The rise of e-commerce is often cited as the key contributor to the struggles of venerable brick-and-mortar retailers that once ruled their sectors — Sears, Payless and Toys ‘R’ Us, to name a few. Digital disruption is also accelerating in traditionally more insulated sectors such as retail pharmacy.

Tom Block

At the same time, Amazon is continuing to redefine what online pharmacy looks like through the acquisition of Pillpack and the launch of Belei, Amazon’s private label beauty brand. Although some retail pharmacy chains have had digital capabilities for the last 20 years, the need for a seamless and increasingly sophisticated digital experience is critical for two reasons:

• Advancements in fast and flexible delivery are erasing the few remaining competitive advantages held by retail pharmacies for high-frequency routine and acute purchases.

• Changing customer expectations of digital to deliver and address their needs as technology continues to evolve.

Retailers need to keep in mind that the sophistication and functionality of any of their digital offerings is only half of the equation to their success. To truly connect with the customer requires the retailer to have a deep understanding of what motivates them: how they think, feel and shop. In addition, with retail pharmacy’s increasing role in the customers’ and patients’ health, the need for a 360 degree understanding of each customer’s health care needs is also critical. Successful execution across all digital strategies requires that understanding and will result in a retailer both differentiated and elevated above its peers.

Here are four key strategies that brick-and-mortar retail pharmacies are embracing to address their customer needs.

Create a virtual store

The first step many traditional pharmacies take on their digital journey is to develop a virtual store. By launching a virtual store, retailers accomplish four objectives:

• Provide new customers with a touchpoint that could not be reached solely through a brick-and-mortar location.

• Strengthen relationships with existing customers with a digital shopping option.

• Expand convenience for all with 24-hour accessibility.

• Compete head on with pure play digital health, beauty and pharmacy operators.

Although an online retail pharmacy brings parity with pure play competitors in the minds of the customer, retailers need to understand that customers shop for products differently online versus offline. If decisions are not made with surgical precision by retailers around items and prices, it could erode the customer experience and negatively impact the business — both online and in-store.

Enhance the in-store and online experience

Mobile capabilities have created connected consumers, resulting in personalized communications, tailored coupons and loyalty information both in and out of store. Mobile apps are facilitating on-demand information between customers and stores as well as simplifying historically manual tasks such as prescription refills. Digital capabilities are providing an unprecedented level of access to the consumer, even for retail pharmacies with thousands of stores and millions of ­customers.

Yet, greater access to customers also brings with it an increased responsibility and risk for retailers. Poorly executed personalized offers and communication can be the trigger for significant customer rebellion. When done well, personalization can yield exceedingly strong results. When done badly, it can cause customers to actively disengage with a previously trusted retailer.

Create a platform for driving strategic differentiation

As retail pharmacies face the challenges of new and stronger competitors, some have embraced strategies to stand out in the crowd with increased and more holistic approaches to health. For example, Walgreens Balance Rewards for healthy choices (BRhc) digital wellness program has more than 850,000 active members nationwide and recently earned the company a spot on Fortune magazine’s 2019 “Change the World List.” CVS Health is also embracing using digital technology to help improve its customers’ health. The company has created alliances with digital health providers such as Big Health by rolling out access to its sleep improvement app Sleepio.

Digital capabilities are helping reinforce retailers’ “trusted health advisor” mission in the mind of the consumer. By establishing a role in the consumer’s daily life, such as the pursuit and maintenance of good health through devices like wearable technology that reward healthy activities, the retailer has a tremendous opportunity to evolve the traditional customer and retailer relationship into something bigger. Customer-first metrics play an even greater role in guiding execution as the impact on financials is very real, but often indirect. The call to action from a business perspective is to make sure the data that is being collected by these digital touchpoints is powering the feedback loop to optimize the retailers’ relationship with the customer.

Become an everyday provider of healthy living

Pharmacy as a “proprietor of health” has prompted a re-evaluation of health care from a reactive set of activities to a much more proactive approach, with digital playing a key role in delivering the health solution itself. Key examples include usage monitoring sensors attached to medical devices, such as Propeller Health’s asthma inhalers, and mental health apps that can help sufferers manage symptoms. Some devices can even facilitate prescription refills directly through to retail pharmacies.

An increasing number of these types of digital therapeutic and wellness management applications provide an ‘always on’ view of the customer that enables new insights when combined with existing customer data. Many of these solutions provide retailers the opportunity to bring a new level of curative capability to retail pharmacies that can help them grow in the front line of health care.

Adherence to medication is one of the most widely known issues in pharmacy and health care worldwide. With global adherence to medication treatments in developing countries hovering around 50%, the World Health Organization has stated that improved adherence would likely lead to a better overall health outcome than the development of a singular cure for a major disease. Deep insights into adherence and the ability to drive customer change would have a major impact on both customer and retailer.

Retail pharmacies must embrace digital development as a key element of their long-term strategy. By leveraging deep customer insights and being ever vigilant to their customers’ needs and expectations, pharmacies can play a central role in health care. Those that fail to do this will render themselves irrelevant in their customers’ lives.

Tom Block is head of retail pharmacy at dunnhumby.