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Chains need to take their owned brands to another level

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When it comes to turning high-level corporate strategy into concrete action, top pharmacy chains are “walking the talk” in admirable ways. They’re launching health clinics, partnering with insurance companies, freeing up pharmacists and pivoting to preventative care, just to name a few.

Todd Maute

It’s particularly heartening to me, as a brand strategist focused on own (or private label) brands, to see movement on another front as well: Major chains are seeking to bolster their pharmacy sales by bringing the front of the store into closer alignment with the aforementioned health care imperative. These latter moves include pulling toxic chemicals out of own brands and providing healthier offerings in the front of the store.

But here’s a candid assessment: So far, the leading national pharmacy chains aren’t yet walking the talk enough when it comes to bringing their own brand portfolios into proper alignment with their new ­identities.

Why own brands matter

Why is it so important? COVID-19 is going to transform just about everything, and we do not yet know precisely how it will affect health care initiatives and, in turn, pharmacy business over the long term. Even before the pandemic, rising input costs and declining reimbursement rates were putting the squeeze on retail ­pharmacies.

But from the very beginning of the pandemic, chains saw massive increases in their online sales — as much as 10 times initially — with the industry suddenly facing the prospect of millions more Americans forging the new habit of buying prescription drugs online, and simultaneously receiving more and more medical services, too, via telemedicine provided by doctors and hospital systems.

Throw in the massive increase in online grocery shopping and it is not great news for drug stores seeking to drive in-person traffic and sales in the ­pharmacy.

The truth is that most consumers still see the top drug store chains as functionally equivalent: Loyalty to a particular store and pharmacy is, to a remarkable degree, still based on real estate fundamentals such as proximity, visibility and ease of access.

But when you buy more and more of your needs and wants online, suddenly every operator is equidistant, at least in the way you experience it sitting at home. In the absence of a differentiating brand — and powerful reasons to get off the couch and go to the store — you’ll make your purchase decisions based on price.

My sense is that it’s time for the majors to get even more serious about their owned brands. They need to start innovating along the lines of Trader Joe’s, Costco or Whole Foods Market — with purpose and in support of a well-defined strategy.

That means integrating all offerings and touchpoints, from the front of the store to the pharmacy counter and back again, with the overarching brand story, design and purpose. Despite some laudable experiments with test stores, none of the majors has yet created the brand lineup, service offering and in-store experience needed to truly rise above the rest. Across the country, the in-store experience continues to be broadly similar from chain to chain.

Ditching off-brand merchandise

Trader Joe’s understands that the products you sell — along with their packaging and all related marketing materials, including the design of websites, emails, social media and other touchpoints — are a core part of the brand. The totality, at shelf and everywhere else, is the image you present. The parts are not separate from the whole.

Today’s national chain drugstores are still full of off-brand merchandise that have nothing to do with health, wellness or personal care. On a recent trip to my local pharmacy, I did a double-take at the amount of square footage allocated for cheap novelty items by “As Seen on TV.” If your goal is to improve pharmacy performance, it’s important to recognize that the impression you create with your front-end consumables and beauty products can and does affect the pharmacy — and vice versa.

Moving forward, chains would do well to focus on holistic store-brand strategies that are more distinct, attractive and engaging. The goal should be to create an atmosphere that you can feel the second you walk into the store. You also want to offer a portfolio of wellness-related product brands that people can’t find anywhere else.

The conventional wisdom is that the next generations see wellness as integral to their lives. They’re the ones, the thinking goes, that are zeroed in on eating right, embracing fitness and avoiding toxins in categories such as beauty.

This may have been true a few years ago, but it no longer holds.

Especially in the wake of COVID-19, baby boomers and Gen Xers alike are more focused on health and wellness than ever. Naturally (no pun intended), what you eat is part of that. And yet consider my recent experience at my local chain drug store. Over the past couple of years, I have lost a dramatic amount of weight and radically improved my blood lipid profile by shifting to a plant-based diet. When I went into the store, I needed to pick up some snacks for a dinner party that I and my other guests would feel comfortable eating. I walked up and down the aisles for 20 minutes and left with a lone bag of unsalted pistachios.

This particular chain puts a big emphasis on health and wellness, but the front-end consumables were all about making a quick buck on impulse buys that spike your blood sugar and clog your arteries.

Meanwhile, the popularity of nontoxic cosmetics illustrates that looking good is also part of the health and wellness trend. Your beauty section, in other words, can support your brand or detract from it. The choice is up to you.

A cohesive approach

Moving forward, the national chains need to do better with their private brand strategies in the front end of the store. This is not to say they have to be perfect. You can still find some junk food at Whole Foods. In the main, though, such specialty grocers set a good example. They succeed in creating a more distinct and enjoyable brand and story.

We’re already seeing major chains launch new brand identities and logos and work to overhaul the store experience. It’s a good direction: Get this right, and your pharmacy sales will rise along with the profitability of the rest of the store. Stronger customer loyalty and distinct products will even translate into higher online sales: “I’ll hit the website to refill my three prescriptions and buy that new conditioner the store has started to sell — the one that’s all natural.”

The service question is a little trickier. Here, COVID-19 is spurring demand (the quest to stay healthy) and suppressing it (the fear of contracting the virus in an enclosed space). We will see what happens with efforts to bring pharmacists out from behind the counter to interact with shoppers and patients. Such efforts could be unwanted until the pandemic has truly passed.

Nonetheless, chains can and should continue to strive to transform pharmacies into wellness centers, not just drug dispensaries. People want to know how to better protect and take care of themselves and their loved ones. With a strong, brand-reinforcing identity shift that carries through to all touchpoints, drug stores could start to create a more distinct and engaging experience, and that could make a real difference in pharmacy performance.

America has never been more conscious of the value of health and wellness. Now’s the time for drug store chains to leverage their experience and their offer to protect their market share, differentiate themselves and grow the bottom line.

Todd Maute is a partner at New York-based brand strategy and design agency CBX. He can be reached at todd@cbx.com.


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