LOS ANGELES-Several thousand apartments and condominiums are under construction and in the planning stages in a revival of Downtown Los Angeles living that has been under way for half a dozen years, but one of the recurring themes of discussions about the new Downtown is the lack of shopping, restaurants and retail services. Owners Jerry and Jo Ann Shapiro of Uptown Drug & Gift Shop are doing their part to fill that void with the opening of their new store at Fifth and Flower streets in an expansion and relocation of a pharmacy they operated for 28 years in the Mid-Wilshire district of Los Angeles, kitty-corner from the now shuttered Ambassador Hotel.

Uptown Drug & Gift began as Uptown Drug in August 1945 when Jerry Shapiro’s father, Peter Shapiro, opened his drug store at Olympic Boulevard and Western Avenue. Jo Ann and Jerry bought the business from Jerry’s father in 1969 and operated at the original Uptown location until the move to the Mid-Wilshire store that they recently vacated. Their new location is in the Citibank building at 444 S. Flower St., at the corner of Fifth and Flower, which Jerry describes as arguably the most desirable retail spot in Downtown L.A.

Besides seeing potential for growth in the emerging Downtown L.A. retail market, Jerry Shapiro says Uptown needed to move because of the changing demographics of the store’s previous location. The Mid-Wilshire location is in the middle of Koreatown, where, he says, the residents are loyal to Korean-owned businesses and the retail sales portion of his business had fallen off precipitously. Uptown has remained profitable by specializing in delivering prescriptions to a 100-square-mile area, a service that it is continuing to provide at the new location, but rebuilding retail sales was one of the chief reasons for the move to Downtown L.A. Retail sales at the new location are already higher than they were in Mid-Wilshire, about 10% of the sales volume versus 5% at the old shop, Shapiro says. “I think the front end can go a lot higher than that, probably up to 40% of our sales,” he says. The new location carries an expanded line of gifts and cards, including Nao by Lladro, jewelry, executive gifts, cosmetics, perfumes and personalized baby gifts, according to Jo Ann Shapiro, who oversees the gift and merchandising operations of the store.

The Shapiros have signed a nine-year lease for their new location, a 4,600-sf store that’s about 1,500 sf larger than their previous location. “This is the only space in Downtown that we were interested in because it is probably the hottest corner in Downtown L.A.,” Shapiro says. The store is near a number of the new apartment loft and condominium projects, which include conversions of office buildings into housing as well as some new ground-up construction. “We probably have about eight or 10 high-rise office buildings within a three-block radius of us, and five or six major hotels,” Shapiro adds, saying that these should also contribute to walk-in traffic. Only three other drug stores are open for business anywhere near his new location, Shapiro says, and none of those is close enough to represent worrisome competition.

The Shapiros’ expansion in a Walgreens world is not unusual despite the common perception that drug store chains have all but taken over the business, says Doug Hoey, an SVP at the senior vp at the Alexandria, VA-based National Community Pharmacists Association. Hoey explains that while the large chains represent formidable competition, they are not the main obstacle to the success of independent pharmacies. Hoey says independent drug stores have suffered more at the hands of pharmacy benefit managers (PBMs), companies that manage prescription drug costs for health insurers and, in the view of the independent druggists, steer the prescription business toward chains rather than independents. Despite the impact of chains and PBMs, Hoey says, “Independent owners like Jerry Shapiro have found different patient care niches to specialize in, like delivery, durable medical equipment and prosthetic fittings, and because of that, they’ve done very well.” According to statistics provided by the National Community Pharmacists Association, the independents represent a $78 billion marketplace, with $70 billion of that coming from prescription sales. Annual gross sales of the average independent pharmacy rose by 14% in 2003, according to the NCPA, with prescription sales up 16% for the year. The 23,956 single-store independent pharmacies, independent chains, independent franchises, independent long-term care and home I.V. pharmacies, and independent pharmacist-owned supermarket pharmacies constitute 42% of the nation’s 57,208 pharmacies.

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