Drug stores have sustained a dip in trips in recent years, down nearly 15% from 2015 to 2017, according to IRI. This loss of trips is challenging for the drug class of trade, as stores lose the foot traffic they need to accelerate growth.
Our data and analytics indicate that trips in drug are down by 4% compared to a year ago and down by 15% since 2014 (see chart above). However, fill-in trips were up 2.4% in the 52 weeks ended January 28 compared to year-ago figures.
Drug is capitalizing on the fill-in trip but losing quick trips that tend to be consumables purchases, which may be due to a combination of higher pricing compared to other retail options and increasing convenience offered by other retail modalities. Trips seem to be migrating to dollar stores, club, food, convenience stores and, to some degree, online for the types of products most often purchased at drug stores.
Especially intriguing is the strengthening of convenience stores in the past decade. C-stores have evolved to appeal more to broader consumer groups, while drug stores have remained mostly unchanged. Though c-store trips recently have dipped along with most major channels, the role c-stores play in cutting an additional trip from consumers’ hectic lives has affected the challenges in drug.
C-stores siphoning off trips
C-stores have had a makeover in the past decade and have seriously evolved from the once overpriced, less-than-sparkling-clean small outlets carrying a limited assortment of packaged goods. Today’s c-stores — which now number more than 154,000 with reported store growth of 6% since 2008, according to the National Association of Convenience Stores — have high-quality assortments with fresh options spanning meal occasions and reasonably competitive pricing. C-stores appeal to all demographics, making the experience in a c-store today completely different than in decades past.
C-stores deliver on consumer desires to accomplish multiple errands in one stop and increasingly live up to their promise of convenience. Now they are most often built adjacent to a gas station, so consumers can fill up their car and simultaneously utilize the c-store to grab the milk and eggs needed for the next morning. These items are priced appropriately given the added convenience, thereby cutting out one errand from the to-do list. With high-quality, fresh goods in store and assortments that cover both national and interesting niche brands, c-stores have stolen a portion of the staple-driven quick trip from the drug channel.
Drug stores understand the importance of positioning themselves as holistic health care solutions and are taking advantage of the self-care behavioral shift we see today. This shift transcends more traditional food and beverages and is potentially a powerful inducement to drive trips. In addition, more prescription conversion to the front of store is important, as this is a trip where drug chains have leverage.
Health and wellness products continue to sell well in drug, but figuring out a way to entice shoppers back for quick trips is also important, since they impact other category purchases.
Drug gets its mojo back
Even as recently as 10 years ago, drug was competing well with convenience stores on the strength of their many locations, as well as the manageable size of the store and carefully curated product assortments. In response to convenience stores stepping up their game of late, drug stores seem to be accelerating efforts to position themselves to appeal to consumers in an area in which they have unique expertise: health, wellness and self-care. Increasing emphasis on in-store clinics, immunization campaigns/availability, health fairs, drug disposal programs and more healthy product assortments are but a few of the actions drug chains are taking to set themselves apart from competing retailers.
Drug chains need to continue to view self-care as the overarching behavior that embodies health, prevention, treatment and wellness. Also, it’s important to note that self-care includes not just taking care of one’s body directly but also making sure one’s home environment and surroundings are healthy, safe and clean. With that at the center of a strategy, drug is becoming the trusted source/destination for a broad, holistic line of products and services that enable consumers to optimally take care of themselves, where “optimally” includes the notion of convenience.
A number of leading drug chains have paved the way on this journey to a holistic health position. Many have eliminated products that are considered unhealthy or that don’t support a healthy lifestyle. And a number of stores now house prestige beauty sections in an effort to connect to consumers’ desires to pamper themselves at home — pampering without boutique or upscale department store pricing is very appealing and a form of self-care.
Drug chains can boost trips with two primary strategies:
• Improved convenience features — including product assortment, pricing and quality — to drive quick trips of a self-care nature.
• Unique positioning as a retailer concerned and focused on the full consumer — holistic health and self-care.
There is reason to be optimistic about tackling the task of winning back trips. Drug chains already have resources in clinics and pharmacies that can bring patients into the store, but the channel needs to give consumers a reason to come in whether they’re healthy or not, to seek out items to promote self-care.
Drug retailers have done well, but they can do more to become known as the place to go for consumers’ overall health and well-being. This is a differentiator from other classes of trade, and it will continue to help keep drug chains relevant to the consumer.
Trends and insights point to a positive trajectory with this move — drug chains can win back consumers and more frequent trips by showing they care. They can convince consumers that they’re looking after them in a more holistic way. They can give consumers a reason greater than — or at least as important as — convenience to come into their stores.
Robert Sanders is executive vice president and health care practice leader at IRI. He brings more than 30 years’ experience to the marketplace, sets the strategic initiatives for IRI’s Health Care Practice and is a frequent keynote speaker at health care industry events.