The biggest reason supermarket companies are adding pharmacy departments is to provide a one-stop-shopping experience for their customers. Supermarket pharmacy directors also are aggressively adding new services, including mail delivery and home health care.
These were two major findings of a survey of supermarket pharmacy directors conducted jointly by Supermarket Pharmacy and Marketing Corporation of America, Westport, Conn. A total of 276 survey forms were sent to top supermarket chains, with 49 returned for an 18% response rate.
The average supermarket company in the survey operated 137 stores, of which 35 contained pharmacies. Respondents reported that, on average, pharmacy represented 4.3% of store sales.
Results presented here represent the second part of the survey findings. Part one, in the April 18 issue of Supermarket Pharmacy, examined the relationship between supermarket pharmacies and pharmaceutical manufacturers.
Asked to rank the advantages of having an in-house pharmacy, more than three-quarters of supermarket pharmacy executives (78%) said it was to provide a one-stop-shopping experience. "To increase HBC business" was the next highest ranking response with 33%; 29% said they put in a pharmacy "to increase store traffic"; 27% said they did it "to add a profitable department," and 18% said they added pharmacy because "competitors have pharmacies."
Nearly all respondents (96%) said they merchandise over-the-counter medications within sight of the pharmacy counter. More than a third (35%) display commonly requested OTCs at the pharmacy counter.
Supermarket pharmacy directors are offering new services to customers. Nearly one-quarter (24%) said they plan to offer mail delivery in the next two to three years, with 16% of executives indicating they already offer mail delivery. About half (49%) of supermarket pharmacy respondents said they offer home delivery, with 10% providing home health care services, and 20% expecting to begin offering home health care services soon.
When asked how they differentiate their pharmacies from those of competitors, most pharmacy executives (69.2%) said they emphasized, "Being helpful to patients." Also receiving high rankings were: convenient location, 43.6%; short wait times, 35.9%; low prices, 30.8%; and extended hours, 12.8%. Other mentions: exclusive agreements with third-party plans, and "our pharmacists."
When it comes to marketing the pharmacy department, supermarket companies depend heavily on in-store signs and highly visible locations, both mentioned by 86% of survey respondents as primary means of promoting the pharmacy.
Other methods of promoting the pharmacy include: hosting health fairs and health screenings, and publishing a newsletter for customers.
Just over three-quarters of respondents (76%) said they run pharmacy ads in the store's weekly circular "on a regular basis." One-third offer promotions that are related to the grocery business. Nearly a quarter (22%) said they promote their pharmacies through dedicated radio and television advertising.
As for issues faced by pharmacy executives, pressures on margins due to shrinking third-party reimbursements topped the list at 85.4% of first and second rankings. Also cited were: competition from mail-order pharmacies, 41.5%; uncertainty over the Clinton health plan, 22%; competition from chain and independent drug stores, 17.1%; pharmacist shortage and the six-year Pharm.D. degree controversy, 14.6%; and counseling and drug utilization review requirements of the Omnibus Budget Reconciliation Act of '90, 12.2%.
Supermarket pharmacies are apparently keeping up with the latest technology. Nearly all respondents (96%) have on-line links with third-party plan payers. Eighty-six percent use their computers to review drug utilization. Three-fourths have an additional computer printer to generate patient literature.
Most pharmacy executives (63%) are "generally comfortable" with dispensing generic drugs to help patients save money on their prescriptions. About half (51%) said their comfort level depends on the medication, and 20% said it depends on the generic drug manufacturer.
Why Open a Pharmacy?
Most supermarket pharmacies say the main advantage is to provide a one-stop-shop
To provide one-stop shopping 78%
To increase HBC business 33%
To increase store traffic 29%
To add a profitable department 27%
Competitors have pharmacies 18%
Promoting the Pharmacy
Prominent location and sign are key strategies.
Highly visible location 86%
In-store signs 86%
Regular circular ads 76%
Promotional tie-ins to grocery 33%
Dedicated radio/TV ads 22%
Investing in Technology
Supermarket pharmacies have invested heavily in computer technology.
Direct on-line links with third-party payers 96%
Electronic drug utilization review 86%
Second printer for computer-generated patient literature 76%
Ability to fill customers' prescriptions at any location 31%
Electronic interface with manufacturers 14%
New Services Being Added
Mail delivery of prescriptions and home health care are the new frontiers.
Mail Delivery of Prescriptions NOW 16% TO BE 24%
Home Health Care NOW 10% TO BE 20%
Home Delivery NOW 49% TO BE 22%
Standing Out
How supermarket pharmacies differentiate themselves from competitors in rank order based on the highest percentagle of No. 1 and No.2 rankings.
1 Emphasis on being helpful to patients.
2 Convenient location.
3 Short wait times.
4 Low prices.
5 Extended hours of operation.
6 Easy access for nongrocery customers.
7 Private consultation area.
8 Multilingual employees.
9 (tie) Sitting are for patients.
The Important Issues
Third-party plan margins are the biggest concern faced by supermarket pharmacy directors. Rank order is based on the highest percentagle of No. 1 and No.2 rankings.
