Though the front end has traditionally been the province of chain drug stores, independent pharmacies are driving sales at a faster rate in six health-related categories, according to a new report from Hamacher Resource Group Inc.


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Report: In some categories, independents hold edge

October 21st, 2011

WAUKESHA, Wis. – Though the front end has traditionally been the province of chain drug stores, independent pharmacies are driving sales at a faster rate in six health-related categories, according to a new report from Hamacher Resource Group Inc.

Last year, independent drug stores saw higher sales growth than chains in the first aid, eye/ear care, sun care, smoking deterrent, foot care and incontinence/home health care/diabetes categories, Hamacher said in its study, titled "Supply Chain Collaboration: Maximizing Health, Beauty and Wellness Product Sales in Independent Pharmacy."

The retail consumer health care market research firm noted that independents get high marks for pharmacy service. Hamacher cited a recent poll by Consumer Reports that found independents ranking at the top in a number of key pharmacy service areas.

"This good news carries signifi cant implications for independent pharmacies because it demonstrates that consumers already are predisposed — by a wide margin — to favor independents with their prescription business," Hamacher observed in its report. "Earning more of their front-end HBW [health, beauty and wellness] purchases is only a short leap away."

In 2010, independents posted year-over-year sales gains of 16.45% in first aid, 10.71% in eye/ear care and 10.17% in sun care, compared with chain drug increases of 6.31% in first aid, 5.28% in eye/ear care and 10.16% in sun care, according to the Hamacher study.

"First aid [sales for independents] far outpaces category growth during the same time period compared to food, drug and mass outlets and in drug outlets alone. Its 16.45% increase likely reflects the new emphasis by first aid product manufacturers on selling through to the customers of independent pharmacies," Hamacher explained in the report. "This usually female consumer demographic is often responsible for the care of family
members a generation older and a generation on younger than herself, so a variety of first aid options and even a few specialty items can make the difference to earning her business."

Independents also saw smoking cessation sales climb 8.34% in 2010, whereas chain drug stores watched their smoking deterrent sales dip 2.40%, Hamacher said. Independents, too, had a smaller drop-off in foot care sales (-0.75%) last year than chain drug retailers (-3.50%).

"Growth in smoking deterrents (+8.34%) [by independents] reflects the consumer trend in self-care," Hamacher stated. "It also shows a remarkable increase versus the same time frame in chain drug, where the category declined by 2.4%."

In addition, independents generated a 3.28% sales gain in the incontinence/home health care/diabetes category. No figures were available for chain drug in this product area because of a lack of one-to-one comparison data, according to Hamacher.

"While incontinence is considered part of home health care and outside of the 'traditional' HBW categories, it is significant because it serves a growing consumer demographic. If they are not already, independent pharmacies should consider adding to or modifying their home health care department to be ready to compete within one of the fastest-growing segments of the retail consumer health care industry," the Hamacher study said. "An aging population brings a shift in health care needs, and the growth that independent pharmacies are experiencing within the home health care category is substantial: a 3.28% dollar sales
increase between 2009 and 2010."

U.S. retail pharmacy sales (i.e. prescription drug business) at independents rose 2.5% to $44.70 billion in 2010, compared with a 1.3% increase to $106.58 billion by chain drug stores, according to data from IMS Health and the National Association of Chain Drug Stores.

Overall independent pharmacy sales volume was up 4.8% to $79 billion last year, versus a 5.4% gain to $238.31 billion by chain drug retailers, according to research by Racher Press Inc., publisher of Chain Drug Review.

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