The Drug Store Shopper - US - February 2015 This report is supplied in accordance with Mintel's terms and conditions. Mintel Group Ltd.

Transcription

1 The Drug Store Shopper - US - February 2015 This report is supplied in accordance with Mintel's terms and conditions. Mintel Group Ltd. Key points Nearly one third of drug store shoppers will typically shop at the same drug store where they have prescriptions filled. Thirty percent said that loyalty cards could cause them to visit certain stores. Significantly more people think price is more important than convenience than do those who think the reverse and favor convenience (29 vs. 16% respectively). Older consumers (55+) are more price-conscious and will use loyalty cards and buy private label brands to save money. Conversely, younger consumers are more fickle, and will shop around at various drug stores to find the best prices and product selections. Drug stores that promote healthy lifestyles are more likely to appeal to this active and engaged group. Consumers with less than $50K HHI state that price is more important than convenience when shopping for drug store needs. As such, they are more apt than consumers with over $50K HHI to shop around at a variety of drug stores to browse merchandise and prices. They may be leaving some money on the table as they are also less likely to buy private label brands or to use loyalty programs to save money. This suggests that some education about the quality of private label brands and the benefits of various loyalty programs targeted to these lower income consumers is in order. One in three say a loyalty card could influence where they shop Nearly one third of survey participants said they typically shop at the same drug store where they have prescriptions filled. This is not surprising, given that they have to go to the store to pick up the prescription, and for convenience reasons, will likely purchase other items needed at the same time. However, nearly 20% say they prefer other types of retail chains over drug stores for their drug store needs. One in three consumers said that loyalty cards can influence their decisions about where to shop for drug store needs. Given the general lack of loyalty in the category, retailers that offer drug store items should take care to ensure their loyalty programs are competitive. CVS s MyWeekly ad program does a nice job of tailoring offers and deals to customers based on prior purchasing history. Walgreens makes it easy to use its program because only a phone number is needed at check-out in order for points to be added to individuals accounts. Mintel s Retailer Loyalty Programs US, July 2014 notes the top three loyalty program incentives (ranked by more than 40% of consumers) include free products, storewide discounts, and the ability to earn store credit with purchases. Older consumers tend to favor the ability to earn store credit and storewide discounts more than younger respondents. More than half of younger women aged were especially likely to pick free products as an important feature. With so many loyalty programs now available, it may be confusing for consumers to know or keep track of what benefits they get from each one. Drug store retailers offering loyalty cards/programs may want to provide side by side comparisons on their sites or via one-sheeters inserted into shopping bags 1 of 7 10/28/15 1:38 PM

2 highlighting why theirs is the best. Another valid option would be to seek endorsement from trusted third parties such as credible news publications. FIGURE 61: Attitudes toward drug store shopping, November 2014 Thinking about when you shop at drug stores, please select which of the following, if any, statements you agree with Base: 1,808 internet users aged 18+ who shopped at a drug store in last 12 months I typically shop at drug stores where I fill prescriptions 31 All % I am more likely to shop at a drug store if they have a loyalty card that helps me save money 30 When shopping at drug stores, price is more important than convenience 29 I buy private label brands/products at drug stores to save money 23 I prefer to shop at a mass merchandiser or a grocery store instead of a drug store for drug store needs 18 When shopping at drug stores convenience is more important than price 16 I regularly seek advice/information from the pharmacist when I shop at drug stores 13 I am not loyal to any one drug store, and like to visit different drug stores to browse product selections I would shop more at specific drug stores that support a healthy lifestyle (eg, CVS eliminating tobacco) I would like a more private waiting area/consultation area when waiting in the pharmacy or clinic area I prefer to shop online for my drug store needs rather than going to a store 6 I am embarrassed to ask the pharmacist questions when I shop at drug stores 4 None of the above 13 Source: Lightspeed GMI/Mintel Older generations more likely to shop where they fill prescriptions Older adults (55+) are more likely than younger shoppers to shop at drug stores where they fill prescriptions reflective of having more prescriptions to fill, and by default, form a higher level of loyalty to certain drug stores. They are also more likely to be value conscious, seeking drug stores that offer loyalty programs that save them money, and stating that price is more important than convenience. Retailers in this space could offer these consumers targeted offers and/or news about items they are more likely to purchase such as OTC medication, prescription medication, and vitamins and supplements. They would also be interested in learning about generic medications that could serve as suitable alternatives to brand name drugs, such as is offered by Target s new Healthful app. Since older consumers don t use mobile 2 of 7 10/28/15 1:38 PM

3 apps much, this information should be disseminated in other ways to communicate with them, such as via circulars in newspapers or store flyers, or even via regular updates on the status of their loyalty memberships that provides content on general health and wellness information. Younger consumers are most likely to admit they are not loyal to any one drug store and prefer to shop around and browse selections. Additionally, they are more apt to be loyal to certain drug stores that promote healthy lifestyles. Since most drug stores already position themselves as centers for health and wellness needs, winning younger customers can become a game for retailers that is about which company has the best and most compelling message. CVS name change to CVS Health and elimination of tobacco products boldly positions itself as the health and wellness expert in an attempt to lure more customers. Retailers offering drug store needs should consider rewarding customers for not only their purchases, but for their healthy lifestyle choices. They could earn points for buying products designated as heart healthy for example, or retailers could partner with health clubs or fitness organizations to provide crosspromotions when consumers sign up for classes or memberships. Another idea is for retailers to think about adding sports advisors and/or light physical therapy sessions as an added service in retail health clinics to appeal to amateur athletes. Although a low percentage (under 10%), consumers are the most likely age group to be embarrassed to ask the pharmacist questions, and 15% of men say that a more private waiting area in the pharmacy or health clinic would be of interest. Emotional marketing messages about privacy and genuine concern for individuals needs could break through to this group. FIGURE 62: Attitudes toward drug store shopping, by gender and age, November 2014 Thinking about when you shop at drug stores, please select which of the following, if any, statements you agree with Base: internet users aged 18+ who shopped at a drug store in last 12 months I typically shop at drug stores where I fill prescriptions I am more likely to shop at a drug store if they have a loyalty card that helps me save money When shopping at drug stores, price is more important than convenience I buy private label brands/products at drug All Male, Male, Male, 55+ Female, Female, Female, 55+ 1, % % % % % % % of 7 10/28/15 1:38 PM

4 stores to save money I prefer to shop at a mass merchandiser or a grocery store instead of a drug store for drug store needs When shopping at drug stores convenience is more important than price I regularly seek advice/information from the pharmacist when I shop at drug stores I am not loyal to any one drug store, and like to visit different drug stores to browse product selections I would shop more at specific drug stores that support a healthy lifestyle (eg, CVS eliminating tobacco) I would like a more private waiting area/consultation area when waiting in the pharmacy or clinic area I prefer to shop online for my drug store needs rather than going to a store I am embarrassed to ask the pharmacist questions when I shop at drug stores None of the above Source: Lightspeed GMI/Mintel Lower income consumers may be unaware of savings they are missing from loyalty programs Although one third of lower income drug store shoppers (under $50K HHI) say that price is more important to them than convenience when shopping at drug stores, they exhibit some contradictory behavior. They are less likely than higher income households to shop at drug stores that offer savings via loyalty cards, or to buy private label brands/products to save money. Furthermore, lower income consumers are the most likely group to admit they are not loyal to any one drug store, preferring to shop around for best prices and/or selections. Retailers may want to consider offering samples of private label brands in the store to allow customers to try something new before buying. 4 of 7 10/28/15 1:38 PM

5 Lower income consumers are also more likely to shop at Walmart for its low prices (see Drug Stores Shopped) than at traditional drug store chains. However, consumers with sub-$50k HHI are important to retain because they tend to shop more frequently for drug store needs than do more affluent consumers. This does not necessarily mean they are spending more on each trip, but probably more likely to be buying essentials as affordable, and then waiting until the next paycheck to get more items. Highlighting weekly deals should resonate with this group given their tendency to more frequently be in market. FIGURE 63: Attitudes toward drug store shopping, by household income, November 2014 Thinking about when you shop at drug stores, please select which of the following, if any, statements you agree with Base: 1,808 internet users aged 18+ who shopped at a drug store in last 12 months Source: Lightspeed GMI/Mintel FIGURE 64: Drug store shopping frequency, By household income, August 2013-September 2014 Base: 9,188 adults 18+ (CVS) and 9,421 (Walgreens) 5 of 7 10/28/15 1:38 PM

6 Note: Figures in boxes represent mean monthly number of drug store visits Source: Experian Marketing Services, Summer 2014 Simmons NHCS Adult Study 12-Month. Copyright: 2014 Experian Information Solutions, Inc. All rights reserved/mintel Are consumers loyal to certain drug stores? Why or why not? In an online discussion panel conducted by Mintel, consumers were asked about their loyalties, or lack thereof, to drug stores. What follows is a sample of some of the responses that helps to provide insight into how consumers manage all the available shopping choices in the drug store category. Do you tend to be loyal to one drug store? If so, which one and why? If not, do you visit several? Why? Do you shop for different things at different places? If so, please elaborate. Not loyal at all. There are too many other places around to get a better deal. Drug stores really are not very inexpensive. Married man, I'm pretty loyal to Walmart for several reasons. They are within a mile of my home and I pass them no matter where I'm going. They have there own brand, Equate, which can serve my needs most of the time. I fill my there prescriptions there as they are on my Medicare Part D drug plan, and I can eat at the instore McDonalds and/or browse through the rest of the store while I wait for my prescription (if I chose to wait). Married woman, 55+ I am very loyal to Walgreen's. It's close to home and open 24/7, even on Christmas. Walgreen's is my favorite drug store, and will only go somewhere else if it's necessary. Single man, of 7 10/28/15 1:38 PM

7 Yes. I have loyalty cards for cvs, rite aid and walgreens. The rewards via points or cash back at these stores a beneficial when I use coupons on top of those offers for certain items. Married man, 55+ I tend to be loyal to many stores because you whomever has the best prices that day is the one I will shop in.. I visit a couple different stores based on price and also location.. I do this because I like to save money.. I do shop for different things at different places because some stores do not carry items that other stores do so I have to make a couple trips to get the items I need. Single woman, If you want more details about this particular report, please contact the Mintel information team on in the U.S. or +44 (0) in the UK and the rest of the world, or them to info@mintel.com. 7 of 7 10/28/15 1:38 PM