Healthy Times for the Drug Retail Store Industry
The trend in the drug store industry has been the growth of large retail super centers, with their vast array of merchandise across different product lines, snatching business away from smaller specialty drug stores. Interestingly, while these drug “super stores” are on the rise, many chains are adapting the specialty store philosophy with profitable results.
The increased longevity of an aging population means increased prescription medication, which has been the core business of drug stores. Stiff competition and consolidation have also changed the dynamic of the industry, with a growth in personal care and beauty products, over-the-counter medication, and food and general merchandise including clothing, electronics and games.
A real mover and shaker in this sector is Rite Aid. Capitalizing on the customer prescription fallout from Walgreens due to their dispute with Express Scripts, Rite Aid has increased its sales in this area and is aiming to keep the spoils by getting customers to opt-in to their Rite Care Prescription Advisor, a service where patients can see what their prescription-drug adherence looks like (i.e., the degree to which patients correctly follow prescription instructions). With over 300,000 customers/patients using this service, Rite Aid pharmacists are also utilizing this information in their one-on-one consultations with patients. Rite Aid President John Standley said, “Improved compliance benefits Rite Aid through both an increase in prescriptions filled over the course of a year, as well as the increase in personalized interactions between Rite Aid pharmacists and Rite Aid patients.”
Another way in which Rite Aid is redefining merchandising is its embrace of the “Wellness Center,” which more chains are implementing or aspiring to. The “Wellness” format features a more visible pharmacy, enhanced vitamin and supplement choices, and new organic products. The pharmacists in these stores get extra training and so does the staff, who act as “wellness ambassadors,” advising customers on OTC medications, supplements and what to buy for what illness. Since this format out-performs Rite Aid’s core stores, the aim is for the transformation of almost 800 Rite Aid stores to Wellness Centers by year-end, and 80% of Rite Aid’s 4,652 stores will be remodeled with the Wellness Center concept within the next 5 years.
The wellness theme and boutique nature of the specialty store has also crept into Walgreen’s chain, which now has about 200 “Well Experience” stores in Metro New York, Chicago and Indiana. Additionally, Walgreens has been transforming its New York City Duane Reade subsidiaries into an upscale chain that offers organic produce, wraps and salads, smoothies, and even sushi and local beer. They also have physician-staffed walk-in clinics and beauty and personal care "boutiques.”
Opportunities for employment amid this changing and adaptive environment look very good. Store managers, department managers and assistant managers; sales associates and entry-level retail workers; and executives and office staff comprise this growing work force. A growing aging population seeking long-lasting health bodes well for this booming sector.