How Grocers Can Capitalize on Rising Pharmacy Traffic

A tectonic shift is taking place in the way people buy prescription medications. The most obvious sign is the closure of thousands of chain drug stores. Since 2010, nearly one in three pharmacies have closed their doors for good, and the pace of closures is now outpacing the number of new stores.  

For the stores that remain, customer satisfaction is falling fast. According to JD Power, customer satisfaction scores in the segment dropped 10 points last year alone. 

For grocers with in-store pharmacies, this trend offers both promise and peril. While many are seeing a surge in traffic as former CVS, Walgreens, and Rite Aid customers seek a new pharmacy, this spike in volume is causing significant challenges.

Maxed Out

The most immediate impact is on pharmacy operations. Many stores are experiencing a shortage of trained pharmacy personnel, and staff are already maxed out dispensing prescriptions, administering vaccinations and providing patient counseling. Add to this a sudden increase in customer flow, and stores may see longer wait times, errors and a less than stellar customer experience.

The workflow behind the counter is also becoming increasingly challenging due to the proliferation of prescription discount programs. The popularity of these programs is being driven by several important factors: Consumers are more aware than ever of the high cost of medications; health plans have scaled back their formularies, requiring members to pay out of pocket for many drugs; and companies offering discount programs have invested hundreds of millions of dollars in mass-market advertising.

As a consequence, customers often present multiple savings cards and ask the pharmacy staff to identify the lowest-cost option. This process, referred to by some as “52 pickup,” is a painstaking task that requires staff to enter information for each card into the point-of-sale system and then reverse the transaction.  

To put this into perspective, the average pharmacist processes 14.6 coupons per day and requires 4.8 minutes for each claim – meaning that he or she spends 70 minutes processing discount programs per day. Staff juggle both traditional insurance billing and discount program processing, often in separate systems.

Yet discount programs present a challenge to retailers beyond workflow. The revenue received from the transaction varies by store, drug and discount program. In some instances, filling a prescription for a customer with a discount card not only costs time, but it may also actually cost the store money.

Expectations and Inventories

Grocers also face different consumer expectations than chain drug stores. Drug store customers expect extensive health-related products and specialized health care services. Grocers now must adapt by increasing product selection, improving medication synchronization programs, expanding pharmacy hours and adjusting inventory management to meet the increased demand.

These challenges should not overshadow the opportunity this trend presents for an industry-facing margin compression and other competitive pressures. If grocers can delight the new pharmacy customers, they are likely to keep them. Grocers and large consumer goods retailers already filled an average of 91,000 prescriptions per pharmacy per year. And, unlike chain drug stores, customer satisfaction with grocery pharmacies is high, with only 3% of customers saying that they’re planning to switch over the next year.

Seize the Opportunity

To seize this moment, grocers should consider at least two steps. First, implement technologies that improve efficiency behind the counter and enhance the customer experience. Since helping customers with discount cards is a persistent challenge, this is a good place to start. Technology exists today that instantaneously compares multiple cash card programs and identifies the lowest-cost option for the customer while also protecting the store from financial losses. This is good for the customer, the people in line and the store.

Second, with information about each shopper’s medication history, grocers can make recommendations to customers based on their health conditions and guide them to products throughout the store that address their medical and nutritional needs. This can even be done without involving the pharmacy staff. Grocery chains, hospitals and health plans have begun providing customers and patients with branded, personalized wellness apps that track the user’s medication usage, provide appropriate menu and grocery list recommendations, and message shoppers while they’re in the store.

This has many benefits, such as helping customers manage their health and, in doing so, increasing customer satisfaction, retention and loyalty. It also increases foot traffic and shopping basket size.

Not to Be Taken for Granted

Pharmacy traffic is growing and competitors are shrinking, but grocers shouldn’t take this shift for granted. After years of seesawing utilization of home delivery, Amazon and mail-order pharmacies are gaining traction and market share.  

But with technology that improves customer flow, protects margins and delivers savings, and a strategy for connecting pharmacy and front-of-store sales, the volume can be manageable and profitable – and these customers could be here to stay.