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Drug chains lead way in retail health care

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The three most influential health care retailers in America are drug chains.

They are, in no particular order, Walgreens, CVS Health and Rite Aid.

In a sense, this is a surprise. Over the past several years, every major mass retailer in the U.S. has put an emphasis on health care. The emphasis has taken different forms, reflecting the individual retailer and the particular trade class.

So it is that grocery retailers have tied health care to their larger food-oriented assortment. Discount retailers have linked health care to their larger general merchandise assortments. And drug chains, in the main, have been content to simply market the idea of health care, offering their customers the opportunity to improve and maintain health simply by availing themselves of the products, services and expertise the drug store routine offers.

This simple, direct approach has paid off. Bombarded with information, suggestions, promises and possibilities from a variety of mass retailers, consumers are opting for the drug store proposition, one that turns on the availability of the pharmacist and the idea that the drug store is the logical place to shop for health care medications.

Surprisingly, no one drug store approach has proven dramatically superior to the others. The CVS proposition turns on its relationship with CVS/caremark, the retailer’s PBM. Walgreens’ is tied to its name, reputation, pharmacy dominance and nationwide store network, a campaign that will only gain strength and credibility as its association with the Alliance Boots retailer/wholesaler gains traction.

Perhaps the most impressive health care campaign is the one that has returned Rite Aid to the first ranks of mass retailers. For a simple reason. Rite Aid has used its health care emphasis as a route to return the drug chain to viability. Unlike CVS and Walgreens, retailers that launched their health care initiatives from a position of strength, Rite Aid has leveraged health care to return customers to its stores.

That it has done. In a remarkable turnaround, monthly sales gains have replaced the monthly declines that were until recently an accepted, if not anticipated, monthly result at Rite Aid. For good reason. The drug chain’s wellness+ initiative is at once among the most compelling and creative any U.S. retailer has undertaken in a very long time. Its strength lies in its simplicity, in its commonsense call to customers to think of Rite Aid when thinking of their health.

Whatever the relative merits of the new chain drug emphasis on health care, the result has been dramatic. In terms of prescription medicines, proprietary drugs, and such support services as vaccinations, immediate medical care and insurance, these three drug chains have come to dominate the retail health care market in America. They collectively dispense more prescriptions and over-the-counter drug products, while offering more and more-effective auxiliary services, than any other comparable segment of the market. In other words, when an American consumer thinks of health care, he or she thinks of one of the major drug chains first.

Business aside, there’s much to be said for this. If this momentum continues, and if the results going forward mirror or even approach the results to date, the chain drug retail segment will have secured a position in the market that will make it impervious to traditional competition. Other mass retailers may sell more groceries, more electronics, more general merchandise, more health and beauty merchandise. But when it comes to health care, rapidly emerging as the No. 1 priority in an aging America, drug chains will be the retailers of choice, with little fear of competition.

The key, of course, is traditional retailers. New retail concepts and formats, and new approaches to retail health care, will certainly appear. Drug chains will themselves develop new ways of offering health care. So the market is a very fluid one.

However, it would be appropriate to pause, for only a moment, to give Walgreens, CVS and Rite Aid the credit they so richly deserve. The American consumer is probably more confident about her health care prospects then she was a decade ago. And if she is, one very important reason is the aggressive approach to retail health care America’s leading drug chains have taken.


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