11th Drug Store News Industry Issues Summit
Q: Has the current STATE OF THE ECONOMY caused you to re-evaluate your business, perhaps evolving away from a PURE GROWTH STRATEGY to more of a MARKET-SHARE STRATEGY? What about the consumer—have shopping habits really been reshaped forever as many have suggested? For the retailers on our panel, with SHOPPING TRIPS down year-over-year, how are you GETTING CUSTOMERS INTO YOUR STORES? And, for the suppliers on our panel, given these changes, how do companies like yours effectively reach consumers to engage them to STIMULATE THE PURCHASE DECISION?
DAVE FONG, SAFEWAY: That’s a great question.… I believe that retailers [used to] invest more heavily on developing strategies and tactics to capitalize on new and emerging market opportunities. Given the current volatility of the marketplace, I believe companies are much more focused on basic ‘block-and-tackle’ initiatives to optimize operational excellence and explore integrated store approaches that would provide offerings based on a better understanding of shoppers and their shopping behavior during these tough times, and ways to maximize their spend and frequency of visit in the store.
From a pharmacy perspective, we have noticed that shoppers are much more cost-conscious about their healthcare spend. Shoppers seem more interested, and are asking a lot more health-related questions and seeking options on how to avoid or address their medical conditions, thus encouraging sales in health-related categories of the store.
BRYAN SHIRTLIFF, RITE AID: I think there are a couple of pieces to it. One is: Are you measuring pure [sales] growth, or are you looking at market share? We’ve always done both. I think it’s really dangerous to only measure pure growth because you can be thumping your chest, thinking you’re doing great and still have some huge opportunity gaps. We look at it both within the channel and across channels, as some businesses continue to migrate to different channels.
That being said, what are we doing to drive the customer in? Our primary vehicle 52 weeks of the year is the 12 to 16 pages we have on the street. We’ve gotten more aggressive in our traffic categories. I think the way the consumer has changed—wanting value, using coupons—I’m of the mindset that they are deselecting retailers at home. They’re sitting down, and they’re looking through the ads or they’re looking on the Internet. You’re getting deselected before they even get in the store. So, how do you get them into the store? You’ve got to get on the shopping list. Customers are creating lists, trying to control their spend. And that’s the real magic, at least in the retail drug channel, to make that list—to not get deselected—make it into the store and then provide an environment where hopefully you’re building the basket, both in count and size.
I think [the customer] has changed; I think she has changed forever. I mean, it’s not uncool to shop the dollar channel now, whereas…three to four years ago, it wasn’t necessarily the ‘in’ thing. Now it’s cool to say, ‘Look at the deals I’m getting at the dollar store.’… [Dollar chains] certainly are doing pretty well in this economy.
DEWAYNE RABON, WINN-DIXIE: I think, yes, the consumer has changed, and I don’t think it will be a short-term change. When you look at the economy today, I don’t think I believed I would ever see a day when I had to worry about whether my bank was going to be open the next day or not. But that’s the reality of the [economy] we’re in today. So I think the consumer—whether it be corporate brands or whether it be value-priced—I think they have been reshaped, and I think they’re looking for something different when they come into our stores.… We have always looked at market share along with top-line sales growth, but we are focusing equally now on market share as much as we are on growth because there are certain categories where, nationally, sales are down across the board.… You have to be careful when you only look at sales growth.… You could either be leaving something on the table or missing some opportunities where you thought you might be doing well. So the market share piece of the equation has become more relevant as we analyze our data each week.
JOEL CARDEN, PACIFIC WORLD: I think the consumer’s shopping habits have changed; I think the focus on value is a big—and a very important—aspect of the equation, [and it] is here to stay for a long time. And I think…to get back to the question of growth versus market share, we absolutely continue to look for growth, but also market share. We have to continue to look at ways to meet what the consumer is looking for right now. We talked about it a year ago at this meeting, and it’s still true: They’re looking for value, and we have to create new ways to bring value to the consumer in this economic climate.
DAVID HOWENSTINE, PFIZER CONSUMER HEALTHCARE: The landscape has changed; it’s largely good news with some new challenges. Retailers are becoming savvier about how to market to their shoppers. Our customers are working with us today to create differentiated and creative ways to engage their shoppers—our consumers—at the point of sale. At Pfizer Consumer Healthcare, we are investing in new capabilities, such as shopper insights and shopper marketing, to take advantage of these opportunities.
Historically, manufacturers had access to syndicated data, typically retail and household panel data. We could reliably analyze traditional trade promotion tactics, such as TRP’s, features and displays. Those kinds of events will continue to be important, but I think the challenge for us going forward as an industry is how to effectively understand how all segments of the in-store experience contribute to the success of a category or broader solution set. That’s a gap for suppliers and retailers today. We need continued collaboration and smart thinking in order to gauge what is truly creating demand in store. It’s an exciting time.
SHARON GLASS, CATALINA MARKETING: According to Google, the No. 1 word that’s [currently] being searched is ‘coupons,’ which [is an area] Catalina Marketing excels in… And, we’ve seen new consumer shopping trends emerging that also indicate consumers are looking for increased value. Catalina Marketing works with our manufacturer and retail partners to focus on two primary initiatives: insulating current loyal shoppers and protecting against defection.
A great deal of the focus has been on adapting our solutions and strategies according to what our retailer and manufacturer partners are looking for in order to aid them with maintaining their current user base and uncover the potential new user. Consumers are shifting their behavior. For instance, someone who bought a department store lipstick a year ago…is now buying it in a regular drug store, and they’ve adapted to that lipstick. They may not change and go back to their old ways because they have decided they are satisfied with the quality and value available for less. So, we look at these new consumer trends and buying behaviors, and adapt accordingly. We speak to them based on what it is they’re buying today, and we predict how they may change in the future. This is one way we utilize our data to support and uncover opportunities for our partners.
CHARLIE BURNETT, COSTCO:In the past, it has been quite different because we never spent any kind of promotional money on advertising of any kind. We now do quite a bit of internal promotion through multi-vendor coupons, and we run those a couple of times a month.… And it has…driven our frequency of visits up to the two- to three-week level. So our traffic is up, our sales are up. We’re up in the 3% range right now over last year.
DRUG STORE NEWS: Is there anything specifically in the pharmacy that you’re doing to drive shopping