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Drug Store Retailing - US - February 2018

"A combination of an aging population and favorable market factors is expected to result in positive growth for the drug store market. However, a number of issues, such as consumers’ low loyalty and desire for deals, combined with an increasingly competitive landscape will continue to pose challenges for traditional drug stores. They will need to evolve both the shopping experience and their image as healthcare destinations, in order to stand out from the competition and maintain shoppers’ trust and loyalty."

- Alexis DeSalva, Retail & Apparel Analyst

This report will look at the following areas:

  • Competition and online shopping play a role in driving trips outside the drug channel
  • Lack of awareness and skepticism deter most consumers from using healthcare clinics

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • The issues
            • Competition and online shopping play a role in driving trips outside the drug channel
              • Figure 1: Retailers shopped – Drug stores versus other retailers, November 2017
            • Lack of awareness and skepticism deter most consumers from using healthcare clinics
              • Figure 2: Retail clinics – Reasons for not visiting, November 2017
            • The opportunities
              • Store brands can help drug stores address price and loyalty issues
                • Figure 3: Attitudes toward drug store shopping, November 2017
              • Some shoppers turn to drug stores to manage health needs
                • Figure 4: Influencers to encourage more shopping, November 2017
              • What it means
              • The Market – What You Need to Know

                • Growth is expected, but challenges inside and outside the channel remain
                  • Health and wellness items are a source of growth
                    • Favorable market factors will likely benefit drug stores
                    • Market Size and Forecast

                      • Positive market conditions fueling expected growth
                        • Figure 5: Total US drug store revenues and fan chart forecast at current prices, 2012-22
                        • Figure 6: Total US drug store revenues and forecast, at current prices, 2012-22
                    • Market Breakdown

                      • Drug store growth driven by prescriptions and BPC items
                        • Figure 7: Total US drug store revenues and forecast, by segment, at current prices, 2012-22
                        • Figure 8: Total US retail sales of drug store retailing, by segment, at current prices, 2015 and 2017
                    • Market Perspective

                      • Competitive changes present future challenges for some retailers
                      • Market Factors

                        • Drug stores could reap the benefits of aging population growth
                          • Figure 9: Population by age, 2013-23
                        • Positive market factors could help consumers’ pricing sensitivity
                          • Figure 10: Consumer confidence and unemployment, 2000-December 2017
                      • Key Players – What You Need to Know

                        • Store brands help drug retailers stay competitive
                          • Drug stores are not capturing the most drug store related trips
                            • Opportunities to help shoppers help themselves
                            • What’s Working?

                              • Drug stores are solidifying their spots as health and wellness destinations
                                • Figure 11: Attitudes toward and influencers to encourage more drug store shopping, by select demographics, November 2017
                              • The price is right: store brands are appealing to deal-seeking shoppers
                              • What’s Struggling?

                                • The most shopped retailer is not a drug store
                                  • Figure 12: Retailers shopped – Drug stores versus other retailers, November 2017
                              • What’s Next?

                                • New drug store concepts innovate the market
                                  • Helping consumers combat opioid addictions
                                    • Figure 13: Attitudes toward drug store shopping, November 2017
                                • The Consumer – What You Need to Know

                                  • More consumers are shopping outside the drug channel, while online shopping is on the rise
                                    • Drug stores are a destination for health and wellness, even online
                                      • Drug stores should leverage loyalty programs and better pricing to drive traffic
                                        • Clinic visits positively influence store perception, but few utilize them
                                        • Retailers Shopped

                                          • Most consumers are doing more shopping outside the drug channel
                                            • Figure 14: Retailers shopped, November 2017
                                          • Women are likely fulfilling their drug store needs during other shopping trips
                                            • Figure 15: Retailers shopped, by select demographics, November 2017
                                          • Who’s shopping for drug store needs online?
                                            • Figure 16: Retailers shopped online, by gender and age, November 2017
                                          • Hispanic consumers shop around
                                            • Figure 17: Retailers shopped, by Hispanic origin, November 2017
                                        • Items Purchased

                                          • Medication still a top priority, but other health related categories are popular purchases
                                            • Figure 18: Items purchased, November 2017
                                          • Online is a destination for health and wellness items, especially for women
                                            • Figure 19: Items purchased – Online, by gender and age, November 2017
                                          • Single shoppers are buying more than just medicine
                                            • Figure 20: Items purchased, by gender and marital status, November 2017
                                          • Hispanic shoppers are fulfilling grocery needs on drug store trips
                                            • Figure 21: Items purchased, by Hispanic origin, November 2017
                                        • Attitudes Toward Drug Store Shopping

                                          • Lack of loyalty among drug store shoppers
                                            • Figure 22: Attitudes toward drug store shopping, November 2017
                                          • Parents likely choosing to shop other retailers for convenience and price
                                            • Figure 23: Attitudes toward drug store shopping, by parental status, November 2017
                                          • Using store brands to engage more shoppers
                                            • Figure 24: Attitudes toward drug store shopping, by select demographics, November 2017
                                            • Figure 25: CVS e-mail campaign, October 2017
                                            • Figure 26: Walgreens e-mail campaign, January 2018
                                        • Influencers to Encourage More Shopping

                                          • What consumers want: fewer coupons, more rewards
                                            • Figure 27: Influencers to encourage more shopping, November 2017
                                          • Parents are highly influenced by price and rewards
                                            • Figure 28: Walgreens e-mail campaign, January 2018
                                            • Figure 29: Influencers to encourage more shopping, by select demographics, November 2017
                                          • Men are seeking healthier options
                                            • Figure 30: Influencers to encourage more shopping, by select demographics, November 2017
                                          • Better delivery options could engage Black and Hispanic consumers
                                            • Figure 31: Influencers to encourage more shopping, by race and Hispanic origin, November 2017
                                        • Retail Clinics

                                          • Visitation is low, but drug stores see highest visitation
                                            • Figure 32: Retail clinics visited, November 2017
                                          • Young men most likely to visit, while older women appear less inclined
                                            • Figure 33: Retail clinics visited, by select demographics, November 2017
                                          • Reasons for not visiting retail clinics
                                            • Figure 34: Retail clinics – Reasons for not visiting, by select demographics, November 2017
                                          • Influence on store perception
                                            • Figure 35: Influence on store perception, November 2017
                                          • Older consumers likely to show favoritism to clinics, younger adults could increase frequency and spend
                                            • Figure 36: Influence on store perception, by age, November 2017
                                        • Appendix – Data Sources and Abbreviations

                                          • Data sources
                                            • Sales data
                                              • Fan chart forecast
                                                • Consumer survey data
                                                  • Direct marketing creative
                                                    • Turf analysis methodology
                                                      • Abbreviations and terms
                                                        • Abbreviations
                                                          • Terms
                                                          • Appendix – The Market

                                                              • Figure 37: Total US sales and forecast of market, at inflation-adjusted prices, 2012-22
                                                          • Appendix – The Consumer

                                                              • Figure 38: Retailers shopped, in-store versus online, November 2017
                                                              • Figure 39: Items purchased – In-store versus online, November 2017
                                                              • Figure 40: TURF analysis – Influencers to encourage more shopping, November 2017

                                                          Drug Store Retailing - US - February 2018

                                                          US $4,395.00 (Excl.Tax)