Wendy future of retail top

The area where independents have an edge

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One of the most interesting phenomena in retail pharmacy is the continued vitality of independent drug stores.

Competing in a field dominated by multibillion-dollar corporations, independents have done a remarkable job of staying afloat despite hearing, for many years running, repeated predictions of their imminent demise.

Far from declining, the sector has proved resilient. Since 2000 the number of independent pharmacies in the United States has held steady, with 20,792 in operation in 2009, according to the most recent industry profile issued by the National Association of Chain Drug Stores.

Prescription drug sales, which account for more than 90% of independents’ business, remain strong. The trade class was the second-largest dispenser of scripts in the nation last year, according to IMS Health, accounting for 748.3 million, or 18.7% of the total. It was No. 3 in dollar sales with $37.9 billion, good for a 12.3% market share.

By most measures commonly used to evaluate retailers — convenience, merchandise mix, shopping experience and price prominent among them — most independent pharmacies are at disadvantage vis-à-vis drug chains and other mass marketers with a pharmacy presence. What, then, accounts for their ongoing appeal?

The answer, which should come as no surprise to anyone involved in community pharmacy, is service. Independents’ stock-in-trade consists of personalized interactions with patients, which over time enable pharmacists to play a more active role in health care.

The results of a survey that appear in the May issue of Consumer Reports support that view. Based on responses from more than 43,000 readers, independent pharmacies earned a score of 93, putting them at the top of the field. Health Mart and Medicine Shoppe, franchised chains of independently owned drug stores backed by McKesson Corp. and Cardinal Health Inc., respectively, were tied for second at 92.

“Chalk one up for the little guy,” the publication wrote. “Independents made fewer errors, offered swifter service at the pharmacy counter, and were much more likely to have medications ready for pickup when promised than traditional chain, supermarket or big-box-store pharmacies.”

In fairness it should be noted that some chains scored almost as well as the independents: Bi-Mart and Publix each rated a 91; Hy-Vee and Wegmans earned 90s; and Jewel-Osco, Kinney Drugs and Sam’s Club had 89s. Although the four largest pharmacy providers were among the bottom five in the Consumer Reports study, all of the retailers listed (with the exception of Walmart, which had a 78) posted scores of 80 or higher, indicating that customers were, on average, very satisfied in terms of speed and accuracy, helpfulness and courtesy, knowledge, and personal service.

The results should be kept in perspective. The large chains’ relatively weak showing points to the difficulty of sustaining a standard of excellence across thousands of locations and coping with average script counts that are almost three times higher than those of most independents.

That said, chains should consider what they might learn from independents and their commitment to individualized customer service. They need to redouble their efforts to find new ways to free pharmacists to focus the lion’s share of their time on patient care, not putting pills in bottles and checking prescriptions. Only then will those professionals be in a position to make full use of their unmatched knowledge of medications and their effect on the body to help produce better patient outcomes and lower overall health care costs.

Meeting the challenge quickly should be a top priority. Community pharmacy operators of all sizes understand that changes in the health care system promise to open the way for the profession to assume the expanded role to which it has long aspired.

The scramble to capitalize on them is under way, with pharmacies adding such services as immunizations, diagnostic tests and in-store clinics in a bid to make their stores true neighborhood health care centers. The trick will be to perform those functions while maintaining and improving patient care in their core pharmacy business.


ECRM_06-01-22


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