Growing an independent network
Measured by sheer number of stores in its service network, geographic reach and market penetration, Cardinal Health wields enormous clout as an independent pharmacy provider. The healthcare giant now distributes pharmaceuticals and provides marketing and support services to more than 8,400 independent pharmacies.
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“We’ve continued to grow our position with independent pharmacies and other pharmacy channels over the year,” Cardinal noted. “Our portfolio of solutions for these customers has never been more comprehensive, and the response of retailers has never been more enthusiastic. Our focus remains to help these critical members of the healthcare system improve patient care, broaden their products and services, and increase the efficiency and profitability of their businesses.”
One newer addition to that portfolio is a turnkey medication therapy management solution to help retail pharmacies boost patients’ prescription adherence rates and outcomes. “Our goal is to make it as easy and time efficient as possible for pharmacies to deliver the MTM services that address these important patient needs,” said Brad Tice, Cardinal’s MTM solution product leader.
Through the program, MTM-certified pharmacists from Cardinal act as an extension of a participating pharmacy’s team, working directly with patients on a comprehensive medication review and sharing the results with the pharmacy. Both patient and pharmacy are given a “medication action plan” that highlights recommended changes in therapy, adherence issues that need to be addressed through clinical intervention, suggestions for medications the patient should consider taking or stop taking and opportunities for generic substitutions, according to Cardinal.
Cardinal reported that “the more than 180 retail pharmacies that … participated in the company’s pilot MTM program have delivered nearly four times as many comprehensive medication reviews as the industry average.”
Target sharpens focus on core priorities
Today, Target has moved beyond the data breach of late 2013, recording a 4.1% lift in fourth-quarter sales for the period ended Jan. 31, and discontinued its Canadian operations.
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With these weights lifted, Target will focus on core priorities, as outlined by chairman and CEO Brian Cornell, including:
- A channel-agnostic approach to growth, driving a total Target experience across stores, online and mobile. Guests who shop Target in stores and online generate three times the sales compared with guests who shop in stores only. Continued enhancements in technology, supply chain and inventory management will create a shopping experience that is rooted in ease and inspiration. “Now, almost 75% of our guests begin their shopping experience on a mobile device,” said Kathryn Tesija, EVP, chief merchandising and supply chain officer. Target executives expect this channel agnostic focus to drive annual growth of 2% to 3% in digital sales.
- Elevating its core signature categories: style, baby, kids and wellness. Signature categories account for $20 billion in sales, representing more than one-quarter of its total sales in the United States. One key driver of its wellness platform has been the “Made to Matter – Handpicked by Target” collection of natural, organic and sustainable brands. In 2014, sales of the Made to Matter brands grew twice as fast at Target compared with the overall market, according to executives. In 2015, Target will double the size of the collection with more than 200 new and exclusive products. Sales are expected to hit $1 billion this year.
- Target will create a more guest-centric experience by tailoring its assortment and offering more locally relevant products with demographics, climate, location and other guest-led factors driving merchandising decisions. “We’ll be investing to build the capabilities to deliver a much more relevant in-store and online experience. Similarly, today’s consumer expects to receive relevant, personal offers and experiences, and we’re investing to build digital capabilities to make Target a leader in this space,” Cornell said.
- Target’s store opening plans will increasingly focus on new, more flexible formats, such as TargetExpress and CityTarget. These smaller formats enable Target to serve dense urban areas and, judging by the numbers, the concept is winning. At the CityTarget formats, for example, sales productivity is roughly double the average of its larger stores, and gross margin rates are nearly 10 points higher than the rest of the chain. As for TargetExpress, the company is seeing “strong early results” and will continue to test this format in 2015, with plans to open eight locations across the country.
Target continues to make dramatic improvements to the digital experience. More than 70% of its digital platform is new, including new mobile apps, desktop and the registry experience. This year alone, Target expects to invest $1 billion in technology and supply chain.
“Digital sales are growing at a breakneck pace. We delivered a 50% increase in digital conversion last year, and sales grew three-times faster than the industry average,” said Casey Carl, chief strategy and innovation officer. “Not only are we closing the gap, but digital sales are beginning to play a meaningful role in achieving our overall financial goals. Digital sales account for more than half of our total comp growth last year.”
As for mobile, in particular, it has truly become the “front door to Target,” Carl said. Today, 98% of Target guests shop digitally, and the vast majority of that shopping occurs on a mobile device. Last year, mobile traffic grew 44%, and conversions shot up 69%. Looking to further drive mobile, Target plans to evolve the user experience by improving its in-store location and navigation capabilities, provide greater mobile payments integration and test such new technologies as iBeacons to make shopping even more personalized.
Aligning health services, nutrition
“Our health-and-wellness experts are leading the way for the future of health care in our stores and beyond.”
For any retail pharmacy provider, that would be a bold, perhaps even overly confident, assertion. But coming as it does from Walmart, it’s something that both the U.S. healthcare system and Walmart’s competitors are taking seriously.
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Walmart’s goal, said Labeed Diab, president of health-and-wellness, is to be nothing less than “the No. 1 U.S. portable healthcare provider.” The world’s largest retailer is throwing its vast arsenal of resources behind that effort with a fast-expanding network of smaller stores with pharmacies; new pharmacy-based health services, such as immunizations, health screenings, insurance services and smoking cessation programs; a radically new concept for in-store walk-in clinics; a line of low-priced diabetic-care products called ReliOn; and a growing commitment to provide healthier nutritional choices.
“Whether it’s a small or large format, we have 140 million Americans who walk through out doors every single week,” Diab said. “In health-and-wellness, [we’re looking to be] a one-stop shop that American consumers can leverage.”
To that end, Walmart is taking big steps to make itself the destination of choice for virtually every facet of front-line, primary health services. That includes the care programs and prescription services developed by 53 U.S. clinical service managers and delivered by its 17,000 pharmacists, vision center services provided by some 4,000 opticians and optometrists, and expanding efforts to align all its health care and nutritional programs more seamlessly under one roof, according to Diab and other Walmart health-and-wellness leaders.
One major spearhead of Walmart’s campaign debuted in 2014 with the launch of a new in-store clinic format under the banner Walmart Care Clinic. The company opened 17 of the new care centers last year, positioning them as a full-service alternative to a visit with a primary care doctor with a range of health services, including urgent and preventive care, as well as management of such chronic diseases as diabetes and hypertension.
With its ambitious menu of primary health services and its radical payment structure — virtually free for employees and $40 for all customers regardless of service — the new clinic could be a disruptive force in U.S. health care if it’s rolled out nationally. “It’s just like going to your primary care physician,” Diab said.
Meanwhile, Walmart continues to drive home its message of “affordability and accessibility … the building blocks of our success.” Since the advent of its $4 generic drug pricing strategy in 2006, the company said it has saved shoppers “a total of $4.9 billion in prescription medication costs alone by switching from branded to generics.” And “the ability to walk into our stores and find affordable food [has] saved our customers $2.3 billion by offering low prices on fruits and vegetables,” to date, Walmart reported.
In addition, customers with diabetes “can save up to $784 on testing supplies per year” with the private label ReliOn brand of diabetic testing strips and other supplies, the company asserted.
On the broader front, Walmart is focusing heavily on the rapid rollout of such highly fruitful smaller store formats as Neighborhood Market, whose concentrated mix of groceries, general merchandise and pharmacy have been a hit with consumers. “Neighborhood Markets delivered approximately a 7.7% comp during the [fourth] quarter,” said Greg Foran, Walmart U.S. president and CEO. “We opened 233 Neighborhood Markets during the year, and customers like their easy and convenient access to fresh foods, pharmacy and services.”
The company also is steadily ramping up its automation, online marketing and distribution capabilities. “We’re also leveraging global best practices to increase site visits and add services such as the Asda Direct kiosk — which allows customers to order from online catalogs while they’re still in the store — to grocery delivery and drive-through pickup, which we’re testing in Denver,” Walmart Stores EVP and CFO Charles Holley Jr. reported.