Finding the Perfect Prescription

There is very little doubt that supermarket pharmacies are the equal of the drug chains when it comes to basic services. For supermarkets, the real opportunity to thrive exists in accentuating their pharmacy advantages to maximize profits.

“I honestly don’t think that they recognize the sweet spot that they are in,” says Jeff Wilson, vice president of marketing for QS/1, a pharmacy-management software provider based in Spartanburg, S.C. “There are opportunities there. They say with any retail establishment, the three most important things are location, location, location. Well, they are in a destination location.”

A trip to the supermarket is on almost everyone’s weekly to-do list, which means the customer base for pharmacy success is in place. There is a great opportunity to provide nutritional guidance. There is a chance for personal interaction, to do some cross-promotion and to be convenient for the shopper. Drug chains may carry groceries, but shoppers will not find the produce, fish and lean meats that comprise a healthy diet in the back of the drugstore.

Dr. John Stanton, professor of food marketing at Saint Joseph’s University in Philadelphia, believes another growing advantage for many supermarkets might be the banner over the front door. For decades, he says, brand-name products were the attraction and the name of the store was largely irrelevant. 

“What slowly has changed is that the actual name of the retailer in and of itself has become more trusted—Wegmans, Walmart, Kroger and the like,” Stanton says. “Kroger has a superior reputation and a lot of brand trust.”

Logic dictates that brand trust is likely to include the in-store pharmacy. If the supermarket pharmacy staffers take the time to build personal relationships with shopper patients, store and pharmacy loyalty can be enhanced. Stanton adds that friendliness of the people who work in the pharmacy really matters to customers.

Dr. David Rogers, president of DSR Marketing Systems, based in Northbrook, Ill., notes that pharmacy represents a relatively small portion of a supermarket’s sales and profits, whereas prescriptions comprise nearly 70 percent of a drug chain’s revenue. That often means drug chain pharmacists are under more pressure to fill prescriptions than are their supermarket counterparts.

“One of the big weaknesses of the drugstore chains is the fact that pharmacists are far too rushed to give proper advice to their customers,” Rogers says. “That would be a point of advantage that supermarkets could potentially offer.”

Despite these potential advantages, Rogers says supermarkets, for the most part, are not making any progress in claiming a higher percentage of pharmacy market share. The drugstore chains and the discount clubs are the ones making the gains. He adds that the supermarket pharmacy business, with a few exceptions, is relatively flat and that some smaller food stores are actually removing their pharmacies because of costs. 

Industry observers say there are ways supermarkets can help their pharmacies. “They seem to miss the opportunity by not advertising in their weekly mail flier,” says Ron Mackert, vice president of Corona, Calif.-based Uniweb. “The pharmacies don’t seem to get the same ‘front-and-center’ advertising as do other supermarket departments.”

Perhaps that is the issue here. Supermarkets are in the food business, first and foremost. Their pharmacies are often thought of as add-ons and more of a convenience for the customer than anything else. 

Yet, pharmacists almost always command annual salaries of more than $100,000, and a store might need more than one pharmacist. Add in the costs of a few pharmacy technicians, software, equipment and the drugs themselves, and suddenly the pharmacy represents a considerable expense—one that does not take into consideration other ancillary costs.

“It has always just been something that kind of bucks the trend of normal supermarkets, but the profit margin on pharmacy has much greater potential than it does on a box of Cheerios—but the cost is a lot higher, too,” says Brian Glaves, director of sales for pharmacy technology-developer ScriptPro, based in Mission, Kan. “I think it has been tough for grocery guys to get over what pharmacy is and how it operates very differently from the rest of the grocery store.

“How do we make these two work together? That’s been the struggle, but the grocers who are doing it are doing it really well right now, and they provide a nice blueprint for their peers to catch up,” adds Glaves.

Rooted in Robotics

While “location, location, location” might be a major plus for the supermarket in its bid to gain more market share, another factor might be even more important. That factor is time. An investment in the proper software and robotic tools can automate at least half of the prescription filling process. That gives the pharmacist, and staff, the time to do other things—such as interact with patients and build those loyalty-fostering personal relationships.

Glaves describes ScriptPro’s robots as looking like enclosed shelves or bays. They come in different sizes, and a pharmacy needs only one robot. The different sizes dictate how many drugs the robot can store, and the range is 50 to 225. Medication cells inside the robot contain the drugs. 

When a prescription is received, the robot verifies it contains that particular medication. Then the robotic arm selects the correct size vial, scans the barcode of the medication cell to ensure accuracy, and then counts directly into the vial the correct number of pills. The system affixes the labels and auxiliary warnings to the vial and presents the filled vial to a technician and pharmacist to make final checks.

“From a pay perspective, our robots work for $10 to $16 an hour, depending on the size of the system,” says Glaves, who adds that robots can be rented, leased or purchased. “That’s generally less than what the average technician costs, especially when you add in benefits, training, turnover and the other associated staff expenses.”

ScriptPro can also offer pharmacies a back-end Third Party Management System that handles all the accounting and money management associated with a pharmacy. Current clients include supermarket chains of various sizes, including one that operates only two stores.

The system takes all the financial data from a pharmacy and, with its staff members and technology, oversees the insurance-claims process by determining which bills have been paid and which have not. The system also handles financial reconciliation, generates reports, points out ways in which the pharmacy can generate more revenue and annually reviews the pharmacy’s entire financial operation on site and in person.

“Your pharmacist is very expensive, so you need to find the right partner to help collect and increase your cash flow so the accounts receivable turns into cash at a faster rate,” says Shafi Shilad, vice president of business development at ScriptPro. He notes that even though pharmacy may represent a small percentage of a supermarket’s revenue, in actual dollars it might be the same as that of a drug chain.

“ScriptPro technology in front (pill dispensing) makes it more efficient. In the back, it collects faster and it identifies opportunity where you can make more money,” Shilad says.

QS/1 takes a slightly different approach to automating supermarket pharmacies. Unique to QS/1, says Wilson, is that its pharmacy operating system components are designed to interface, or work together, and that its Interactive Voice Response (IVR) system, for example, is not an add-on to another system. 

“Typically, the supermarket is not going to generate the extreme high volume where you could even consider replacing technicians with machines,” he says. “No matter what your volume is, you never replace them because somebody has to maintain and replenish those robotics. The idea is to take away as many mundane tasks as you can that do not require a human touch.

“To take advantage of the IVR—it would typically be a refill,” Wilson adds. “Somebody’s going to call in, and they’ve got the opportunity to enter their prescription number, which automatically goes into the system. The technician or pharmacist can set it up so it automatically submits the claim, and when that’s paid by the insurance company, it will print the label. The IVR is entry-level automation. It’s a piece of technology that everybody can take advantage of, no matter what your volume is. What it does is free that pharmacist and technician up from the phone calls. Of course, with the IVR, the patient always has the opportunity to speak to someone.”

The IVR also sends a message to the patient via phone, email or text that the prescription is ready for pickup. That works well for the supermarket shopper who wants to drop off a prescription before shopping and pick it up before leaving the store.

The Point Of Sale software complements the IVR because it gives the pharmacist the chance to post messages and reminders to the customer. When the prescription is picked up, for example, a message might tell the patient to talk to the pharmacist for specific instructions on how the medicine works and how to take it.

While ScriptPro and QS/1 offer the supermarket pharmacy all sorts of automation possibilities, Uniweb focuses on the physical setup of the store.

“We provide an efficient solution to maximize space and improve throughout,” Mackert says. 

He notes that Uniweb’s Modular Enclosures can help the supermarket pharmacy create space for consultation and immunizations. Its Flexible Counters can be reconfigured without waste or work disruptions, and its Adjustable Height Workstations offer adjustable ranges for sitting, standing or preset positions, and that all under-counter and above-counter work accessories move with the work surface.

If supermarkets are willing to make an investment in their pharmacies, the robotics, software and store design elements are available to make them more efficient. As most retailers know, that all-important element called “time” is money.

“Supermarket pharmacies are in an ideal position to leverage the existing loyal customer base of the grocery shopper by providing a great value-added service—easy access to a pharmacist,” Wilson says. “Building that relationship with a pharmacist creates trust with the patient and increases the value of the supermarket to the community.