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

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1 The Drug Store Shopper - US - February 2015 This report is supplied in accordance with Mintel's terms and conditions. Mintel Group Ltd. Rewards or loyalty programs help drive online chatter for the reviewed drug store brands as people seek and share special offers using the programs or special offer codes while shopping for drug store items. Paired with a need for convenience, retailers like Walgreens and Duane Reade are taking to mobile to help shoppers navigate stores with more ease. Key findings Elizabeth Martinez, Social Media Analyst CVS and Walgreens lead the number of online discussions among the selected retailers as they account for 38% and 31% of Share of Voice (SOV), respectively. Drug store shoppers share when they visit stores or their intent to do so, how much money they spend and saved based on coupons and loyalty program rewards, and their experiences with pharmacies and retail/health clinics. Drug store brands average 91% brand awareness, with the exceptions of Drugstore.com and Duane Reade. Drugstore.com s online-only presence may set it back in terms of recognition, but the retailer s convenience and constant promotions help drive its online mentions, which account for 21% of drug store retailer buzz. Expectations and acquisition messages lead the way in which people discuss the reviewed drug store retailers. Mentions of acquisition overlap with those of expectation as people share their intent to visit the drug store retailers and what they will buy. The internet, including social media, is increasingly at the heart of everything people do, changing the way in which consumers interact with one another and the commercial world around them. Both have proven to be powerful tools for brands to generate and measure buzz, and the result is a wealth of online consumer conversations. In this section, Mintel examines the brandscape based on consumer experience of, interaction with, and online discussion about, brands within this market. Mintel has rated drug store retailers by metrics relating to consumer engagement and social media presence. Market overview Prices and expectations of spending or saving money help drive online chatter for the reviewed drug store retailers. Mintel data shows 54% of adults say lower prices would encourage more frequent drug store shopping, and 24% would like to see a loyalty card program offering frequent discounts/savings (see Influencers that would encourage more drug store shopping section). Rewards or loyalty programs help drive online chatter for the reviewed brands as people seek and share special offers using the programs or special offer codes while shopping for drug store items. Convenience also generates drug store chatter as people expect quick visits to the stores, particularly at retail clinics and at the pharmacy. Among those who have visited a retail health care clinic in the last 12 months to Nov. 2014, 79% did so for the convenience, and 50% stated they received treatment in a timely manner (see Retail Health Clinic Visitation section). Key social media metrics CVS records the highest number of online mentions among the reviewed drug store retailers. The retailer s loyalty programs, MinuteClinics, and decision to stop selling tobacco products help generate online mentions. The brand has the third-largest Facebook following among the competitive set, only behind Walmart and Walgreens. Although Walmart accounts for only 2% of online mentions among the reviewed retailers (for the purpose of this report, Mintel has only included mentions of Walmart as they pertain to drug store items and services), it holds the highest number of Facebook page likes. The appeal of low cost and convenience of shopping for home goods, groceries, and pharmaceutical needs help drive Walmart s social media footprint. However, its lower online mentions indicate the retailer could be doing more to emphasize its drug store capabilities and offerings. Walgreens follows CVS in number of mentions, accounting for 31% of online buzz. The brand s dedication to health helps position it as a leader in the drug store industry. With over 4.3 million Facebook likes, Walgreens takes to its social media platforms to help its customers live healthier lives through tips on staying active, sharing promotions for in-store and online deals, and showcases its mobile app. FIGURE 32: Key social media metrics for select drug store retailers, Jan of 7 10/28/15 1:42 PM

2 Brand usage and awareness Walgreens records the highest levels of usage and awareness, with 96% of Mintel survey respondents having heard of or visited the drug store retailer. Walgreens is also the retailer most often visited within the last three months to November 2014, with 45% having done so. Those aged 55+ are most likely to have visited Walgreens in the last three months, demonstrating the need for healthy living at an older age. Blacks and Hispanics are also most likely to have visited a Walgreens in the last three months with 54% and 51% having done so, respectively. This creates opportunities for marketing to multicultural audiences through social media (eg, promoting healthier lifestyles by tracking food and exercise through mobile apps). Additionally, Mintel data shows Blacks and Hispanics are more likely than other race/ethnic groups to shop at drug stores where they fill prescriptions at 36% and 31%, respectively (see Attitudes toward Drug Store Shopping section). Seven in 10 (70%) of Mintel survey respondents have never heard of or visited Duane Reade, making it the least recognized retailer among the competitive set. Headquartered in New York, Duane Reade sees its highest levels of usage and awareness within the Northeast region of the US (52% of those living in the Northeast region of the US have heard of or visited Duane Reade). The regional retailer has made steps towards higher awareness by creating brand ambassador programs and became a part of the Walgreens Company in FIGURE 33: Brand usage and awareness for select drug store retailers, Nov What single statement best describes your use or awareness of each of these drug store retailers? Base: 2,000 internet users aged 18+ * Note: For the purpose of this report, mentions of Walmart are limited to those referring to drug store products and services. Source: Lightspeed GMI/Mintel Interactions with drug store retailers Over half (54%) of those who have purchased or visited from the listed retailers have interacted with them in any of the listed ways. People are most likely to 2 of 7 10/28/15 1:42 PM

3 interact with a retailer before visiting it, with an average 19% having done so. This reflects online trends as people often take to the internet to share when they are visiting the retailers or their intent to do so. People are also interacting with the competitive set to share a positive experience, with an average 17% having done so. Online mentions reflect this trend as people share when they find good prices and use coupons or rewards points for purchases. FIGURE 34: Interaction levels with select drug store retailers, Nov You have indicated that you have purchased/visited the retailer(s). Please complete the sentences below to tell us how you have used social media in regards to the retailer(s). Base: internet users aged 18+ who use social media and have purchased/visited I have looked up/talked about this brand online on social media Walgreens CVS Walmart (drug store items only) Rite Aid Drugstore.com Duane Reade 1, % % % % % % Before visiting it While visiting it After visiting it I have contacted/interacted with the brand online on social media to Share a positive experience Get freebies, discounts or special offers Express excitement/satisfaction Share a negative experience Seek or share advice To enter or participate in a contest or giveaway I follow/like the brand on social media because. I want to be associated with it It aligns with my personal views (ie GMO-free) I want my friends to know I like it I have researched the brand on social media to. Compare it against other brands (ie price, quality) None of the above Source: Lightspeed GMI/Mintel Leading online campaigns Charitable initiatives Walgreens commitment to health extended to underdeveloped countries in its 2014 Shot@Life campaign. With the partnership of the United Nations Foundation, Walgreens donated the value of a vaccine for every flu shot or immunization shots administered at Walgreens or Duane Reade pharmacies. Walgreens used its social media pages to promote the initiative and update followers on the progress and donations being made. CVS partnered with St. Jude Children s Research Hospital to support the hospital s work. In addition to in-store opportunities to donate to the hospital, CVS took to Twitter to help generate funds in autumn For every retweet of a St. Jude s Hospital post CVS donated $1 for up to $25,000. Rite Aid s charitable organization created a program called KidCents to benefit children throughout various communities. Participants of Rite Aid s wellness+ loyalty program have the option of rounding up each purchase to the next dollar, donating the change to the Rite Aid Foundation. Digital and mobile campaigns Duane Reade has used the always on-the-go attitude of New Yorkers and incorporated it into various mobile apps and campaigns. The retailer uses various methods to engage its customers through mobile such as location-based coupons, using hash tags to promote current deals, and has piloted programs for online ordering and in-store pick-ups. Duane Reade also launched weather-triggered coupons. Duane Reade s parent company Walgreens worked with brands like Poncho, Claritin, and Allegra to coordinate high rain and pollen index days. s or text messages went out to participants on these days with coupons for products from the brands. Rite Aid launched its Nails extravaganza in The popularity of beauty bloggers and nail art came together in Rite Aid s campaign as participants were encouraged to submit pictures of their nail art creations to win various prizes. Rite Aid also incorporated coupons for nail polishes from brands like Sally Hansen. People could also vote for the most popular designs. 3 of 7 10/28/15 1:42 PM

4 Health and wellness CVS decision to stop selling tobacco in 2014 was a springboard for its #OneGoodReason campaign. The campaign helped promote CVS smoking cessation program, and prompted people to post their reasons for quitting smoking through social media. The program saw tweets from celebrities and leaders across the US like model Christy Turlington and First Lady Michelle Obama. Walmart takes to its social media pages to promote its sponsorships with those showing how to live healthier lifestyles. The brand sponsors shows like The Dr. Oz Show, and shares upcoming segments on healthy living like which products to have in one s medicine cabinet. What we think Emphasis on digital and health/wellbeing has created engagement for the reviewed brands. While Walmart is a largely recognized retailer (90% of Mintel survey respondents have heard of or visited it), it could benefit from placing greater emphasis on its drug store product and service offerings. Additionally, Duane Reade s social media channels record high levels of engagement with over one million Twitter followers (the most among the competitive set), but its regional limitations hold it back from larger brand usage and awareness. The retailer has found its niche in New York as its marketing emphasizes the need for fast and convenient offerings in a busy city. 4 of 7 10/28/15 1:42 PM

5 Online conversations CVS leads the competitive in online mentions, accounting for a 38% in SOV (Share of Voice). People are most likely to discuss CVS in terms of expectations. Over half (53%) of CVS messages mention expectations as people visit the retailer hoping to find products, expect shorter wait times at the MinuteClinic, and use coupons to save money. CVS decision to stop selling tobacco products helps drive online chatter for the drug store retailer. CVS generates over 45,000 tobacco, smoking, and cigarette messages for the time tracked. Mentions are widely neutral as news sources and internet users share company news of CVS decisions to stop selling tobacco products. Positive mentions highlight CVS commitment to encouraging healthy lifestyles and helped generate buzz for its One Good Reason campaign (see Leading Online Campaigns section). Tobacco mentions help drive buzz peaks for CVS during the weeks of Feb. 1, 2014 and Oct. 19, Walgreens accounts for 31% of drug store chatter. Walgreens Balance Rewards program generates online mentions as people share their tips on how to maximize their savings. Frugal shoppers suggest earning and using rewards points combined with manufacturers coupons, for instance. Technology also helps drive Walgreens chatter as the retailer advertises its mobile apps, which include coupons, pharmacy capabilities, photo ordering, and fitness/health tracking. Walgreens announcement to partner with Apple for its Apple Pay initiative helped to drive Walgreens peak buzz for the week of Oct. 26, FIGURE 35: Online mentions for select drug store retailers, by week, Jan. 12, 2014-Jan. 11, 2015 Base: 3.2 million online mentions Note: For the purpose of this report, Walmart mentions are limited to those referencing drug store services and products. Where are people talking about drug store retailers? Over seven in 10 (77%) online mentions for the listed retailers occur on blogs. Beauty bloggers and frugal shoppers help drive online chatter as they share makeup reviews and tips on how to spend wisely at drug stores. Beauty bloggers like Neon Blush praise drug stores for their affordable prices compared to larger beauty retailers like Sephora and Ulta. Brands like CVS have taken advantage of this trend by highlighting their beauty product offerings on social media. CVS also has a Beauty Club (a rewards point system similar to its loyalty card), which allows users to accumulate points and coupons for their beauty purchases. Frugal shoppers generate online mentions for drug stores as they share weekly circular ads, promotions, and finding clearance items or other deals at the reviewed retailers. While Drugstore.com does not have any physical stores, the retailer still manages to drive buzz through its ongoing sales and reward points system. Facebook makes up 15% of online chatter as people share their intent to visit the reviewed retailers. Mentions of shopping lists or errands to run while at the retailers are also common. Walmart could benefit from further highlighting its drug store offerings in order to save time in that customers can shop for groceries and 5 of 7 10/28/15 1:42 PM

6 home goods at Walmart. Recommendation: With a large emphasis on price, and a niche of beauty enthusiasts, the reviewed retailers could benefit from partnering with beauty bloggers to help increase engagement. At the time of writing, CVS does not have a Pinterest presence a key hub for sharing beauty products, tips, and tutorials. The retailer could benefit from creating content around its beauty club on Pinterest. FIGURE 36: Online mentions for select drug store retailers, by page type, Jan. 12, 2014-Jan. 11, 2015 Base: 3.2 million online mentions What are people talking about? Expectation makes up 73% of online chatter among the listed drug store retailers. Those discussing expectation hope for in-stock products at drug stores, low prices at the pharmacy, and prompt customer service. This is particularly the case with retail/health clinics and filling new prescriptions. Mentions of acquisition overlap with those of expectation as people share their intent to visit the drug store retailers and what they will buy. Overall mentions of drug store retailer peak at 12AM and then again at 4PM, showing the importance of 24-hour services. Cost and attraction go hand in hand as people praise retailers with the lowest prices and best loyalty/points programs. This is particularly the case among beauty bloggers who review products and compare drug stores to retailers like Sephora and Ulta. Uninsured pharmacy patrons also take to the internet to seek and share advice on which drug stores offer the best discounts to those without health insurance. FIGURE 37: Topics of conversation for select drug store retailers, Jan. 12, 2014-Jan. 11, 2015 Base: 3.2 million online mentions 6 of 7 10/28/15 1:42 PM

7 Note: Topics of conversation can overlap, eg, expectation messages can also mention acquisition. 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 7 of 7 10/28/15 1:42 PM