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Frugal shopping behaviors may set tone for future shoppers

BY Michael Johnsen

CHANDLER, Ariz. Shopper behaviors being shaped out of economic necessity today — with more and more consumers buying fewer products, for example, or migrating toward more private-label purchases — may be casting the mold for shopping behaviors tomorrow, noted Steve Johnson, EVP healthcare and personal care client solutions for Information Resources Inc., during a presentation at the National Association of Chain Drug Stores’ Regional Chain Conference here last month. Change is in the air, Johnson said, “[and] without question, the shopper dilemma is deepening, and it’s projected to get worse before it gets better.”

Cash flow is the theme of the day, especially with consumers worried over whether or not they’re going to keep their jobs, and with credit still difficult to come by. “These concerns have a very strong trickle-down effect, heavily influencing the consumer decision-making process,” Johnson said.

That change in shopper behavior is cutting across all categories, including health care — especially health care. “As critical as health care is to long-term survival, consumers are in a position where they are being forced to consider the possibility of eliminating spending on healthcare products in order to feed the family,” Johnson noted. That’s not all bad news for drug stores, however. According to IRI research, 15% of consumers are treating at home more frequently and going to the doctor’s office less, Johnson said, a trend that may not be reversed once the economy begins recovering. Already, 83% of consumers have reported that they are eating for nutrition, and 81% are relying on maintaining a healthy lifestyle in order to minimize medical expenses.

“But, sometimes attempts at prevention are not completely successful,” Johnson said. “In these cases, we are seeing increased prevalence of self-treatment and shifts in [over-the-counter] medication behavior,” Johnson added, such as consumers bringing home OTC medicines that relieve more than one symptom in an effort to reduce the amount of medicine they have to buy. “For instance, one-quarter of consumers are using less OTC medications today versus six months ago,” Johnson said. “Among households with an income of less than $55K, this number is even higher — one-third if the household has no kids, and nearly one-half among those [households] that do have children.”

“Shoppers are spending more and buying less,” Johnson said, noting that while inflationary pressures may be contributing to dollar growth, unit growth is still declining. In the past five years, the decline in the number of distinct universal product codes in the home pantry has dropped from 393 to 361 — a 9% decline. IRI predicted the number of distinct SKUs will drop to below 350 in 2009. “We see this current model continuing throughout 2009, especially if economic conditions worsen,” Johnson said, which will make pricing a key competitive factor throughout the year.

One of the value propositions consumers are taking advantage of is private label. Sales of store brands have realized significant gains in the past year, and there’s nothing to suggest that those sales will be slowing down anytime soon. “Regardless of income level, private label has played a key role in helping shoppers maximize their [consumer packaged goods] dollar spends,” Johnson said. And that migration to store brands is even more prevalent among healthcare SKUs — OTC private-label sales outpaced the industry average and every other department in the retail store, Johnson said.

Other shopper strategies that may have some staying power in the coming year are greater use of coupons or only buying a product or category when it’s on sale, pantry loading when those products are on sale and shopping within the confines of an established budget. That perhaps makes consumers more susceptible to promotional pitches delivered through such mediums as free-standing inserts, and less susceptible to merchandising and marketing at the shelf. With couponing and the practice of frugality becoming more and more common, consumers are less likely to make impulse purchases that deviate from the shopping lists they generated on their kitchen tables. At the beginning of 2008, 60% of consumers drafted that shopping list from home. Today, more than 75% of consumers shop from that list.

“New strategies and tactics are required in order for manufacturers and retailers to now get on that ever-important shopping list,” Johnson said. “Retailers and manufacturers must work together to meet shoppers’ ‘affordability needs’ in this new economy,” Johnson said, “balancing national brands, as well as private-label brands.”

For instance, in an effort to stave off private-label erosion, suppliers in the past have introduced a steady stream of new products. That strategy may not work as well going forward. The majority of shoppers — 75% — tried five or fewer new products last year. “For many shoppers, new product testing was not part of their purchasing decisions in 2008, nor will it be in 2009,” Johnson said.

“Private label and branded manufacturers need each other,” Johnson told Drug Store News. “If it weren’t for branded manufacturers, private label wouldn’t have a lot of comparative relevance.” That makes getting the assortment right more critical than ever, Johnson said. “The headline here is having an assortment of what people want to buy,” he added, “not what you want to sell.” Toward that end, Johnson suggested that retailers and manufacturers will need to work collaboratively to tap into opportunities across both branded and private label offerings.

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Obama may overturn Bush’s ‘conscience’ rules

BY Alaric DeArment

NEW YORK The Obama Administration may overturn the Bush Administration’s “conscience” rules that allow healthcare workers to invoke religious beliefs to deny certain services such as birth control, according to published reports.

The Los Angeles Times reported that Barack Obama may roll back the provisions, which allow pharmacists to refuse to prescribe birth control pills on account of personal religious beliefs. 

Seven states have also filed lawsuits to challenge the rule, the newspaper reported.

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Clear up patient medication guidelines, independent pharmacy group urges FDA

BY Jim Frederick

ALEXANDRIA, Va. The National Community Pharmacists Association wants the government to give patients a clearer, more concise set of guidelines on how to take their medications, the effects those drugs have and the risks and benefits they carry.

The independent pharmacy organization yesterday urged the Food and Drug Administration’s Risk Communication Advisory Committee to push for a change in the current system of overlapping instructions that go to patients along with their prescriptions. In testimony before the committee, NCPA asked the agency to develop criteria for a guidance that would describe “a single, patient-friendly, written prescription information sheet to eventually replace the multiple written documents that patients can currently receive from their pharmacists with a particular prescription.

Under current practices, those documents can include  Medication Guides, Patient Package Inserts [PPIs] and Consumer Medication Information [CMI]. Too often, said NCPA’s director of public policy, Tony Lee, patients discard the CMI and never read it — sometimes even throwing it away before they leave the pharmacy.

“While we recognize that the FDA has worked hard to try and improve these medication documents, the problem needs to be addressed in a fundamentally different way that combines useful written information with the personal relationships between the pharmacists and patients,” Lee told the FDA advisory panel.

“It is time for a comprehensive solution to this written prescription information issue,” added John Coster, NCPA’s senior VP of government affairs. “Any FDA effort to make CMI more useful for the patient should be accompanied by a broader assessment of the usefulness and purpose of the other information leaflets that pharmacist may be required to provide. We look forward to working with the agency and patient groups to meet this goal.”

Last summer, NCPA joined other pharmacy provider groups to file a “One Document” citizens’ petition with the FDA. The Risk Advisory Committee was convened specifically to address how to make CMI leaflets more useful for the patient, the group noted.

“These leaflets are voluntarily provided by the pharmacist, but the information contained in these leaflets often duplicates information in other written leaflets,” NCPA stated.

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