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There are lots of stories that start with how retail used to be. As some of the great American department stores fade away, they are reminders of what was once an elegant and successful combination of service and selection. Corner drugstores were also iconic centers of community and consumption, offering a broad spectrum of products, and providing a place to gather due to the nearly ubiquitous, but now effectively extinct, soda fountain.

The special connection between these types of businesses and their customers transcended the products that were sold. It was, in effect, 'experiential', a term used often today to describe where retail is going rather than where it came from. Advice and guidance were paramount in creating a great experience for the customer. And it's this human aspect which will be the great differentiator in retail today, particularly for pharmacy.


As retail starts to swing away from the commoditized, big box, 'self-serve' models which have dominated in recent decades, many retailers have failed to address changes in consumer behavior as products, technology, and general shopping preferences evolved. In 2017, US retail closed approximately 9,000 stores with 50 chains filing for bankruptcy[1]. The competitive pricing and selection of Walmart and online retailers undoubtedly present a difficult challenge, yet some retailers, (and specifically Pharmacy retailers) are sitting on un-realized assets which could differentiate their offering and develop a loyal bond with their customers. Here are the areas we see having the greatest opportunity:

The first reality is that mediocrity is a retail killer. There is simply not room for 'average' anymore. In today's retail world, selection is nearly infinite with omnichannel, but with all that choice comes inevitably, a greater need of guidance. Do peer reviews and likes from unfamiliar individuals, (who may or may not be a real person) really do the job? Only if you're buying a truly commoditized product and you have absolute level of certainty that it's the best decision based on a combination of factors most important to you.

With the tremendous development in technology and innovation; EVERYONE is striving to move away from commoditization to differentiate. No more is a bar of soap, just a bar of soap. It now has key ingredients of wheat and green tea, and is available in 27 varieties of color, scent, and size.

While much of this incredible variety does not always translate to bricks & mortar; quite a bit actually does. Walk down the aisles of a retail pharmacy, even a small one, and you will see the amazing assortment of products that exists today. Even in the more mundane categories. A typical US pharmacy has over 15,000 SKUs.

Faced with variety, choice and overwhelming quantities of information, customers are looking for guidance and service from someone who is knowledgeable, and someone they trust. The pharmacy occupies a special place at the crossroads of retail and healthcare. With the right service for the right products, it cuts through the endless suspect analyses and recommendations and provides a true connection between the customer and the place, the bricks & mortar location, that breeds trust and loyalty.

The true ace in the pharmacy hand is the pharmacological doctor on staff to be the spear-point to building that loyalty. In a 2017 Gallup poll, pharmacists were ranked as the 5th most trusted and ethical professionals in the US. Pharmacists have been in the top 5 of 22 listed professions for 15+ years, further reinforcing the value of that role.[2] With the right proposition for the customer, it's the human interaction that elevates physical pharmacy over any online competitors.

Bricks & mortar pharmacies are many times the most accessible point of contact, medically, for consumers. While the need for prescription guidance is considered a given, the opportunity being missed by many pharmacy retailers is extending personal guidance to its front end store products.

Through our work with retail pharmacies, we've seen that even in categories considered predominantly self-service, the customer is looking for assistance. Personal care customers in general, and the shampoo category in particular, benefits from assisted selection in 40% of transactions.[3] Understanding the critical categories and strategically designing the space to best utilize store resources will go a long way to providing customers the experience they seek, helping reinforce loyalty and generating greater sales. While this can be a challenge for retailers with hundreds of stores and millions of customers, clever use of insights from customer data can help the pharmacy provide superior service through individually crafted recommendations provided on demand when needed.

Tailored assortment, merchandising, and appropriate pricing and promotions built using customer data, will further build customer trust rather than erode it. Over time and through consistent execution, the pharmacy of the future will prove its value through developing the unique relationship between pharmacist and customer. And the humble corner drugstore will once again be viewed as a valued pillar of the community.

[1] https://www.forbes.comhttps://www.dunnhumby.com/sites/blakemorgan/2018/01/06/the-upside-of-a-retail-apocalypse

[2] https://news.gallup.com/poll/224639/nurses-keep-healthy-lead-honest-ethical-profession.aspx

[3] As observed through dunnhumby research

white and blue magnetic card

Photo by Avery Evans on Unsplash

Most companies attempting to drive customer loyalty fail miserably—and few so-called customer-centric companies generate sustainable customer loyalty that drives measurable business results. Why? Because they get three key principles completely wrong, right from the start:

  1. Loyalty is about the company acting loyally to its customers, not vice versa.
  2. It is about a loyalty approach, not a loyalty program.
  3. Loyalty is about the store, not only about the CRM.

1. Loyal to Customers

We start to act loyally to customers when we understand them to a level of detail that ensures that we remain responsive to changes in their behavior, relevant to ever-changing customer needs and rewarding in the way we treat customers.


Acting loyally is about adopting a loyalty mind set of managing customer segments as strategic business units (aligning with how we think about a category management strategy as managing categories as strategic business units). This context demands change that is both incremental and transformational—evolution, but with a bit of manageable revolution.

What customer loyalty is, and is not:

  • Acting loyally (responsive, relevant, rewarding) to our customers; not about customers being loyal to us
  • An overall approach throughout our business; not a proposition or program
  • Earning customer loyalty; not thinking that customers should become loyal
  • Collaborative partnerships to win customers together; not tolerant of internal conflict between areas of the business or with suppliers
  • Transparent; not opaque
  • Driving sales and cash margin; not customers being responsible for percent margin

2. Loyalty Approach vs. Loyalty Program

We demonstrate loyalty to our customers by taking a loyalty approach wherein we commit to rewarding and delighting our customers with products and experiences that meet their wants and needs.

  • We call this putting customers first—when we decide on priorities and actions based on insights from our customer data.
  • By doing so, a retailer becomes an even more prominent choice in the customer's consideration set. This is not a tactic; it is a long-term strategy that makes the customer the focal point of our business decisions and objectives.

The loyalty program is an important element within a loyalty approach, as the key source of the data that enables customer intelligence, and as the channel that enables us to talk to our customers personally. I call the loyalty program the "little l" in loyalty, with the loyalty approach as the "big L."

But a loyalty program is not required to act in a loyal way to customers. Here's how to think of "big L" loyalty:

A loyalty approach, simply put, embeds customer insight throughout the retail organization to enable better, faster decisions and thereby increase sales and profit sustainably. Best-in-class practitioners have seen an incremental sales uplift in the early stages of a loyalty approach of between 1% and 2% and later stages between 3% and 4%, quarter over quarter and year over year.

3. Loyalty Is About the Store, Not Just the CRM

As I used to say to my retail colleagues, "If the store is lousy but we deliver brilliant targeted CRM, the store will still be lousy."

Even if the personalized CRM is perfect, customers need to perceive that tangible changes have been made in the store itself before they will respond by giving more of their custom. We must put customer insights into action within the "hardwiring" of retail practices—pricing, promotion, assortment, adjacencies, new products, the checkout experience and so on.

In a previous article, I shared several examples of being loyal to customers in store by simply making the shopping experience easier—setting the yogurt section by customer need rather than by brand blocks, for example, and by setting product adjacencies according to how customers shop, rather than by how items are sourced in the supply chain.

3 Ways to Activate a True Loyalty Approach

  1. Make better business decision by putting the customer first. Everything is better when you start with the customer. Start with the data you hold on customers—understanding how they shop and behave, what is important to them and how they engage with your business. This insight will identify a number of opportunities for better decisions using the data.
  2. Improve the customer experience by using data-driven insights to improve your retail offering, such as assortment, pricing and promotions. Use insights to connect you to your customer through the store. Think of the mantra "data to insights to actions"—this is how improved like-for-like sales growth and customer loyalty is delivered.
  3. Transform the organization using customer-driven insight to help you better understand, anticipate, measure and continually respond to your customers. This is realized through empowering, aligning and equipping your people with relevant insights, values, goals, strategies and actions.


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[This is the fourth in a series of articles advocating the voice of the Customer in the highly competitive food-retail industry. David Ciancio is Global Customer Strategist for dunnhumby, a pioneer in Customer data science, serving the world's most Customer-centric brands in a number of industries, including retail. David has 48 years experience in retail, 25 of which were in Store Management. He can be reached at David.Ciancio@dunnhumby.com].

Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.


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Memories of panic buying may be fading here in the UK but have resurfaced elsewhere1. The near constant threat of another wave of Covid-19 may yet prompt another round of hyper demand. Whilst there is little hard evidence to determine the underlying drivers of panic buying2, there are numerous theories that the retail industry may benefit from exploring.

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At the beginning of September – three months on from the previous wave and with supply chains stable and the changing nature of lockdowns – we wanted to revisit the Customer Pulse to see what, if anything, had changed. Below are some of the standout findings from this fourth tranche of research.

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assorted fruits at the market

Photo by ja ma on Unsplash

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Predicated on the idea that individuals respond better to indirect suggestion than outright commands, nudge theory is commonly used as a way of subtly influencing our behaviour towards positive choices. The idea has gained such traction, in fact, that many governments around the world have created "nudge units" in a bid to tackle thorny issues like obesity and the climate emergency.

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Essential to preserving contact data is ensuring that you have the most up-to-date information from your Customers; not an easy task. On average, people in the United States will move an average of 12 times in their lifetime. United States Postal Service data indicates 14% of the population change addresses annually. As email contact has grown, it's important to note that, on average, 30% of people change their email addresses each year. This is driven by ISP or job changes, or just to stop being spammed. As people move away from home phones to primarily mobile devices, phone numbers are stabilizing as consumers maintain the same numbers through physical moves.

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FOR RETAILERS

Smarter operations and sustainable growth, powered by Customer Data Science.

FOR BRANDS

Better understand and activate your Shoppers to grow sales.

Retail leaders must objectively understand how their business currently considers Customers before trying to set a more Customer-centric direction and focus. There are some formal assessment methodologies, like dunnhumby's Retail Preference Index (RPI) and Customer Centricity Assessment (CCA), which offer detailed evaluations of a business' capabilities, strengths and weaknesses based on Customer perceptions (RPI) or global best practices (CCA).

The approach outlined below is not intended to replace these formal tools; rather, these observations are intended as a kind of 'toe in the water' to help retail leaders form early hypotheses and points of views. These are rules of thumb, heuristics culled from global experience. Later, leaders might use these observations to informally check progress from time to time as a way of assessing whether the "program in the stores matches the program in our heads".

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In this series, dunnhumby tours the globe and speaks with some of the world's greatest brands, exploring their biggest challenges and how they are using customer data science to meet those challenges.