August 06, 2016
By gobbling prime real estate and mastering the science of site selection, the top national drug store chains have absolutely succeeded in getting as close to the customer as possible.
But in an era when almost anything you want is available at the touch of a button — not just on your computer at home but on the smartphone in your pocket — is it enough to get close to the customer physically? What about getting close to the customer emotionally?
Go to any of the top chain drug stores and just watch as people try to shop the O-T-C aisles. Invariably, you’ll see folks standing around bewildered as they try to figure out which cold medicine or foot cream is the right one for them. They look confused, even lonely.
Personally, I’ve been to the drug store a thousand times over the years. Only once do I remember a pharmacist coming out from behind the counter to help, an experience that was as highly satisfying as it was rare. And yet this type of friendly, personalized exchange was commonplace in the era when most drug stores were mom-and-pop operations.
Today, three dominant operators have achieved impressive scope and scale, but homogeneity is a real challenge for the sector. Stand in the parking lot of these chains’ stores and you will find that they look remarkably similar, right down to the red-and-white color schemes common to all three (well, one of them has some blue, too). Walk into the stores themselves and, again, the experience is homogeneous right down to the product offering.
Meanwhile, throughout the rest of retail, brick-and-mortar operators are looking to ramp up the authenticity and richness of the customer experience in creative and innovative ways.
Certainly, national chain drug stores understand the need to follow suit here, which is why we’re seeing laudable pushes on wellness, some advances in private label and even the integration of a European drug store brand’s successful elements.
Compared to the rest of retail, though, the drug store experience is still remarkably cookie-cutter. The absence of compelling stories, in particular, is noteworthy when compared to what you find in, say, the arena of better-quality food. At Whole Foods Market Inc., for example, signage at the meat counter tells you all about the South Georgia farmer who takes such good care of his grass-fed cattle and now supplies to Whole Foods stores across the state.
At chain pharmacies, though, story tends to be lacking. You might see a mug shot-style picture of the pharmacist on duty along with a line or two of biographical information. We can do better. Did that person decide to become a pharmacist after seeing medicine improve the quality of life of her ailing mom? Is she a Desert Storm veteran of the U.S. Army? A mother of triplets and a triathlete? We’ll never know.
From both the channel and individual store perspectives, drug stores need to be more creative and daring in their pursuit of unique points of differentiation and storytelling. The growth of digital makes this especially important, as does the coming of age of the Millennial generation, which tends to demand more authenticity and connection from its retail experience.
So what is the specific opportunity here for drug stores? Health care and wellness are becoming increasingly important to just about everyone — baby boomers, Gen Xers and Millennials alike.
While the big chains have made good strides in offering testing, flu shots and other health-related services, they need to do more to build upon this through both the in-store environment (including personalized customer service) and the product offer. Take the sterility out of these environments. Use your private label lines to tell stories. Leverage design to present your private label products in more compelling ways. Elevate the experience to capture the way new consumers are shopping.
Sound impossible? Think drug stores are, by definition, functional and therefore resistant to this kind of elevation? Today, an elevated approach to prepared food and food in general is the fastest-growing trend throughout the once-humdrum convenience store sector — and not just in North America but all across the planet.
For someone born in the 1960s or ’70s, c-stores were dingy places where people went for chips, beer, candy or maybe the proverbial shriveled hot dog. Now, millions of people are starting to see c-stores as places where they can grab quality food and beverages on the go or even sit back and relax on a sofa in a café setting. Confronted with shrinking margins on sodas, cigarettes and gasoline, the industry’s most forward-thinking chains have made a lot of progress in reinventing themselves. They have succeeded in driving traffic and store growth via these elevated offers, improbable though this might once have seemed.
Likewise, chains such as Trader Joe’s Co., Fresh Market and Wegmans Food Markets Inc. offer richer experiences than might have seemed plausible back in the era when all supermarkets were essentially the same. The product offer is wildly diverse compared to this bygone era, and the experience far more lively. People go to Trader Joe’s or Wegmans at least in part because they enjoy the experience. Yet, today most people go to drug stores because they have to, not because they want to. When you have thousands of stores, you have to systematize everything, and mass efficiency is always easier than customer accommodation.
Nonetheless, customer accommodation is too important to ignore, which is why the rest of retail is so laser-focused on it. Systems can still leave room for localization and variability — in visual presentation, marketing, social media and even private label. You just have to build more creativity into the process.
For forward-thinking drug chains, the approach should be, “Let’s find compelling stories — about our communities, products, company and people — and then tell those stories in-store. Let’s stop being so functional and start putting more feeling and uniqueness into the in-store experience.”
Make no mistake, the three national chains have taken some important steps to make their stores stand out.
Rite Aid Corp. has done a good job transforming its stores by focusing on elevating the wellness experience and developing some interesting private label brands. Walgreens has created cool brands and unveiled great flagship stores in key metro markets. And CVS Pharmacy has begun to launch a health platform and healthier brands to create a more holistic experience.
But are these measures enough to overcome the proximity factor? In other words, convince consumers to go out of their way to shop at one chain versus the other?
The goal should be to build loyalty based on satisfaction and identification with the brand and experience. There is no reason why national chain drug stores shouldn’t build more compelling brand stories, conveyed throughout the store and supported by products, brands, people and design.
Could the whole pharmacy area be more of an interaction and consultative environment versus a queue where patients wait for the next available register? Could it be more inviting? Why does it have to be so transactional? Could people exit the store feeling wowed by your in-store beauty expertise or impressed with the food-shopping experience?
The national chains have got back-end efficiency covered. Now it’s time to build loyalty via best-in-class customer experience across the board.
Originally published by Chain Drug Review
Damien is Engagement Director at CBX