Viewpoints

Pharmacy: In-Store Foundation for Health and Wellness

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The buzz around the term “health and wellness” has been building for several years now, and with increased attention from consumer packaged goods manufacturers, it seems to be reaching a crescendo.

This is, of course, a good thing. The question becomes how to maximize the value of the consumer awareness and sales that come with this. The answer is the same as it has been for some time in matters of health: Use the pharmacy and pharmacist. Where it is available, pharmacy is the natural center for health and wellness in most retail environments, and it is the in-store location of a licensed health professional.

While the marketing surrounding most product initiatives is always impressive, pharmacy is something of a stealth category. Some in the industry may be surprised to find it brought in $27.6 billion in sales in 2005 [the most recent available data], according to the National Association of Chain Drug Stores. At the Food Marketing Institute Show in Chicago, Thom Blischok of Information Resources Inc. reported that pharmacy grew 8% last year.

Combining those numbers, pharmacy was nearly a $30 billion business in supermarkets last year — a figure that eclipses many categories occupying much more floor space, putting it somewhere between such major sections as frozens and dairy in total sales. It's like having a relatively quiet health and wellness elephant in the room.

Notably, less than a third of supermarkets have pharmacies — about 10,000, according to NACDS, out of about 34,000 supermarkets counted by FMI. Many of the remaining stores may not have room for a pharmacy, but retailers are putting them in wherever they can. FMI has reported that 80.5% of new stores built last year include pharmacies.

The emerging in-store health clinics — now being referred to as “convenient care clinics” — are usually located near pharmacies and add to the health and wellness environment of the store.

No wonder that the FMI has taken so strong an interest in federal legislation and regulation relating to pharmacies that it has established a new Pharmacy Affairs Council, and is hiring a vice president to head up the effort. With every revision of Medicare, Medicaid or any other prescription drug-related program or policy, big retail dollars are at stake.

Meanwhile, retailers can renew marketing emphases that seek to integrate pharmacy with the rest of the store. As Blischok pointed out, there are many conditions and disease states that relate to diet, and pharmacies are in the position to counsel patients and direct them to the products that are healthier for them. This makes sense as a way of caring for these people, while keeping them shopping in the store. A major point from IRI's research is that 44% of pharmacy customers leave the supermarket without making another purchase.

The conclusion from this is that not only is pharmacy big in supermarkets, it has the potential to get much bigger — by improving margins through regulatory and legislative efforts; by putting more drug counters in additional stores; and by keeping customers in the store to buy foods and other products that are good for them.

That's a prescription for health and wellness that will benefit everyone.

Contributors

Julie Gallagher

Julie Gallagher’s delicious foray into coverage of the food industry was purely accidental. With a background in technology, she joined Supermarket News as associate editor of its Technology...

Mark Hamstra

Mark Hamstra is the editor of the Retail/Financial section of Supermarket News covering mergers and acquisitions, quarterly earnings reports, executive changes and other significant events and trends...
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