Health guides: Personalizing customers’ health-and-wellness experience
Incorporated into the new store formats currently being rolled out by both Walgreens and Rite Aid is a new store associate position with the primary function of proactively engaging customers in the OTC aisle. Walgreens calls them Health Guides; Rite Aid calls them Wellness Ambassadors.
But whatever you call them, these associates are both raising the bar in terms of the retail pharmacy shopping experience — helping to create an actual customer experience in health and wellness — and establishing a gateway to the pharmacist and the growing number of health services available through the pharmacy (e.g., medication therapy management, disease-state counseling, immunizations, weight loss and smoking cessation).
And if ever there was a time to shine a light on all that retail pharmacy can bring to bear in helping to manage health, it’s now. Retail pharmacy faces increasing margin pressure from third-party payers and narrowing PBM pharmacy networks. And that’s today. With healthcare reform expected to provide insurance coverage to an incremental 32 million patients in 2014, that pressure on dispensing margins will only grow more intense.
That’s just one pressure point. The ubiquity of smartphones and tablets — 79% of Americans currently shop using one or the other, according to a recent Nielsen survey — provides ready access to online retail, and it is taking price, convenience and choice out of the equation, leaving only shopping experience as the key point of difference across an increasingly commoditized prescription business and a generally homogenized front-end mix.
“The biggest pressure in retailing today and in the future is going to be from online,” said Todd Hale, Nielsen SVP consumer and shopper insights. “So retailers need to think about what do they do to make that experience in their stores unique and different?” It’s happening across all sectors — JCPenney is looking to leverage mobilized checkout capabilities that will liberate associates to better serve shoppers; Trader Joe’s has employees who are experts on certain culinary subjects; and Giant Eagle has deployed an in-store dietitian for shoppers to consult.
“If you think about the drug format in particular, the shopper base today is typically [made up of ] the kind of people who are more likely to have face-to-face, one-on-one conversations, certainly the older shoppers,” Hale said.
Conversely, one positive factor driving the need for more consumer healthcare touch points, especially in the self-care aisles, is healthcare economics. With the rise in healthcare costs and the transitioning of some of that cost from payers to the end user, “informed people are saying, ‘I better take responsibility for my health,’” said Michael Feuer, founder of Max-Wellness.
The fact is, these health-and-wellness “guides” or “ambassadors” are personalizing pharmacy retailing. And while they aren’t in the self-care aisles to make product recommendations, they do serve as a point of entry to the growing number of services becoming available at retail pharmacy, including vaccinations and a growing number of wellness services.
They’re walking, talking and smiling pharmacy service billboards that are not only helping to improve the patient experience, but also are helping to improve store performance. Rite Aid last month touted its new Wellness format as a promising concept around which the company can grow. The whole format offering — from the fixtures to expanded product selection, from additional clinical pharmacy services to the Rite Aid Wellness Ambassadors — “all those changes combined are really giving us a positive sales trend,” said Robert Thompson, Rite Aid EVP pharmacy. “We’re getting great feedback from our customers. … Wellness Ambassadors have improved our overall ability to help customers get the quality information they need and receive advice or other patient services from our pharmacists.”
On top of highlighting pharmacy services, health-and-wellness ambassadors are helping drive more margin-friendly front-end sales as they provide customers with access to information on health, wellness and beauty products. And they could become a key cog in the new OTC switch model that the Food and Drug Administration is considering by serving to direct traffic toward the appropriate self-diagnostics tools or, again, a consultation with the pharmacist.
New programs spell loyalty with silent ‘you’
In 2006, Time magazine added a twist to its annual “Person of the Year” cover story, replacing the usual picture of some prominent individual with a picture of a glossy computer screen to show that social networking had made “you” the person of the year. Now, the idea that it’s all about “you” has percolated into retail.
It appears that 2012 has become the year of the loyalty card. And while loyalty cards are nothing new in this industry — CVS introduced ExtraCare in 2001 — there appears to be a growing interest among retailers eager to understand how their best shoppers use their stores, what they buy and how often, and how to use that information to get them to shop more often and spend more when they do.
Rite Aid’s Wellness+ program has been a lifesaver for the Camp Hill, Pa.-based chain, with its 52 million members consistently showing greater basket rings than nonmembers. ExtraCare now boasts more than 69 million members, with about 67% of all transactions coming through the program — and importantly, according to company research, ExtraCare members buy 85% more items per trip than nonmembers.
“While pharmacy retailers have a tremendous understanding of their customer’s Rx regimen, many are realizing the value of understanding their customers’ front-end purchase behavior as it relates to their total health and wellness,” Catalina Marketing SVP brand development Sharon Glass told Drug Store News. “There is also increased competitive pressure in the market to capture more of a consumer’s trips.”
Safeway in July made its Just For U program available across all divisions. “Registration is on track,” Steve Burd, Safeway chairman and CEO, told analysts during a July 19 conference call. So far, Safeway has managed to enroll about 70% of its customers into the program in markets where it has been available. “The conversion to regular use is running 20% greater to what we initially anticipated,” Burd said. “The incremental spend for that casual user is more than 50% more than anticipated.”
Safeway expects 35% of its business will come from Just for U members this year, growing to 65% to 70% over the next three years. Just for U includes a mobile app that significantly enhances participation, Burd said, with the program’s mobile users engaging 50% more often than desktop users.
Burd told analysts he expects more of his competitors will launch programs of their own in the months ahead. One of them will be Walgreens, as anticipation continues to build in advance of the launch of its program, expected sometime this fall. While it has been in the works long before the June announcement of the Alliance Boots deal, the Walgreens program will benefit from the learnings of Boots’ loyalty program, the largest in the United Kingdom.
So why are retailers suddenly embracing the programs? Again, it’s all about “you.” “They’re enabling shoppers to interact with retailers on a more personal level, in a sense that they receive communications from a retailer based on their shopping and buying behavior,” Nielsen SVP consumer and shopper insights Todd Hale told DSN. Retailers can use the data they collect to create segments, such as top spenders versus light spenders and people who spend on different categories of products, engaging customers in a “micro” fashion.
It also creates the potential for personalized pricing, as Safeway’s program is doing. This, Kantar Retail chief knowledge officer Bryan Gildenberg told DSN, can help curb competitors who might try to one-up a retailer on pricing by looking at the prices on the shelves. “Over the next few years, more of the best shoppers at the retailers … that have loyalty cards will be getting a menu of prices that are outside the public domain, and that pricing may become a private conversation between retailers and their best shoppers,” Gildenberg said.
But it’s not just about “price messaging,” Gildenberg explained. “There’s a whole host of personalized marketing that you can do. You can communicate to shoppers around particular seasons; you can remind shoppers that they bought 90 days worth of vitamins 89 days ago, and they’re about to run out.”
Notwithstanding possible concerns about privacy, Gildenberg said that pharmacy retailers also could create special opt-in programs for customers with special health needs, like diabetics. Last September, Rite Aid rolled out the first major expansion of its Wellness+ program, Wellness+ for Diabetes.
Loyalty programs aren’t limited to just the big chains. Pharmaca Integrative Pharmacy, the Boulder, Colo.-based chain that operates 24 stores in the West, has found success with its Feel Better Rewards program, including a 50% increase in the percentage of customers cross-shopping between pharmacy and the rest of the store and an increase of 10% to 15% in per-member spending. Pharmaca president and CEO Mark Panzer attributes this to its ability to approach on a customer-by-customer basis instead of simply putting out a circular that tries to grab for anyone the chain can. “It allows you to be more micro than macro in your approach to setting marketing goals,” Panzer told DSN.
New DR store ‘ups’ up market
NEW YORK — Duane Reade has further developed its leading edge “up market” store concept with the recent opening of its second flagship store in Manhattan’s Financial District. Located in the stately American Surety building at 100 Broadway, the 22,000-sq.-ft. store fits the rich history of the area while incorporating some of the most innovative ideas seen today in retail pharmacy.
This impressive location, which features a Walgreens bridge pharmacy — now in all 253 Duane Reade stores — caters to a mix of local workers and tourists. While the store may not feature many of the beauty-oriented services offered at 40 Wall St., it does offer several new additions in food, including a gourmet salad bar, full-time coffee barista and self-serve hot soups. The store also hosts a museum-like exhibit that pays homage to the many victory parades that have passed before it through Manhattan’s historic “Canyon of Heroes” section of lower Broadway.
Click here for part 1 of the photos.
Click here for part 2 of the photos.