BAVIS_1170X120_10-19-20

Maintaining relevance will require change

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As more Americans get vaccinated against COVID-19 every day and hope for a restoration of pre-pandemic conditions intensifies, pharmacy operators are thinking about how their stores will fit into the retail landscape as the new normal takes shape. Consumer behavior has changed considerably over the past 12 months, as restrictions on businesses and risk aversion caused many people to eschew brick-and-mortar stores and rely on e-commerce whenever possible.

CVS Pharmacy administering COVID-19 vaccine. (Scott Eisen/CVS Health via AP Images)

Since drug chains, supermarkets and mass retailers are purveyors of essential merchandise, including prescription medications and other health and wellness products, they remained open throughout the pandemic. That has given them the opportunity to cement relationships with existing customers and connect with new ones.

Having been quick to enter the fight against COVID, the nation’s pharmacy operators have interacted with millions of people seeking information, testing and immunizations. They are currently playing a pivotal role in the race to vaccinate enough people to achieve herd immunity before COVID-19 mutates further, resulting in variants that are resistant to the three vaccines approved for use in the U.S., from Pfizer-BioNTech, Moderna and Johnson & Johnson.

As of this writing, the efforts of community pharmacies, together with those of federal, state and local governments, have led to the administration of some 130 million doses. Fourteen percent of the population has been fully vaccinated, while almost 26% has received at least one shot. Despite steady progress over the last three months, that leaves a lot of ground to cover; most experts say that at least 60% to 70% of the population needs to be vaccinated to reach herd immunity.

Retail pharmacies stand ready to do more to help the nation move closer to that goal. The National Association of Chain Drug Stores indicates that the industry is capable of administering 100 million COVID inoculations per month as soon as adequate vaccine supplies are available. The ability to make a contribution to public health on such a large scale buttresses the case that pharmacies and the professionals who staff them should be granted a wider scope to foster the well-being of patients.

Looking ahead, pharmacies are almost certain to offer a more diverse range of services than they do today. In addition to immunizations, many of them will provide point-of-care testing, coordination of care for chronic conditions, and education and advice on connections between health and nutrition. The expanding array of offerings will be frequently supplemented by in-store clinics that deliver acute and chronic care. Exemplified by CVS HealthHUBs and Walmart Health, such facilities are in sync with the trend toward bringing health care to the neighborhoods where people live and work, and, in the process, improving access and lowering costs, while maintaining quality.

If retail pharmacy’s future direction in health care seems clear, the rest of the business presents more vexing challenges, especially for drug chains, whose assortments are much more limited than those of mass merchants and grocers. Brick-and-mortar retailers of all kinds have been hurt by the inroads of Amazon and other e-commerce companies. Although most have responded by attempting to strengthen their omnichannel offerings, food, drug and discount stores need to contend with the fact that many consumers who have gravitated to online shopping options during the pandemic aren’t going to go back to shopping in-store to the same degree they did before COVID struck. The shift in behavior makes it incumbent on retailers to rethink what goes on in the store.

The task is most pressing for drug chains, which, primarily because of relatively high prices in comparison to the likes of Walmart, Dollar General and Amazon, were experiencing declines in customer traffic well before the pandemic. With consistent comparable-store sales gains at the front end hard to come by, revenue in the trade class has increasingly been skewed toward prescription medications. Taking up about 10% of the selling space in a typical chain drug store, pharmacy accounts for some 70% of total retail sales.

Something needs to be done to mitigate the imbalance. With a growing number of consumers relying on home delivery for merchandise, ranging from frequently used beauty and personal care products to household staples, the importance of one of the store’s traditional functions — to serve as an easily accessible “warehouse” for consumers — will be significantly reduced. Brick-and-mortar retailers — supermarkets and mass merchants, as well as drug chains — can lament the change or see it as an opportunity to reimagine their offerings — services as well as products — in ways that make shopping enjoyable, something that Apple has achieved to great effect in the retail outlets it operates.

Brick-and-mortar retailers that want more than their pharmacy and health care offerings to retain their relevance in the post-COVID world should consider this thought from Giuseppe di Lampedusa’s novel The Leopard: “If we want things to stay as they are, things will have to change.” With a large infusion of exploration, entertainment and education at the front end, that change should give consumers a compelling reason to continue to come into the store.


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