DRUG STORE 'CHANNEL SURFERS' CALLED KEY

PAT NATSCHKE LENIUS

CHICAGO -- To increase profits on the drug store shelf, brand marketers must focus more on frequent shoppers who spend the most money. "Not all drug store customers are created equal," said Paul Lainis, director of retail consumer analytics at the ECR Group, Nielsen North America. Speaking at a conference here hosted by The Marketing Institute, a division of the Institute for International Research, New York, Lainis explained the differences between types of shoppers and their buying habits. He divided drug channel shoppers into three equal segments -- heavy, medium and light -- defined by how much they spent last year in stores. The heavy consumer spent $226 or more, the medium segment spent $76 to $225, and the light segment less than $76, he said. The heavy consumer segment accounts for 65% of shopping trips and 75% of total drug channel sales, he added. Even though the "light" shoppers account for one-third of this universe, they represent only 9% of shopping trips, Lainis said. Similarly, the light shoppers generate only 5% of total drug channel sales dollars. The heavy shopper skews slightly older, with females peaking at age 45 to 54 and males peaking in the 55-plus age group. These consumers tend to live on the East or West Coast. Heavy drug store customers spend 26% more in all retail channels -- including drug stores, mass merchandisers, warehouse club stores and discount chains -- than the medium consumer segment, Lainis said. Heavy drug channel shoppers are channel surfers. They hit grocery, discount and drug more often compared with the average household. They are willing to travel to purchase specific product categories, he said. Once the categories they are surfing for are identified, the opportunity exists to increase shopping dollars and dollars spent per trip. According to Lainis, there has been a change in the distribution of channel dollars. "Grocery share shrank. Mass merchandiser share increased. Drug share maintained itself. Warehouse club share was flat. All other channels increased two percentage points," he said. "Existing drug channel shoppers increased their dollar spending 7.7%. It was not that more customers were entering the channel, but the existing customers were spending more," he said. Dollars spent per shopping trip were up across all channels, up 50 cents per trip in the drug channel. Increased spending was about on par with inflation, he said. Shopping frequency was up by half a shopping trip in the drug channel, Lainis said. "Consumers either shop in a place of preference or attraction. One of the hottest topics today is the supermarkets' focus on consumers, with the object to build loyalty. The drug channel should learn from other channels. No channel is immune to competition. Don't take the consumer for granted. Why not offer a frequent-shopper program?" Two years ago Nielsen asked its household panel members what services they wanted in a drug store. The responses revealed that 81% want pharmacy counseling; 53% want diagnostic aids; 31% want frequent shopper programs, and 25% want grocery items, Lainis said. More than half of respondents said the top reason they would shop at a particular drug store was because of the pharmacist. "The pharmacist should be used as a marketing consultant. He is there and people trust him," he said. Location was cited by 51% as the reason to choose a drug store, while 46% said convenience was the deciding factor. Last year Nielsen fielded 100 attitude statements to its 40,000-member household panel. Of those identified as heavy shoppers of the drug channel, 51% said they live a hectic life; 53% said they seek and act upon information from TV; 64% said they often buy large sizes to save money; 77% said they are annoyed by excessive packaging; 51% said store brands taste like national brands; 43% said they are now buying more store brands than in the past, and 44% said they buy store brands for value, he said. "Store brands are the ultimate in loyalty builders," Lainis said. Also, 69% of respondents indicated they are very coupon-aware, and 53% said they almost always use coupons. "Only 20% of heavy drug customers feel coupons are not worth the time or savings. They are very coupon- or deal-aware. What better way is there to target the category that consumers are purchasing in other channels?" Lainis said. "Not all categories are created equal. Some categories are more skewed to the drug channel," he said. Family planning is the top-selling product in health and beauty care categories. The heavy drug channel shopper makes 68.4% of total family planning purchases in drug stores, he said. Sanitary protection products are purchased in many frequently shopped channels, he said. A significant increase in sanitary protection product sales can be achieved by targeting the heavy drug channel shopper, Lainis said. Brand marketers should seek channel surfers vs. exclusive shoppers because the heavy category buyers tend to be multi-outlet shoppers, he said. "Channel surfing is good. It provides a greater opportunity to attract and convert," he said. "There has been a wake-up call in the drug channel. They have learned they have to offer categories of interest to consumers."