How the Rise of Self-Care Will Reshape Today’s Retail Pharmacy Experience
Vice President of Retail Insights at Kantar Consulting
The U.S. retail pharmacy business is undergoing a great transformation. As evidence, consider the growth of restricted prescription networks and how specialty care centers are moving into retail mall space. According to the U.S. Department of Commerce, the services share of total consumer spending will grow to 70% by 2023 while core goods spending will shrink to 25% and automotive and gasoline spending will fall to 5%. By 2025, for every $4 in consumer spending, $1 will be spent on healthcare. This shift in consumer spending is pushing the U.S. retail pharmacy industry to reconsider its traditional approach to providing care and how it communicates value beyond prescription drug access in its 67,000 retail pharmacies.
Individuals are now shouldering a greater burden of healthcare costs. According to the 2018 Internet Trends Report, the percent of workers covered by plans with high deductibles ($2,000 or more) grew from 7% in 2009 to 22% in 2017. Since they are responsible for paying more out of pocket, consumers are increasingly becoming more proactive with their own self-care. According to Kantar Consulting’s 2018 Global Monitor survey, before seeing a healthcare provider, 73% of U.S. adults preferred to treat minor ailments with OTC medicines. Expect more science-related sick care/self-care insights as behaviors and outcomes become a bigger component to reimbursement payer/provider models.
Retail pharmacy unconventional partnerships: In October 2018, Kroger and Walgreens combined Kroger’s role as America’s grocer with Walgreens’ global pharmacy expertise. Walgreens employees stock shelves with Kroger groceries that take up about 4,000 square feet of a Walgreens store, which averages about 14,000 square feet. The retailers expanded their pilot last month when 65 Chicago-area Walgreens drugstores began offering Kroger’s Home Chef Express meal kits.
As positive health outcomes increase for natural solutions, retail pharmacies will begin to provide new natural services for shoppers. According to Consumer Health Products Association (CPHA), healthcare professionals recommend OTC solutions 99% which includes natural health self-care solutions. And healthcare professionals’ referrals can have an impact. Take cannabis-related offerings. By 2020, consumer sales of natural products such as cannabidiol (CBD) will hit approximately $1.15 billion, according to Statista. CBD, which is legal in most states, is a major non-psychoactive compound found in cannabis and hemp plants. Holistic Primary Care’s 2018 clinician survey found that 29% of medical professionals surveyed are recommending or dispensing both CBD and cannabis, and 28% are considering recommending or dispensing CBD or other natural plantlike solutions. Expect digital to increase demand for natural clinical alternatives. In addition, look to CVS Health and Walgreens to start offering more natural health solutions across consumable categories as well mare more omnichannel services for shoppers with diabetes, anxiety, insomnia, joint pain, and depression.
Retail pharmacy new offerings/services: Eaze, a well-known cannabis delivery service, recently launched the online CBD marketplace. It is basically the Amazon of “licensed and thoroughly tested” CBD products. Eaze Wellness claims that it takes care of all legal compliance issues on its end. If it ships to your location, then it’s legal in your location. CVS Health recently announced plans to revamp its stores to focus more on healthcare and less on retail following its merger with health insurance provider Aetna. CVS Health CEO Larry Merlo told USA Today that more space in the company’s nearly 10,000 locations will be “repurposed” to provide medical services. Merlo envisions CVS becoming more of a healthcare destination that features not only health, beauty, and personal care products, but also “added services.”
The rise of self-care also marks the early stages of the U.S. retail pharmacy system transitioning from transactional care to outcome care. Patient loyalty and chronic care treatment will be the new center of the pharmacy experience. Retail pharmacy operations will depend less on dispensing prescription drugs. Pharmacy foot traffic will no longer be a major measure of pharmacy productivity. New data management and media partnerships will form as consumers demand a more fluid sick care to self-care experience. Expect more healthcare companies to leverage network alliance learnings from airline-type partner loyalty programs as pharmacies look for new ways to retain lives and generate alternative revenue streams.
Retail pharmacy innovative patient programs: Ritzman Pharmacy, a small independent pharmacy outside Columbus, Ohio, is increasingly focused on improving coordination of care and connectivity between the pharmacist and front store. The regional drug player recently launched a line of own-brand patient-customized supplements through its RefreshinQ division as part of a new wellness subscription offering that requires a pharmacist to screen the shopper. Over the course of 2018, Walgreens partnered or strengthen relationships with several companies, including LabCorp, Humana, and Alphabet’s Verily life sciences arm. For people who qualify for an EBT or Medicaid card, Amazon offers Prime membership for $5.99 per month (versus the regular rate of $11.99 per month).
As consumer demands increase for health services, U.S. pharmaceutical companies will need to create a new retail pharmacy 101 playbook to unlock new patient growth drivers in uncomfortable places. Kantar Consulting can help pharmaceutical companies with the new realities of healthcare where more general practice medicine will occur in a retail environment instead of in a doctor’s office. As Amazon looks to disrupt the U.S. healthcare system, the new patient fundamentals for pharma companies will resemble the consumer-driven approach of the consumer-packaged goods industry. Mobile and voice technology will transform healthcare expectations and the retail brick-and-mortar experience will be more aligned to disease states. As pharmaceutical companies prepare for the new pharmacy consumer realities, we want to help our strategic partners better unlock growth in the following areas:
- New retail conversion opportunities across the patient path to purchase
- New data insights to better understand patient loyalty and unhealthy lifestyles
- New opportunities to collaborate with digital innovators to provide a true omnichannel experience
This is just the start.