Meeting changing consumer needs: The US retail pharmacy of the future

Meeting changing consumer needs: The US retail pharmacy of the future

In today's competitive landscape, the US retail pharmacy industry is facing numerous challenges. From saturated retail locations to ongoing labor shortages, inflationary pressure, and a leveling-off of generic drug penetration, pharmacies of all types need to understand and adapt to changing consumer preferences in order to effectively compete.

To gain insight into these preferences, McKinsey conducted a consumer survey of over 1,000 people in the United States. The survey revealed that the retail pharmacy landscape has evolved significantly over the past two decades, with four main types of retail pharmacies emerging: retail chains, regional pharmacies (mass retail and grocers), independent pharmacies, and mail-order and online pharmacies.

Retail chains are the largest and most prevalent type of retail pharmacy, representing a third of stores and about a third of prescription revenues in 2021. These chains dispense approximately 138,000 prescriptions per store annually, which is about 50% more than grocers, the next largest prescription dispensers per retail location.

On the other hand, mail-order and online pharmacies have lower overall penetration for nonspecialty drugs compared to specialty drugs. In 2021, these organizations accounted for less than 10% of total US prescriptions. However, they are gaining traction in the market. Over the past 15 years, several direct-to-consumer online pharmacies have been established, receiving more than $3 billion in funding to date. Traditional players like retail chains have also embraced the omnichannel approach by offering physical, online, and mail options.

For online pharmacies aiming to disrupt the market, there are strategies they can pursue to reinforce their natural benefits of speed and convenience. They can cater to their target demographic of convenience seekers and bridge potential gaps in the consumer experience caused by their lower-touch approach. One way to achieve this is by incorporating video telehealth visits with remote pharmacists, which can help establish a personal connection and complement the benefits of convenience in the absence of face-to-face consultations.

In other news, Turkey has approved Sweden's bid to join the North Atlantic Treaty Organization (NATO). This approval comes as NATO seeks to expand in response to Russia's invasion of Ukraine. The agreement was reached just before the NATO summit in Vilnius, Lithuania, and it paves the way for NATO to expand across more than a thousand miles of territory, creating a potential chokepoint for Russian warships and aircraft in the region.

Turkey's decision to approve Sweden's NATO bid comes after a period of strained ties with Western countries during the war in Ukraine. Turkish President Erdogan hosted Ukraine's president in Istanbul and allowed a group of Ukrainian military leaders to return to Ukraine as part of a prisoner swap with Russia. Erdogan also expressed support for Ukraine's ambition to join NATO, although the US has not yet given its support to this aspiration.

In conclusion, the US retail pharmacy industry is undergoing significant changes to meet the evolving needs of consumers. Retail chains dominate the market, but mail-order and online pharmacies are gaining traction. To stay competitive, pharmacies must understand consumer preferences and adapt accordingly. Online pharmacies, in particular, can leverage their natural benefits of speed and convenience while working to provide a more personalized experience. As the industry continues to evolve, it is crucial for pharmacies to stay ahead of the curve and prioritize consumer satisfaction.

Actionable advice:

• 1. Embrace an omnichannel approach: Whether you're a retail chain or an online pharmacy, offering multiple channels for customers to access your services will enhance convenience and meet changing consumer expectations.

• 2. Leverage technology for a personalized experience: Online pharmacies can use video telehealth visits to establish a personal connection with customers and bridge the gap caused by the lack of face-to-face consultations.

• 3. Stay informed and adaptable: The retail pharmacy industry is constantly evolving. Stay updated on the latest trends, consumer preferences, and regulatory changes to ensure your pharmacy remains competitive.

Sources:

• McKinsey's consumer survey on changing consumer preferences in the US retail pharmacy industry.

• Turkey's approval of Sweden's NATO bid and its recent moves in relation to the war in Ukraine.