and organic produce to people all across America. (See “Following the Lead of Whole Foods?,” page 21.)

Skorman touted his chain-store plans in the company’s earliest press releases, and they were mentioned in articles in the Oakland Tribune and San Francisco Chronicle. But somehow, word never trickled down to many of his young employees. Wolfe and his friends say they had no idea that the owner of Elephant had far bigger plans than building a single, funky, natural-foods store in Berkeley.

Former department manager Zena Bardelas said she was well aware of the expansion plans, but she also noted that there was an unspoken concern among staffers about telling customers. “Customers would ask, ‘Oh, is this a chain?’ And we would say, ‘No, we’re local, but we would like to grow,'” Bardelas said. “There was a certain fear that people would not like us if we were a chain.”

Skorman now concedes that he should have done a better job of making sure all his employees knew his plans from the beginning. But he also said the young employees bore responsibility for their own ignorance. For instance, he noted, he routinely held business meetings that included open discussions about his expansion plans, but many of the younger workers showed no interest in attending.

In any case, Skorman added, common sense should have told the workers that it would have been foolish to plow that much money into a single store. After all, there was no way one store could possibly generate enough income to finance the company’s Bonita Avenue headquarters, which was costing the company $150,000 a month. If Skorman’s original plan was simply to create one excellent store in Berkeley, he would not have needed a separate two-story headquarters staffed with executives. But the headquarters and executive brainpower were essential to launching a successful chain. And opening more stores would generate the income to make the headquarters financially viable.

By the fall of 2003, Elephant’s finances demanded that it expand or go belly-up. In addition to paying for the management infrastructure, Skorman also desperately wanted to increase Elephant’s buying power to bring down the cost of its goods. Wholesalers and manufacturers typically provide chain stores with better deals on products than individual stores, because they buy larger quantities. In the ultracompetitive drugstore world, Skorman said, Elephant needed every advantage it could get.

The financial crunch started spilling onto the sales floor in early fall 2003, and some employees began to realize that Elephant wasn’t entirely what they thought it was. The store became less and less about fun, they said, and more and more about meeting sales goals and making a profit. “The overall vibe from management was, ‘We need to make money this month,'” said Charlene Wright, a North Oakland resident who was 22 when she started working at Elephant. “It was: ‘If we don’t make money, we might not be here in three months.’ Turning a profit was a very big issue.”

Managers also appeared to be stressed out about visits from potential investors, who started showing up at the store in groups of three to eight. “Every time the investors would come, everything had to be perfect,” Wright said. “We never called them ‘the investors.’ They were ‘the suits.’ We’d look at each other and say, ‘The suits are here.'”

The tipping point for Daniel Wolfe came when the music changed. Until then, workers were allowed to play reggae, funk, or even hip-hop on the store’s sound system — as long as it wasn’t too outrageous. “One day I came in and it felt very strange,” said Wolfe, describing a day in late fall of 2003, just as the holiday season was getting under way. “I couldn’t put my finger on it. … Then I realized. It was Christmas music. The reggae was gone. They were playing Christmas carols, sixteen songs, and they would repeat. I thought if I heard ‘Jingle Bell Rock’ one more time, I would go crazy.”

Elephant’s buyers also were grappling with the store’s identity as the busy holiday season approached, looking for the right way to add Christmas items to the powdered echinacea and frozen gourmet pizzas. “They got a bunch of weird, gimmicky stocking stuffers that had nothing to do with a natural-food store — candleholders, flashlights,” recalled Jeanne Geiger, 23, who began working at Elephant a few months after it opened. “It was like they were trying to be like Longs.”

Once the throng of holiday shoppers was gone, morale plummeted further. It was a complete turnaround from 2002. That year, many employees got holiday bonuses, but in 2003, Elephant didn’t even send out cards, Wolfe said. Then some employees who were hired just before the holidays were let go. Five former employees said the laid-off workers had never been told that they were temporary seasonal help. In fact, Elephant had asked many of them to commit to working at the store for at least six months, the former employees said.

Wolfe and the others had shrugged off the first signs of change, so strong was their desire to believe that Elephant was going to be a pharmacological utopia of health foods, herbal remedies, alternative medicine, and social justice. But as the 2003 holiday season rapidly approached, Elephant managers started reneging on more substantive promises, ten former employees said in interviews. Workers stopped getting raises, employees were shuffled from department to department without explanation, and promised health-care benefits failed to materialize.

The frustrated employees decided it was time to talk. They still believed that they could convince Skorman and store managers that Elephant had strayed from what they thought was its original mission. Wolfe and a few others put out the word about an employee-only meeting at his home. Employees immediately began gossiping about the meeting, talking about organizing, unionizing — even going on strike, the former employees said. Jason Lasley, who was twenty when he joined Elephant in September 2003, said that during one pre-meeting brainstorming session, he blurted out: “What if we just walked out?”

The once-mellow atmosphere at Elephant turned tense. Store managers heard about the meeting and appeared visibly uncomfortable. At the same time, some employees were so scared that they wanted nothing to do with it. “I had a feeling that something bad might happen,” Wright said about why she decided not to attend. Even Wolfe said he later regretted announcing the meeting a week in advance and not being more discreet.

By the time of the meeting, the employees were keyed up. Half of the thirty or so who attended believed that they held the power to change the store as long as they stayed united. Others were simply afraid of losing their jobs. “It was one hour of people venting, sharing their stories of not getting raises, the store wasting money,” Wolfe said.

As angry as they were, the workers never seriously discussed unionizing, eight people who attended the meeting said. Unions seemed extreme, almost foreign to them — something for older workers, perhaps, trapped in dead-end jobs or working for a ruthless corporation. Elephant was a progressive store, they reasoned. Surely Skorman and the store managers would listen to them. The workers decided to request a meeting with management to air their grievances. They would ask for raises, benefits, and a voice in decision making. But if Skorman refused, they would walk out.

A few days later, Wolfe was let go.

His supervisor told him he was the victim of an economic layoff, but many of his co-workers were convinced that he was fired for being one of the employee leaders. Layoffs had been based on seniority up to that point, they noted, and although Wolfe was new to the photo department, he had been at the store longer than some employees who kept their jobs.

“It was obvious,” Geiger said. “He’s a really vocal person. He’s smart. We had the meeting at his house. It just seemed obvious that they must have thought he riled us up — that he was the rabble-rouser. … After that, people were intimidated. It was like, ‘I don’t want to get fired.'”

Still, a few workers were undeterred. They held a follow-up meeting at Wolfe’s house, but this time, only twelve people showed up and the mood was somber. Nonetheless, they agreed to follow through on their decision to request a meeting with management, and Wolfe decided to attend even though he was no longer an employee.

Management agreed to the sit-down, and about 35 people attended the 7 a.m. meeting. The employees decided in advance to strike a civil tone, convinced that they still had a shot at persuading Skorman and his managers to see their point of view.

“I started talking, but it became immediately apparent that we were completely lacking any kind of force to get what we wanted,” Wolfe said. “We didn’t have solidarity. We didn’t have strength.”

After several employees spoke, Skorman said he wanted to say a few words. Jeff St. Andrews, who started at Elephant in June 2003 at age 24, recalled that Skorman said he was really sad to see his employees unhappy, and eventually started crying. “I don’t know how sincere the tears were,” St. Andrews said.

Skorman told workers he couldn’t afford to give them raises, but once again pledged that employees who stayed with the company would be rewarded with stock options, Wolfe and St. Andrews said. But several of the other former employees said they paid little attention to him. After all, stock options were not why they came to work at Elephant.

After the 2003 holidays, Skorman and his staff grew increasingly nervous. Although they had cut costs and increased store sales — Elephant grossed nearly $1 million in December, almost double what it did in June — they were having trouble closing a deal with investors.

The only serious investor was a seemingly unlikely one: CVS Pharmacy, the nation’s largest drugstore chain. Based in Rhode Island, CVS has more than 5,300 stores in thirty-plus states and is the dominant chain on the East Coast. Elephant’s profit-and-loss statements scared away most potential investors, but CVS not only understood the tight margins in the drugstore industry but believed that Elephant’s innovative product mix might just work.

The CVS deal was vital for Elephant, but it was anything but certain at the time of the store meeting, Skorman said. And it was unlikely that any other big-time investors would step up unless CVS did. “If the CVS deal did not come through, we would have gone broke,” he said.

CVS is nonunion, like the rest of the chain drugstore industry. But Skorman denied the widely held suspicion that he fired Wolfe in an attempt to snuff out the fledgling organizing campaign. He also said he was not worried that labor strife would ruin the fragile talks with his potential investor. Skorman said he never believed the talk of unions was serious anyway, and that Wolfe was laid off to cut costs in accordance with the store’s established seniority rules. “Our payroll was putting us out of business,” he said. “We were losing our shirts.”

Nonetheless, Skorman refused to discuss his attitude toward unions, although he said he would go to great lengths to avoid labor problems, noting that disgruntled workers are anathema to high-quality customer service. “I’m very afraid of unhappy employees,” he said several times during two lengthy interviews for this story. “We need very happy employees in order to survive.”

Skorman said that when employees were angry at him, it was “one of the hardest things I’ve had to go through in my life.” He blamed his own lack of management skills for some of the store’s problems. “The staff had a huge amount of frustration, because the management was in way over our heads,” he said. “We were so untogether, it was pitiful. The employees deserve medals.”

After the store meeting, layoffs continued. But some of the workers who kept their jobs finally got raises. Managers told them that the company couldn’t have afforded the higher wages without the layoffs. “It was hard — a lot of friends got laid off,” Wright recalled. “There was a lot of anger. A lot of people got raises. To a lot of people, it felt like blood money.”

Eventually, the former workers said, all the employee leaders who demanded the meeting with management either were laid off, quit, or were fired because store managers said they had “bad attitudes.” Several said they never got medical benefits. None said they had seen stock options.

Geiger recalled her own final performance review with her supervisor: “He said I had a bad attitude. He said, ‘I just want the old Jeanne back.’ He said customers said, ‘This girl used to be so friendly, what happened?’ Then he said, ‘If you have a boil, you have to cut it off.'”

He stopped short of firing her, but she quit nonetheless. “It just made me really angry,” she recalled. “I felt basically I was forced to quit. … I couldn’t work there anymore. I had given so much of myself and I was basically told it was worth nothing.”

St. Andrews, who had worked in Elephant’s organic produce department, said that Skorman told him before he was fired: “We would rather have bad produce than negative vibes in our store.”

All ten of the former employee leaders interviewed for this story say that they’re relieved they no longer work at Elephant. But most of them remain disappointed and angry about what happened. Most say they were led to believe that Elephant was going to be a small local business dedicated to progressive ideals. “It was the vibe,” Wright said. “It was the image they were putting forth. It was the idea of the small independent company trying to make a difference, quote-unquote.”

Jennica Murray is similarly angry. “Do I feel duped?” she asked. “Totally. I was so excited about working at Elephant.”

Skorman said he doesn’t mind such criticism from former employees, because it will help make Elephant a better store. “Berkeley is a very, very good place to start a business, because people will call you on your shit,” he said. “It’s a great proving ground. It forces us to be good.”

But Skorman also maintains that most current and former employees are not angry and do not believe they were misled. To prove his point, he provided contact information for three former employees who worked at the store throughout 2003. All three said they left Elephant on good terms. All three also were several years older than the group of workers who grew unhappy with Skorman and his store.

When asked why former Elephant workers had not received promised stock options, Skorman said the company only recently rolled out details of the plan. All former employees who worked at Elephant for at least six months will soon receive their stock option information in the mail, he pledged. “All of the companies I’ve started, the employees have done very well,” he said.

Yet Skorman conceded that he was sorry he did not communicate his chain-store plans more effectively, adding that in the future he will make store business meetings mandatory, and that employees being hired this holiday season must sign a form acknowledging that they’re only short-term workers.

Still, Skorman maintains that many of his former workers had unrealistic expectations about Elephant, and acted as if the company was a nonprofit or a co-op.

“People have a lot of expectations that we’re a socialist company,” he said. “It turns out we’re in the drugstore business.”

Expansion plans for that business appear to be on track today. Skorman said the store produced a positive cash flow twice in recent months and that its sales should top $11 million this year, up from $6.3 million in 2003. And earlier this spring CVS made a significant investment, prompting investment banking giant J.P. Morgan to follow suit. All in all, Elephant raised nearly $10 million, he said.

Elephant also inked a deal with upscale retailer Saks Fifth Avenue to install Elephant Wellness Boutiques in Saks-owned stores around the nation. There are already eleven baby Elephants up and running in places such as Biloxi, Mississippi; Birmingham, Alabama; Des Moines, Iowa; and Madison, Wisconsin, said Sandy Sickley, Elephant’s vice president of operations. The boutiques feature natural cosmetics and body-care lines and each carry about 3,500 Elephant products. Saks pays for the fixtures and staffs the boutiques with its own employees. Skorman said he hopes to open Elephant boutiques in 160 more Saks stores in the next eighteen months.

And in 2005, Skorman hopes to open two more full-fledged Elephant Pharmacies — in San Rafael and Los Altos. Elephant also plans to supplement its income by expanding its own private-label lines. The vitamins and herbal supplements that bear the Elephant name provide the company with higher profit margins than other brand-name items. Skorman hopes to start selling Elephant-brand products in CVS stores soon.

Elephant plans to keep capitalizing on a key segment of its customer base — educated, affluent women who want “organic” or “all-natural” body- and skincare products. The popularity of those products helps add to Elephant’s margins. Jurlique, a pricey line of organic creams and lotions, is an example of just how much money is to be made. A bottle of Jurlique Recovery Gel goes for $112.50 at Elephant. Skorman calls such natural body and skin products, which occupy the prime, center-of-the-store location, “the star of our show.” The higher profit margins from these items allows Elephant to finance the wide array of services that set the store apart from other drugstore chains, from offering free classes to having more employees to assist customers, he said.

The skin- and body-care profits also make up for lagging prescription-drug sales. It typically takes a drugstore several years to fully grow its prescription department because people are slow to change drugstores, said David Pinto, editor of Chain Drug Review, an industry publication. But once they do, prescription drug sales can represent 70 percent of a pharmacy’s total business, Pinto said. Although Elephant’s prescription drug sales have steadily increased since the store opened, they still represented just 28 percent of the store’s total sales in September.

Meantime, Elephant is doing well with herbal supplements, which are outselling over-the-counter items such as aspirin and Pepto-Bismol three to one, Skorman said. And when comparing apples to apples, such as Tom’s of Maine natural deodorant or toothpaste against the nonnatural Right Guard or Colgate, the margin is six to one, he said. But fewer sales do not mean Elephant will eliminate traditional drug store items, because customers expect them, he said.

Skorman said it could take ten years or more to grow Elephant into a five-hundred-store chain. And while he said he might stay on in some advisory capacity, it is unlikely that he would remain at the company’s helm that long because he admitted he lacks the management skills to run a big corporation.

“I’m a start-up guy,” he said.

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