HEALTH

Health, wellness and the total store: Linking Walmart pharmacy operations, in-store marketing

BY Jim Frederick

A retail pharmacy giant is beginning to fully harness the power of scale. Now firmly established as one of the top retailers of prescription drugs in the United States, Walmart may soon lay claim to an even bigger share of the pharmacy and OTC market as its leaders learn to align pharmacy operations and in-store marketing efforts more closely with other departments within Walmart’s Supercenters, discount stores and Neighborhood Markets.

To do that, the company is changing the relationship structure within its store and field management organizations. The goal: to build bridges of opportunity and mutual support among the various store departments so that the health-and-wellness side of the business can mesh more seamlessly with Walmart’s overall mission of value and one-stop shopping. And the end result, said Paul Beahm, SVP health-and-wellness operations for Walmart U.S., could drive more traffic to both the pharmacy and to other store departments.

(To view the full report, click here.)

Beahm, a 28-year Walmart veteran, acknowledged that pharmacy is “a specialized business that has a complexity to it.”

“Prior to the relationship change, … we focused on the complexity of it, instead of how much commonality we have between health and wellness and [the rest of the store],” he explained. “So the change was, ‘Let’s begin to align one to one, and be seen as one team.’”

That more holistic, total-store approach has helped elevate the role of pharmacy, health and wellness within Walmart’s total-store offering. “The ideal situation today is that when a regional [pharmacy manager] goes into a store, they don’t just go to the pharmacy and vision center and focus on pharmacy and vision topics. They … look at the departments like baby [care] — the offerings that holistically mean health and wellness to the customer,” Beahm said.

“The goal is to leverage the larger box, the larger business,” he pointed out. “And that only happens through relationships. That’s something that, frankly, we pushed really hard on the last year.”

“If we’re going to close the gap on penetration for health and wellness for the total buy, relationships within the field organization to educate each other on the businesses become one of the most important things,” Beahm added. “So the structure of our field organization is really built around relationships and education, and the end goal is conversion of those [customers] who aren’t using our services.”

‘A tremendous year’

There’s no doubting the scale or market reach of the enterprise. Walmart operates some 4,500 in-store pharmacies in all 50 states.

“We have 17,000 pharmacists, 4,000 opticians and 65,000 associates out in the 4,500 stores” who serve the pharmacy, health-and-wellness side of the business, Beahm explained. Its pharmacists, he added, already “do more than provide medications.” They serve as “part of a continuum of care for our customers, providing clinical services, such as immunizations and comprehensive medical reviews, which include walking patients through their entire health profile as part of their preventive care.”

Under the company’s hub-and-spoke organizational framework, store districts are overseen by pharmacy marketing directors, each of whom is in charge of about 12 Walmart pharmacies. In turn, those directors report to one of 40 regional directors, who Beahm said are “typically but not always centered [along] state lines.”

In charge of those 40 regions, he added, are nine divisional leaders, each of whom has a counterpart on the GM and food side of the business management structure, “so there’s a cross-functional team and relationships, and a structure that supports our pharmacists and the market leaders.”

That means that field and store management are now “aligned geographically,” Beahm added. “But more than that, it’s about how we help each other be successful in each of the businesses.

As Walmart rapidly expands its pharmacy presence into more communities and more urban and suburban markets — the company added more than 100 smaller-format Neighborhood Market stores with pharmacies in January 2015 alone — that kind of cross-functional teamwork and coordinated store marketing and merchandising becomes even more critical. One example of how the approach is already working has been in the quick embrace by local communities of the new pharmacies, Beahm said.

The success of Walmart’s total-store approach to health and wellness is also borne out by recent sales results. “We had a tremendous year in health and wellness” for the fiscal year ended Jan. 31, 2015, said Labeed Diab, president of health-and-wellness for Walmart U.S.

“That doesn’t happen by accident,” Diab continued. “That’s Paul and his leadership team, along with the support of Lindsey Helt’s [senior director health-and-wellness HR] HR team, and the support of the home office team, aligning the players in the stores to the needs of our customers.”

The resources to boost clinical care

But “health and wellness within Walmart is not just about filling prescriptions,” Diab pointed out.

Added Beahm, “We want to be a health-and-wellness destination for our customers, and we’re rapidly changing as the industry moves to provide cutting-edge health services. This year, we’re adding diabetes and disease state management services to our list of clinical services provided by our pharmacists in select stores.”

“These pharmacists will be trained to provide ongoing, in-depth counsel to diabetic and chronic-disease patients in an effort to help them effectively manage their disease,” he said.

To that end, Walmart Pharmacy now employs 53 clinical service managers across the United States who “oversee Walmart’s clinical services and train and educate our pharmacy staff,” Beahm said.

“We plan to more than double the number of pharmacy clinical service managers over the next year,” he added. “The company has given us the resources to allow them to upscale the pharmacies and work with the market directors across the United States [to develop and expand] the things that matter in wellness services,” including health screenings and disease education and management for conditions like diabetes and cardiovascular disease. “As the launch into services occurs, those clinical service managers — pharmacists by trade and education — will spread the word … across multiple stores within their market responsibility,” Beahm explained.

“We’re always looking for new and innovative ways to serve our customers,” Beahm said.

Walmart is also applying the scale of its pharmacy operations and purchasing power to lowering costs both for patients and health plan payers. A prime example: its groundbreaking $4-per-30-day supply generic drug pricing policy offered on hundreds of multisource, widely prescribed medicines.

“Since we launched our $4 prescription program in 2006, our U.S. customers have saved $4 billion on their medications,” declared Mark Phillips, VP pharmaceutical merchandising for Walmart U.S. “Walmart aggressively delivers new options to our customers as generic versions of frequently used medications are released.”

“Public and private health plan sponsors and insurers also have been prime beneficiaries of Walmart’s pharmacy purchasing power and pharmaceutical pricing policies,” said Marcus Osborne, VP health-and-wellness payer relations for Walmart U.S.

“Our mission in payer relations is to develop solutions that drive down costs for the payer customer, because ultimately that will trickle down to the customer who walks through our store,” Osborne said. That means, “looking at opportunities around lowering the cost of distribution,” as well as “creating savings around pharmacy networks through preferred programs or limited pharmacy programs.”

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TABS Group: Light VMS shoppers behind growth in mass outlets

BY Michael Johnsen

SHELTON, Conn. — Although the total of all online sales of vitamins, minerals and supplements continues to outstrip all specific brick and mortar outlets, Amazon and other online retailers saw a share drop in category sales for the first time in eight years according to a survey by the TABS Group. In the “Eighth Vitamin and Sports Nutrition Study,” TABS Group found VMS sales were up 3% versus 2014 levels, and were being driven by gains in mass market outlets particularly from Walmart, Costco and Rite Aid.  
 
TABS Group estimates the U.S. retail market size of VMS at $11.8 billion annually.
 
Online vitamin sales hit $1.9 billion surpassing Walmart’s sales of $1.7 billion in 2014, a slight increase over 2014. However, online’s share of occasions of the vitamin category dropped from 9.9 in 2014 to 9.7 in 2015, the first time online share has dropped since the inception of the TABS Group survey in 2005. Pure play online retailers (without brick and mortar stores) share surged to 80% of online sales versus 67% the last two years. Amazon alone had 36% of all online supplement sales.
 
“All online outlets saw declines with the primary cause being the drop in sales among heavy buyers. Amazon’s decline in share was much less pronounced since it draws a disproportionate amount of its sales from light buyers,” said Kurt Jetta, president TABS Group. “The decline in online share is the second sector TABS Group has tracked with the other being consumables. Given that vitamins is among the most highly developed online categories in the consumer packaged goods industry, this study adds an important data point that suggests online sales in CPG have peaked with the existing online shopping technology.”
 
The survey found that the growth in VMS is primarily being driven by gains in mass-market outlets with Walmart, Costco and Rite Aid leading the pack. These three mass market leaders combined to account for $3.4 billion in sales representing 29% of all vitamin sales. Mass market has recaptured lost share from 2014 due to the surge in light-buyer penetration.
 
According to the TABS Group, there are several reasons for this swing by consumers to buying via the mass market. These outlets are much more convenient and accessible than specialty outlets and the survey bears that out as it demonstrates that light buyers (defined as purchasing 1 to 2 types of vitamins) skew their purchases strongly to mass market outlets. The survey also points to some heavy buyers (defined as purchasing 3 to 5 types of vitamins) dropping down to being light buyers, and therefore more likely to shop at mass market outlets, because they stopped buying certain types of vitamins. 
 
But perhaps the most significant reason behind the VMS exodus from online to retail is retailer promotions. “The channel shift from online to mass market affirms the importance of retailer promotions in driving sales. If compelling deals are not available, many consumer just won’t buy.  Our investigation of online promotional practices suggests that online outlets are not competitive promotionally,” said Jetta.
 
Vitamin specialty, grocery and Sam’s outlets all saw a drop in share compared to 2014. Lower and less aggressive promotional activity was cited as a cause for sales softness among some specialty retailers in their public earnings announcements.
 
The survey revealed that 37% of adults 18 years and older have purchased sports nutrition products in the last year accounting for a $2.6 billion market. Twenty-five to 29 year old adults account for the highest category penetration rate at 63%, with a gradual drop off occurring in light buyers at age 30 and a sharp drop off at age 60. There is a sharp drop off of heavy buyers at age 40. Half of all purchases occur in mass market outlets.
 
The Sports Nutrition category has 50% more men heavy buyers than women heavy buyers and Hispanics are two times more likely to be heavy buyers than non-Hispanics. Among adults in the core 18-44 age group, 74% of Hispanics have purchased a sports nutrition product in the last year compared to 50% of non-Hispanics.  
 
“The results from the survey highlight that sports nutrition is a category deserving of more space and support in mass market outlets. With half of all sales already occurring there, that number has considerable upside, particularly given retailers focus on millennials,” explained Jetta. “Furthermore, unlike almost any other category of CPG, sports nutrition is an efficient way for retailers to appeal to Hispanics.”
 
The TABS Group Vitamin and Sports Nutrition study of 1,015 U.S. consumers geographically and demographically dispersed, was conducted in April 2015, and was designed to examine the types, frequency and outlets where VMS and sports nutrition products are purchased.
 
 
 
 
 
 
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NBTY launches mini-tab Osteo Bi-Flex EASE

BY Michael Johnsen

NEW YORK, – NBTY on Wednesday introduced Osteo Bi-Flex EASE, a daily mini-tab that promotes joint comfort. One Osteo Bi-Flex EASE mini-tab a day supplies Vitamin D3, Joint Shield, an herbal ingredient that helps with occasional joint flare-ups and a natural source of collagen called UC-II that has been shown to improve joint comfort. 
 
"Osteo Bi-Flex EASE mini-tabs are 80% smaller than standard joint health supplements and are free of gluten and shellfish," said Osteo Bi-Flex senior brand manager Albert So. "With Osteo Bi-Flex EASE, we have designed a joint health supplement that is easy to take and provides the benefits of collagen UC-II with our proprietary Joint Shield to support mobility and comfort." 
 
Recent research shows that a daily 40mg dose of UC-II collagen, as represented in Osteo Bi-Flex EASE mini-tabs, can be effective in improving joint comfort.
 
"As we age, our bodies lose collagen and supplementation with this compound may become more important, as collagen is the main component of our connective tissue and plays an intricate role in joint health. The particular standardized form of type II collagen contained in Osteo Bi-Flex EASE has been shown to promote joint comfort," James Rippe, editor-in-chief of the American Journal of Lifestyle Medicine, said.
 
A survey commissioned last year by Osteo Bi-Flex found that nearly seven in 10 Americans over 34 years of age experience occasional joint stiffness or other concerns. The survey also found that 62% of Gen Xers – now in their late 30s and 40s – are concerned about their joints.
 
"Supplementation can serve as an essential part of proper nutrition for your joints," Rippe said. "Blood supply to our joints is poor and it is often difficult to get joint health ingredients like glucosamine, chondroitin and collagen in our diets."
 
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