Kantar Retail Drug Channel Workshop charts present, future of retail health and wellness

The drug channel is undergoing massive transformation as a new age of healthcare consumerism is driving a new retail-ization of healthcare. "The old paradigm of a patient is now a consumer looking for information," said Kantar Retail director Brian Owens, setting the table for two days of intense discussion and in-depth presentations at the group's annual Drug Channel Workshop last week.

 

To compete in this rapidly changing space, drug retailers — and the suppliers they do business with — will need to adopt to those changes or they will be replaced by companies that will. That was a key takeaway from the Kantar Retail Drug Channel Workshop, held May 4 to May 5, at the Renaissance hotel in Newark, N.J. 

 

This rise of consumer-directed care, said Owens, who led much of the discussion over the course of the two-day program, is one of the largest potential areas of growth for retailers, as by 2021 Americans are expected to devote 24% of all household spending on goods and services toward health care — that's up from 12% in 1980. 

 

According to Owens, one of the biggest trends impacting the channel right now  is somethings Kantar calls the “FLONH” effect, or the fact that as much as 25% to 30% of major supplier and retailer innovations in the next 5 years will be centered around fresh, local, organic, natural and health products, or at least have one of these components, he explained.

 

“The consumer sometimes doesn’t necessarily know what natural means, but they know it's on trend,” Owens said. “What I’m telling you is these things aren't just trendy — they're here to stay and there's going be a bigger value in terms of the storytelling you see in retail.”

 

At the center of much of Owens’ remarks over the course of the two-day workshop was the separation in shoppers’ minds between health — which they see as functional — and wellness, which is seen by shoppers as more of an emotional concept. According to Owens, both types of shoppers can be captured by playing toward convenience and personalization.

 

When it comes to health care, that means stores that allow shoppers to quickly find what they need — something Owens said CVS is making a push toward with healthy food. Tailoring the experience can also capture health shoppers by providing a solution for customers that they feel is unique for them — and this can include rewards programs and such efforts as screening events.

 

For wellness shoppers — whose motivation is largely emotional and motivated by feeling their best — the convenience aspect retailers can offer them is indulgence. This can mean using incremental space for indulgent treats, or beauty displays that are engaging and offer an assortment of products. In terms of personalization, wellness shoppers can be captured through a transforming experience — Owens pointed to such retailers that offer a boutique experience as Sephora as examples of transformation, and noted that in the drug channel, retailers are moving toward this as well.

 

STRATEGIES OF THE BIG THREE

Taken together, Owens said the convenience aspects of both health and wellness can be leveraged for growth by investing in services retailers offer, while investing in the shopping experience will help retailers capture the personalization that appeals to both health and wellness shoppers. In later sessions, Owens provided attendees with an overview of the strategies Walgreens, CVS and Rite Aid are implementing in an attempt to appeal to both these types of consumers.

 

At CVS, the biggest area of focus for the retailer is its enterprise health strategy, Owens said that for CVS this means capturing today's healthcare shopper by leveraging a model that integrates its CVS/Caremark pharmacy benefits manager, its retail stores, its newly acquired Target pharmacies and clinics, and its recent acquisition of Omnicare. But it is also focused on wellness shoppers, and CVS is working on a four-point plan to capture that shopper at a time when they make fewer trips, which shifts the imperative to bigger baskets. 

 

Owens said that CVS’ plan involves elevating the store environment to make a customer feel special with a re-imagined beauty segment; making health the future of beauty by providing premium and healthy brands and products while expanding Minute Clinic offerings beyond chronic and acute care and offering such beauty services as eyelash lengthening; leading personalization by tailoring offers to its Extra Care customers; and delivering an omnichannel experience that can engage with customers on their terms while making its site and app into a health care resource. This is all taking place as the company launches Hispanic-centered store formats and growing its base with the acquisition of Target pharmacies.  

 

Owens began the session on Walgreens Boots Alliance by noting the candidness with which EVP and Walgreens president Alex Gourlay noted at the National Association of Chain Drug Stores Annual Meeting that the company is still working on refining its retail strategy, while continuing to leverage its strengths as a global wholesaler.

 

In the U.S., the company’s strategy will be focused on wellness consumers, providing a unique assortment and experience, expanding its beauty footprint with better digital platforms and improved segment shopability, while also bringing more of its global brands, which include No.7 and Soap & Glory, to U.S. shoppers. It is also looking to simplify the shopping experience while providing an assortment of localized products, and to leverage its Balance Rewards partnerships to drive healthy behavior and in-store traffic, and streamlining the in-store trip through the use of its mobile app.

 

And though Owens discussed the potential synergies that will result from the pending merger between Walgreens and Rite Aid, he offered a separate section on the retail evolution of the Pennsylvania-based drug chain, where it remains business as usual until when and if the FTC approves the deal as is expected. In particular, Owens spoke at length on the continued development of Rite Aid's Genuine Well Being store format and its overall front-end transformation, as well as its pharmacy services expansion through its Health Dialog subsidiary, and its recent acquisition of the PBM EnvisionRx. In a handful of stores, Rite Aid is testing a new in-store home health/DME department.

 

KEY TAKEAWAYS FROM ANNUAL MEETING

Many of the strategies Owens talked about play into new trends that Kantar’s chief knowledge officer Bryan Gildenberg shared at the outset of the workshop’s second day with key takeaways from NACDS Annual Meeting that also served as a look ahead at the path forward in a channel environment he described as “consolidated, specialized and digitally enabled.”

 

According to Gildenberg, the world toward which the drug channel is moving will be post-device, post-targeting, post-labor and post-multichannel. In the post-device world, retailers and suppliers will have zettabytes (trillions of gigabytes) of data about shoppers, but less opportunity to reach them, as in a few years, the marketing space that has gone