A new study from GMDC brings powerful new data to bear on the need to integrate pharmacy with the rest of the store
Pharmacy and food is a natural combination. It's hard to find anyone in the supermarket business who will dispute that.
How to integrate them is another matter. While this is hardly a new debate, there are signs that important voices in the industry are saying that it must be done, and soon.
For example, the Global Market Development Center, Colorado Springs, this month completed a study that advances the discussion with new statistics. “Helping Consumers Make Healthy Choices Through a Fully Connected Store” was sponsored by Catalina Marketing, St. Petersburg, Fla., and conducted by market research firm Pivotal Perspectives, Madison, N.J.
The study found that less than half of pharmacy shoppers from all channels did not buy anything besides their prescription, representing $4.8 billion in potential sales for retailers. Also, of the 55% of prescription customers who did shop the store, 75% made a Center Store purchase, while of the 45% that stayed close to the pharmacy, only 25% made a Center Store purchase.
This study follows a 2004 report from GMDC on “Leveraging the Connection Between Pharmacy and the Whole Store,” which included tests run in 50 stores of five chains. In one result, Schnuck Markets, St. Louis, reported a 47% increase in sales of featured items that related to heart health.
“The challenge and the opportunity for retailers is how to invite prescription shoppers to explore and purchase other products in a store,” said Keith Wypyszynski, GMDC's vice president of business development and chief member officer.
“The findings [of the new study] are correct,” said Charles Yahn, vice president, sales, retail development and pharmacy, Associated Wholesalers Inc., Robesonia, Pa. “The biggest problem is making it work in the real world — getting the whole store to buy into the idea of a small department setting the tempo for the rest of the store.”
More of AWI's retailer customers are buying into the idea, but others have yet to embrace it, Yahn said.
There is resistance in some places to implementing ideas that originate in the pharmacy, but when a concept comes from another part of the operation and it is successful, it makes everyone more enthusiastic about leveraging pharmacy's potential, Yahn said.
One such promotion was store tours for diabetics. “We labeled everything in the store that would be good — or not good — for a diabetic to eat. People came in and walked the stores with the pharmacist and nutritionist,” he said.
Some in the industry said it is common knowledge that, in many places, there is a resentment at store level of the pharmacy staff. This is related to the fact that they are somewhat isolated from other employees — for example, the head pharmacist usually must keep filling prescriptions when there is a department manager meeting — and also because of the high salaries paid to pharmacists, often higher than the store manager. This works against a spirit of cooperation. However, in an informal poll of pharmacy executives, SN found that this is not considered universal, and tends to be site specific.
But when those barriers are broken down, it can be good for everyone. “The pharmacist is one of the main reasons a consumer is loyal to a pharmacy,” Wypyszynski said. “The pharmacist can be one of the greatest influencers in a patient's care, along with providing recommendations to support patient needs. This endears the consumer not only to the pharmacist, but to a specific retailer or location.”
Creative retailers can find many nontraditional ways to connect the pharmacy and the rest of the store, he added. For instance, they can tie in with other store services such as nutritionists, in-store clinics and other innovations coming into pharmacy and grocery stores. “Food and nutrition play a vital role in the health and wellness arena with pharmacy consumers,” he said.
“Supermarkets have the opportunity to differentiate by positioning their stores as integrated health, wellness and education centers,” said Sharon Glass, vice president of health and wellness, Catalina Marketing, St. Petersburg, Fla. “Supermarkets are well-positioned to leverage the relatively high frequency of interaction with the pharmacist to recommend adjunctive therapies.”
Among other findings from the new GMDC study:
When compared to other channels, supermarkets did better than most others with 65% of shoppers buying additional items. Club stores also enticed 65% to make other purchases, while mass merchandisers were at 70%. Drug stores sold other items only to 41% of pharmacy customers.
Women are more likely to venture out into the rest of the store than men while waiting for a prescription — 60% vs. 49%.
Of customers who spoke to a pharmacist, 50% made an additional purchase on their most recent shopping trip. Only 35% of those who didn't speak to the pharmacist bought something else. Customers who had spoken directly with their pharmacist in the past three months reported higher levels of loyalty to their primary pharmacy.
Center Store items purchased by the percentage of prescription customers: food or beverage, 60%; non-prescription health remedies, 23%; oral care, 18%; skin care, 17%; vitamins and supplements, 13%; baby care, 6%; and other, 20%.
When it comes to pharmacy loyalty, 77% said they were very committed to buying prescriptions at the store where they last shopped.
Drive-through windows are a convenience, but offer little incentive to customers to make other purchases. Only 8% bought other items on drive-through trips.
The survey sample included over 1,300 pharmacy customers recruited through an online consumer panel in July 2007. MarketTools, San Francisco, asked them about their most recent shopping trip, as well as other questions about their primary pharmacy, and measures variation across trade channels.
“This study provides actionable insights that can enhance the pharmacy shopping experience, help consumers manage their health and drive overall store sales,” Glass said. “The results show that consumers would welcome more information and interaction with their pharmacy if provided in convenient, relevant ways.
“This large-scale study indicates that retailers have an opportunity to improve performance in both the Center Store sales they generate, and ways they help consumers proactively manage health conditions through adjunctive health, beauty, wellness and general merchandise products,” she added.
Glass gave two examples of how this might work in a supermarket pharmacy setting:
A 45-year-old male patient picks up a new prescription to treat high cholesterol. While he may have printed diet instructions from his doctor, he won't read them until later. If the pharmacy provides him with a list of appropriate foods, he is more likely to make those purchases at the store.
Prescription medicine side effects represent another case where printed information may not be read until the patient is out of the store. If given advice by the pharmacist about the foods or over-the-counter products that would alleviate the side effects, the customer will probably buy them on the spot.
“Consistently encouraging a more proactive approach to self-care and disease management would benefit retailers, marketers, our national health system and consumers, many of whom would welcome additional guidance to more fully manage their conditions,” Glass said.
“The best way to treat chronic health conditions is generally to pair prescribed medications with dietary changes, exercise, nutritional supplements and the use of adjunctive non-prescription therapies,” she added.
Building on the professional responsibility of the pharmacy, “this is not just a business opportunity, but it really is a health care opportunity,” said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill. “If the pharmacist is to provide adequate support and intervention, the pharmacy should have a proactive role in not only linking the customers' health condition to lifestyle changes, but to products that are a part of that.” In the supermarket, that means food, but also items that might aggravate an allergy, such as chemicals, he said.
Food retailers with pharmacies have a natural opportunity to build on their health and wellness offerings, said Chris Dimos, president, Supervalu Pharmacies, Franklin Park, Ill. “You can be a knowledge center for the healthy and a solution center for the sick. You can help people stay well, but if they have a condition that requires pharmaceutical care, then you would be right there to tie in with their particular needs,” he said.
Integrating food and pharmacy “is a very compelling proposition for our patients, who are — first and foremost — our customers. They are time-starved and looking to make healthier and more economical choices. So I think this integration is very powerful from a consumer standpoint and also from a business standpoint,” Dimos said.
“The pharmacist lends credibility to the ‘healthy destination’ concept and acts as a focal point for health information. Typically, pharmacy customers are some of the most loyal and engaged customers in the store,” said Curtis Hartin, senior director of pharmacy, Bi-Lo, Greenville, S.C.
“Pharmacies regularly promote diabetic supplies and sponsor health screening events and nutrition store tours. The synergies gained from having a pharmacy on-site allow customers to gather all their health-related products — nutritional and medicinal — at one location while having a health care expert available to answer health-related questions,” Hartin said.
A more pronounced link between store pharmacist and nutritionist is a way to make this integration happen, said Paul Weitzel, managing partner, Willard Bishop, Barrington, Ill. “With the rising cost of health care, there's going to be other, lower-cost alternatives that pop up. Considering all the decisions we are making now inside a grocery store, it's a perfect place to take this supermarket and make it more of a community for wellness,” he said.
“You're going to see more nutritionists inside the store and more stores doing a better job of linking than they are doing today. That will really help the shopper improve their overall wellness experience,” he said.
This will create the need for an in-store health center where self-assessments and consultations can be done, Weitzel said. This could be located near the pharmacy, but the in-store geography might be difficult to arrange.
In an ideal situation, customers could opt in to a system where their purchase data could be analyzed, and then get feedback from the pharmacist or nutritionist. “For example, if you need to cut out red meat, but it still shows up on the list of what you're buying, they could sit down and talk to you about it,” he said.
But it's about more than diet, Weitzel noted. “There's a fun aspect and a social aspect to it that we don't want to lose. We can't make it too clinical. The supermarket really can be the wellness community if done right, but people have to feel comfortable and retailers are going to have to figure out a way to help people start, because it is intimidating for a lot of people.”
The integration of pharmacy and store has a broader customer base than the pharmacy patients. Wisner has coined the term ‘health-caring’ to relate to the caregivers or others who help the patient. This leads to merchandising gifting and entertaining products near the pharmacy. “As someone once told me, you can't be sick without media,” he said.
Waiting Equals Purchases
Less than half of pharmacy trips include Center Store purchases. A 10- to 20-minute waiting period at the pharmacy counter is a critical time for supermarkets to capture additional Center Store purchases from pharmacy shoppers. The challenge is to pull pharmacy customers through the rest of the store during their wait times.
|PURCHASE PRESCRIPTION ONLY||PURCHASED ADDITIONAL PRODUCTS|
Source: Pharmacy Shopper Study 2007
Driving Right on Through
It's a given that, while a customer convenience, the use of pharmacy drive-through windows reduces in-store spending.
The new survey from the Global Market Development Center, Colorado Springs, helps quantify and understand this situation. Called “Helping Consumers Make Healthy Choices Through a Fully Connected Store,” the research was sponsored by Catalina Marketing, St. Petersburg, Fla. It found that although 55% of prescription customers buy other products, only 8% of those using the drive-through window make additional purchases.
“Among those who use the drive-through option at their primary pharmacy, just half reported using the drive-through on their most recent pharmacy trip, while half went directly into the store, said Sharon Glass, vice president of health and wellness, Catalina Marketing, St. Petersburg, Fla.
“One in five drive-through users report making fewer Center Store purchases since they started using the pharmacy drive-through. Drive-through users reported being less aware of store offerings in general, but more likely to respond to promotional vehicles such as coupons and advertisements,” Glass said.