The chain drug store industry is experiencing a major transformation driven by changes in how consumers interact with retailers and purchase products.


Ian Kahn, PricewaterhouseCoopers, Retail and Consumer practice, chain drug store industry, retailers, mobile technologies, social media, online stores, personalized experience, drug store retailers, omnichannel, customer relationship management, CRM, chain drug retailers








































































































































































































































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Inside This Issue - Opinion

Digital technology brings chains closer to customers

April 28th, 2014
by Ian Kahn

The chain drug store industry is experiencing a major transformation driven by changes in how consumers interact with retailers and purchase products.

Today’s newly empowered and connected consumers are increasingly turning to online stores and utilizing social and mobile technologies to access research, compare products and prices, and read reviews before making purchase decisions. They can buy from retailers around the corner or around the world without ever setting foot in a store. And once they decide what and where to buy, they can share their shopping experiences — good or bad — with friends, family and other consumers through social media.

Understanding this dynamic environment and rising to meet today’s customer expectations is particularly important in the chain drug store industry for two primary reasons.

One, drug store retailers are tasked with delivering a highly personalized experience to their customers. Few other retailers deal with the same level of personal information and transactions. Customers in this space are focused on health and wellness, and they value trust-based relationships. Second, drug store retailers play an important role in helping their customers to analyze, access and provide feedback on a wide range of health and wellness products. Helping consumers to navigate this complex process is paramount.

These two variables, combined with the dramatic changes under way in the retail landscape, elevate the need for drug retailers to deliver personalized and trusted shopping experiences integrated across all channels. Further, given the sensitivity of the customer data involved, there is also a heightened need for drug retailers to utilize secure and scalable technology to deliver services that combine convenience, speed and data in a seamless manner.

To drive success and build valuable customer relationships in this complex omnichannel environment, chain drug retailers should adopt total retail clienteling solutions that harness insights from social media, online sources and past interactions to build customer loyalty and increase revenues.

Smart retailers will develop customer-inspired strategies that deliver positive experiences, from sale to service. Providing a superior value proposition to customers starts with understanding their preferences and being in a position to make intelligent, real-time, personalized offers before, during and after their store visits.

Often overlooked, friendly and helpful sales associates are at the beginning of this process. The more retailers understand the customers individually before they walk in the door, the greater chance they have of delivering a buying experience that should keep them coming back for more. Retail clienteling is one way companies can leverage new technology and access to data to close the service gap.

The role of today’s sales associates should evolve from one of an information provider and facilitator of transactions to a facilitator of engagement and a trusted advisor. To get there, sales staff should be empowered with the right tools to help them be successful. Total retail clienteling is more than just a system that provides detailed product information or a handheld point-of-sale device that moves lines more quickly.

Instead, it’s a set of business processes — enabled by technology — that deliver insights about each customer. Using a powerful mix of customer relationship management (CRM) technology, social media and data analytics, total retail clienteling delivers accurate, timely information about each customer to an associate before the point of sale. This puts the customer at the center of the transaction. This transformation also enables associates to become a valuable link between the customer and the retailer. The data from these captured moments can help retailers significantly increase their marketing and sales effectiveness.

Process and technology platforms, the key features of a total retail clienteling solution, can include such tools as the following:

• Item catalog: A repository of available items that share common or complementary characteristics, enabling associates to identify and suggest value-added cross-sell and up-sell opportunities in real time.

• Customer social profile, insights and wish lists: Access to customers’ social media interactions, delivering highly personalized insight into their buying habits, their needs and wants, and their sentiment toward your brand and competitors’ brands.

• Retail workbench: A system that delivers customer-specific and aggregated insight into transactions, promotions, performance by channel and other key performance indicators.
• Store information: A view of product availability across all channels, so that sales can be ‘saved’ if an item is not immediately available at the point of purchase.

• Pre-built integrations: Integrations into core CRM, social and mobile platforms, as well as relevant enterprise systems including finance, customer analytics, inventory and supply chain.

• Employee social network: An ability to connect previously disparate employees — across channels, geographies and brands — to collaborate better on any number of issues, including around a single customer.

These tools can help to dramatically improve how sales associates increase transactions with customers. The benefits of these investments are many and include improved customer satisfaction, based on associates’ ability to provide relevant, timely product information and recommendations; and increased sales per customer visit, based on relevant, targeted cross-selling and up-selling opportunities.

An impactful program should also support improved marketing effectiveness, gained through targeted, timely notice of events, sales and promotions, and an ability to measure the return on investment of any given campaign.

Today’s empowered customers are savvy and social shoppers. Chain drug retailers should deliver differentiated experiences, and they should connect the brick-and-mortar experience with the online world to develop a relationship characterized by trust and customer delight. In many ways, this approach is a throwback to a time when local pharmacists knew the customers who visited their stores and provided them with personalized services.

While the need for a trusted personal experience hasn’t changed, the environment has become substantially more competitive, as organizations have access to a much deeper understanding of their customers in today’s world.

Chain drug retailers should embrace digital and mobile technologies to interact more effectively with their customers and to foster valuable, two-way conversation like never before. They should also empower their sales associates by harnessing the vast data on health and wellness and individual customer preferences, with the goal of delivering a secure and personalized experience that builds loyalty and generates sales.

Customers have a choice. They can choose to shop with one drug store retailer or another, and it’s going to come down to that customer experience edge. Retailers who are smart about efficiency, productivity, standardization and using digital technology to get closer to their customers can change the way products and care are delivered in the industry.

IAN KAHN is a director in PricewaterhouseCoopers LLP’s Retail and Consumer practice.

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