The who, why, what, where and how of health care retail are changing faster and more dramatically than for perhaps any segment of consumer packaged goods. This disruption has certainly posed challenges and translated into declines for some, but it has also opened new, exciting opportunities for innovative marketers who recognize, embrace and take advantage of these changes.
The causes of this disruption are many, but include a changing shopper, an increased consumer focus on self-care, the need to personalize the shopping experience, and the explosive growth of technology and e-commerce. Drug retailers have embarked on many strategies to meet these challenges in an effort to win. These range from enhancing their e-commerce capabilities to offering completely new services, all designed to boost sales and engender loyalty.
Given the unprecedented focus on personalization today, the cornerstone of competing and winning in today’s drug retail environment is leveraging a retailer’s frequent shopper program (FSP) data. By generating deeper insights faster and activating aggressively, innovative retailers can improve the performance of all areas of marketing and create a drug store experience that reflects a keen attention to the highly personalized needs and wants of most loyal shoppers.
The Who — The face of the shopper is changing, literally
It is well known that the American shopper is changing, but it is often less well known just how dramatically and quickly that change is taking place. Millennials have displaced boomers as the largest generation of shoppers, numbering 79.4 million. More than 60% of Millennials have bachelor’s degrees, and 42% are multicultural. And importantly, Millennials already account for one-third of CPG spending, making them worth more than $240 billion by 2022.
The spending power that these shoppers wield makes it vitally important that drug retailers understand how to engage and activate them, and technology plays a key role in both.
The Why — Self-care dominates consumer thinking
Self-care has become the new normal. It has been a behavioral shift to achieve health and wellness goals due to myriad factors, including rising health care costs, empowerment (access to information via technology) and a focus on prevention. Self-care includes all decisions shoppers make for themselves and their families to ensure they are physically, mentally and emotionally healthy.
Whether the approach is treatment, maintenance or prevention, the numbers behind consumers’ self-care efforts are enormous, and these efforts transcend many categories in drug stores.
The What — Personalization
Personalization is perhaps the largest influencer of self-care, and for good reason. Every consumer has unique health challenges and goals, and every consumer has a unique approach to addressing them. Drug retailers face the Herculean task of serving these unique challenges and goals with a comprehensive, 360-degree view of the shopper, which enables a customized messaging schema by individual.
The Where — Be tech savvy or be gone
On the shopping front, much has changed as well. More than three-quarters of all shopping trips begin online, with 48% of consumers stating they are unable to function without a smartphone and 45% saying they are early adopters of technology. The time consumers spend online provides valuable opportunities to engage and influence, even for offline purchases.
Drug retailers are aware of these trends and have not been idle. Many are investing in e-commerce capabilities, either through outright acquisition of e-tailers or through partnerships. They are also improving ease of purchase to “lock in” shoppers through subscription and membership services. Some chains are experimenting with delivery service partnerships such as CVS/Instacart. CVS is teaming up with the U.S. Postal Service to pick up prescriptions at CVS stores and deliver them to customers’ homes within one to two days. And Walgreens is offering a Ship to Store service (click and collect), where shoppers buy their products online and pick them up at the store.
Drug retailers are also investing to make the in-store experience more personal. For instance, Rite Aid and others have deployed higi stations where shoppers can check their weight, body mass index, pulse and blood pressure. They can store their data in their higi accounts and access it via a mobile app and website, which also provides wellness-related content and activity tracking. Pharmacists are positioned as valuable in-store resources, and ailment- and benefit-based assortments are also quite commonplace.
But true personalization goes beyond the actual purchase experience. Consumers must feel that every element of the shopping experience, from discovery to the actual purchase, has been uniquely created to meet their specific needs and wants.
Drug retailers have the core competencies to win
In the face of ongoing — and frightfully fast — change, the final question becomes, “How?” How can drug retailers most effectively position themselves to win amidst today’s market challenges?
The cornerstone to answering that question lies in the hands of chain drug store marketers — in the form of frequent shopper data. And technology has evolved, making it much easier — and cheaper and faster — to harness these data and integrate them with causal, economic, weather and other data sets. With the help of advanced analytics, retailers can quickly access insights needed to create highly effective, personalized campaigns that will reach and activate high-value shoppers.
The drug stores of today — and most importantly, their shoppers — are vastly different from those of yesteryear. It’s no longer enough for stores to guess what a consumer wants or to assume shoppers will rely on them for what were previously obvious purchases like prescriptions and snacks. Rather, retailers need to lean on data to learn exactly what consumers want and then develop diverse strategies around those desires. By using big data powered by an advanced technology platform, drug retailers will win over the increasingly diverse shopper.
Robert Sanders is executive vice president and health care practice leader at IRI. He can be contacted at [email protected]