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It’s not the bricks & mortar, it’s what’s inside that counts


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.com


[3] As observed through dunnhumby research

[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].

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