Riding momentum, customer loyalty
The supermarket industry’s biggest engine appears to be firing on nearly all cylinders.
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Kroger has become one of the nation’s leading operators of in-store clinics. “Due to years of strong growth, The Little Clinic expansion is becoming more aggressive,” Kroger reported last year, “with 55 clinic openings … [in] 2014, including expansion into two new divisions [Central and Mid-Atlantic].” That aggressive strategy boosted The Little Clinic network to 165 units in eight states, including Colorado, Arizona, Ohio, Indiana, Virginia and Georgia.
Kroger’s pharmacies also continue to reach customers with new preventive health-and-wellness services. “Everyday pharmacy services include vaccinations, medication therapy management and a variety of health screenings,” the company reported. “Many locations offer more intensive education and management programs, such as diabetes and heart-healthy coaching, diabetes self-management education, fitness, nutrition and weight management, and smoking cessation. Kroger also is utilizing innovative methods to improve medication adherence, reduce hospital readmissions and lower total healthcare costs.”
“Collaboration has been a key to our success,” said Kroger clinical coordinator Jim Kirby. “Partnering with organizations like the APhA Foundation, health systems and universities has enabled us to develop and test unique interventions. These programs are using a team-based approach to provide patient-centered care and improve health outcomes.”
Key to Kroger’s overall success has been its ability to tailor its customer loyalty and health-and-wellness programs to local markets and regional preferences. “We continue to differentiate ourselves through customer insights gained by analyzing customer shopping habits and behavior,” Kroger reported. “Years of experience in data analytics have made us exponentially better at personalization and individualized rewards.”
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.