THE HEART OF RETAIL 2004-09-06 (2)

DAN ALAIMO

PHOENIX -- It starts with the pharmacy.

New research from the General Merchandise Distributors Council Educational Foundation, New York, finds that retailers can build on prescriptions sold for certain medical conditions, such as heart health, and create marketing programs that lift sales across the store.

The report, "Leveraging the Synergy of Pharmacy in the Whole Store," is one of two studies to be reported this week at GMDC's Health and Beauty Care Marketing Conference here. The other is the second part of the association's "Merchandising for Success" project, focusing on its HBC-related findings (see sidebar on Page 40).

GMDC tested the concepts from the pharmacy study in 50 stores -- 10 from each of five chains: Schnuck Markets, St. Louis; Ukrop's Super Markets, Richmond, Va.; Stop & Shop Supermarket Cos., Quincy, Mass., an Ahold division; May's Drug Stores, Tulsa, Okla.; and the Osco Drug stores of Albertsons, Boise, Idaho.

"The initial numbers I got back showed almost a 47% lift in the items we featured," said Mike Juergensmeyer, Schnuck's group vice president, general merchandise and pharmacy. "That was somewhat surprising."

Among these products were 19 over-the-counter stockkeeping units related to heart patients, designated by the American Heart Association, Dallas.

"I think the study verified everyone's opinion that there are links between the dispensing of pharmaceuticals and the need of these same customers for OTC medications. If you try to market from one to the other, there is potential for increased volume," Juergensmeyer said.

The project involved products from all over the store using distinctive signs with the slogan, "Love Your Heart. We Do."

"These results were really a 'wow,"' said Bob Doyle, senior vice president, Healthcare Solutions Group, Information Resources Inc., Chicago, one of the sponsors of the study. "Ten of the 15 categories tested saw at least some positive growth and seven saw significant growth." For example, unit sales of low-calorie soft drinks increased 5.8% in test stores vs. 2.6% in control stores, IRI reported.

While causing dramatic sales increases for products as diverse as diet soft drinks, the program also served to remind customers of the value of the in-store pharmacy, while minimally adding to the pharmacists' workload, said Wendy Liebmann, founder and president of WSL Strategic Retail, New York, who conducted the study for GMDC.

"Having a display near the pharmacy was a positive, and it reinforced and enhanced the pharmacy image as being health-conscious," said John Beckner, Ukrop's director of pharmacy and health services.

It also facilitated communication between customers and pharmacists. "People were asking questions about it, so it increased interaction. That's certainly a good thing," Beckner said.

Retailers and their suppliers have struggled for years to find a way to capture more sales from the prescription customer, said Roy White, vice president, education, GMDC Educational Foundation. He cited IRI numbers that show 56% of pharmacy customers buy something else in the store in the same visit, while 44% do not. "There's this huge opportunity with customers who aren't taking advantage of shopping the entire store," he said.

"GMDC has put together a data-driven program that can prompt the pharmacy customer to shop the entire store -- GM, HBC and grocery," said David McConnell, president and chief executive officer, GMDC, Colorado Springs, Colo. "This ends the isolation of the pharmacy department whose customers have shown a tendency to buy the script and get out of the store."

Liebmann described getting pharmacy customers to buy more from the rest of the store as a "Herculean mission. The challenge to get the customer to put something else in their basket that day is more important than it ever was."

In a major difference from past efforts that focused on disease states, this study and its test marketing programs were designed from the shopper's perspective, Liebmann said. "It's all about the consumer. It's not about the disease state, and it's not about the way we in the business community might have wanted to lead the consumer," she said.

"What you see here again and again is, if you really listen to your customers, they'll lead you to the right place," Liebmann said.

"We found that when you talk to prescription customers about the way they manage health conditions, they have a much, much broader view -- a whole-store view -- of the process," she said.

The project involved taking data from IRI's RxPulse Patient Panel of 84,000 people and coming up with a list of the top "high-value" conditions people get prescriptions for and other related products. The list, in alphabetical order, is: allergies/asthma/bronchitis; anxiety and depression; arthritis; birth control/contraceptives; cholesterol; diabetes; headaches and migraine; heart health; heartburn/gastrointestinal/reflux; high blood pressure/hypertension; infection (ear and upper respiratory); menopause and osteoporosis; pain management and muscular/joint pain; and skin conditions.

Besides analysis of the IRI data, which also involved identifying the "connector" products relating to the conditions, the study included store-intercept interviews with shoppers and the marketing program tests, said White. Among the other sponsors were Johnson & Johnson, Wyeth and Bayer, he noted.

Making the program work meant breaking down "silos" between the various retail departments and getting them to cooperate, something that GMDC member participants were highly motivated to do, Liebmann said.

GMDC is pointing to the heart-health marketing test done at Schnucks as a prime example of the potential for this kind of program.

In-store, the program begins in the pharmacy with interaction with the staff there and a brochure, and continues with a "yellow brick road" through the store marked by signs, which include shelf-talkers and posters, all carrying the "Love Your Heart. We Do." theme, Liebmann said. This serves to create a "halo effect" for the pharmacy, pharmacist and store, since the message seems to be coming from them.

"We had a very integrated message that began at the pharmacy with a nearby display of products that people with those conditions already were buying at very high incidences," Liebmann said. Throughout the store, other heart-health items included food products, cookbooks, medical and exercise equipment, and videos on yoga or exercise. "It was very much a whole- store, holistic approach," she said.

The results, as IRI's Doyle indicated, were a "wow," confirmed Liebmann. "We may have once and for all uncovered some solutions to what will be core solutions to creating a real legitimate connection between the pharmacy and the whole store," she said.

Not only were there sales increases, but the customer interviews revealed attitudinal changes as well. "This had a real positive impact on how they feel about the store they shop in and about their interest level in purchasing nonprescription products in those stores in the future," she said.

Regardless of whether shoppers purchased a prescription or not, the tests had a positive impact on how they felt about the store, Liebmann added. "Some seven out of 10 said, 'This has improved my impression of the store for the better.' By telling a customer you are concerned about their heart, it has a halo impact, not just for heart patients [but] for any prescription customer, which is really terrific," she said.

"We have put together a program that apparently achieves its purpose in getting customers to shop the whole store, as opposed to just getting their prescription and going back out, and that's the most important high point," White said.

Low-Calorie Soft Drinks

Unit sales change in GMDC's pharmacy synergy study of healthy heart products

Test Stores 5.8%

control Stores 2.6%

Ssource: IRI. the test period vs. the prior 52-week period. (food and drug channels). Unmolded, but statistically significant.