ShopAbility discuss the role of pharmacies to shoppers vs other channels – what this means for who your competition really is, and what your offer and execution focus should be. For Retail Pharmacy Magazine.
From our recent article series on leveraging retail objectives and point of purchase drivers in pharmacies, it should be evident that pharmacies are retail environments, albeit with a strong service element.
In our followup article series, over the next 12 months we are going to look at the role of service in pharmacies and how various pharmacies differ and what this means for execution by pharmacy type.
We thought we’d kick off with an overview of where pharmacies are different from, and similar to, other retail channels, so you can see where this will start to lead for differing areas of focus depending on who and what type of pharmacy you are.
Trip types by retail channel
Below is a brief summary of some typical missions by retail channel. You will see that whilst there is some overlap on trip types (eg a destination shopping trip may occur cross channel, but the categories will differ), different channels have trip types (shopping ‘missions’) that are almost unique to them.
(please note: click on the below to open up the table – too large to insert in to this post)
You can see from the above that whilst there is some overlap in trip types across channels (eg top up, gifting, entertaining) the categories selected are different.
So where do pharmacies sit in all this?
As discussed in some of our previous articles, the major trip types for pharmacy shoppers include Script Fill (acute and chronic ailments), Distress/Emergency (pain relief), Health, and Destination/Specific Item (eg weight management, cosmetics, orthopaedic shoes). Some gifting (cosmetics, skincare) trips. All of these are health (intrinsic) and beauty (extrinsic) related one way or another.
Pharmacy is known for its service, advice and professional trust. Pharmacists are one of the most trusted professions aside from ambulance drivers. The importance of trusted advice in pharmacies is amplified because of the intrinsic, complex, unknown, unfamiliar, and potentially risky nature of health related categories and products to most shoppers. Pharmacy is unique in its dispensation of prescription drugs and range of over-the-counter preparations.
Most retailers are based around one or more of 3 core propositions: Range, Service, and Value. (Also operational efficiencies, but that’s back of house rather than shopper facing).
Using the above table and the Range, Service, Value equation, this means that the Pharmacy channel’s true competitors are:
Grocery: for H&B aisle (haircare, skincare, pain relief) and Vitamins. Price will probably be lower in Grocery, range will be different (no ‘professional’ products, and probably breadth across category segments but no range depth meaning brands will be different) and obviously Grocery has no service element. In fact most shoppers view shopping in grocery somewhere between a necessary evil and a chore.
Health & Beauty specialists: for beauty based items (rather than health ones). They will probably have more haircare and skincare products (broader range) than pharmacies as this is their focus. Whilst they can offer advice from a beauty point of view, they do not have a health & wellbeing focus.
Department stores: similar to Health & Beauty specialists, their focus is on Beauty range, with elements of service (cosmetics applications etc). Very little focus on health and wellbeing.
Convenience: pharmacies have very little overlap here with the possible exception of emergency bathroom and feminine hygiene products, and even then that’s 2/5 of not much. Not a channel for pharmacies to worry about.
Route (mixed business): as per Convenience. Not a pharmacy competitor.
Specialty retail, liquor, hardware: Not a pharmacy competitor. Hardware, when done right (and potentially wine specialist bottleshops) are the only channels that even come close to the expected (and delivered) service that a pharmacy has.
What should be clear from the above is that although Grocery, Department Stores and Health/Beauty specialists can compete on range (and sometimes price) for beauty (and selected health) products, they don’t have the health and wellbeing range or service/advice focus that pharmacies do.
There is not necessarily an expectation that the average pharmacy has to provide exceptional price, as shoppers compute ‘Value’ on the service received as well as range and price. Yes pharmacies with the exception of Priceline may be more expensive than grocery – and pharmacies are never going to be able to compete with grocery on price because you don’t have the same buying power – but the role of pharmacies is to get trial … basket incidence. And for prescriptions, repeat traffic. Service and advice means the shopper may come back to you for repeat purchase for non-drug categories (rather than just going to grocery for repeat purchase because it’s cheaper).
Owning a Proposition
So what Pharmacies can own, that nobody else can, is their persuasive service, trusted advice and health/wellbeing product range. The real opportunities for Pharmacies are not to try to compete on price but to leverage their health services and advice offers to drive traffic and to increase trial, incidence and spend.
We’ll be looking at how to do this, and what to dial up or down depending on what sort of pharmacy you are, in more detail in subsequent articles.
Until then!
