The US retail pharmacy landscape faces saturated retail locations, ongoing labor shortages, inflationary pressure, and a leveling-off of generic drug penetration. To effectively compete in this environment, all types of retail pharmacies can strive to better understand and adapt to changing consumer preferences. McKinsey conducted a consumer survey of more than 1,000 people in the United States to gain insight into these preferences

Over the past two decades, the retail pharmacy landscape—defined as pharmacies that dispense prescription medication—has evolved substantially. We break down the sector into four types of retail pharmacies: retail chains, regional pharmacies such as mass retail and grocers, independent pharmacies, and mail-order and online pharmacies

Retail chains are the largest and most prevalent of the four pharmacy types, representing a third of stores and about a third of prescription revenues in 2021. On a per-store basis, retail chains dispense approximately 138,000 prescriptions annually—about 50 percent more than grocers, the next largest prescription dispensers per retail location

For the fourth type of retail pharmacy, mail-order and online pharmacies, overall penetration for nonspecialty drugs is low compared with penetration for specialty drugs. In 2021, these organizations accounted for less than 10 percent of total US prescriptions,9 but they are gaining traction. Historically, mail-order pharmacies were defined as PBM-owned processing facilities that filled maintenance medications centrally. In the past 15 years, a number of direct-to-consumer online pharmacies unaffiliated with PBMs have been established, with this segment receiving more than $3 billion in funding to date.10 In parallel, traditional players such as retail chains have also moved to more omnichannel—physical, online, and mail—options. For example, Walgreens has its own mail-order pharmacy, offers same-day delivery from 8,000 stores, and provides prescription fulfillment through its phone app

Online pharmacies seeking to disrupt the market can pursue strategies that reinforce their natural benefits (speed and convenience) with their corresponding target demographic (convenience seekers). But they can also work to bridge some of the potential gaps in consumer experience caused by their lower-touch approach. Mail-order and online pharmacies may consider ways to create a more personalized experience that preserves some of the benefits of an in-person experience. For example, video telehealth visits with remote pharmacists could help establish a personal connection to complement the benefits of convenience in the absence of face-to-face consultations.