Drug loyalty programs drive frequent shopping trips and purchases

What this means: The lines continue to blur between retail sectors and channels, and for many consumers, retailers that offer more are beneficial. Drug stores in particular have evolved from very specific category experts to more broad-line retailers that can offer consumers a one-stop shop for daily needs. The channel has done an excellent job in promoting loyalty and personalized promotions for shoppers and expanding assortments to provide merchandise for quick trips and last minute purchases. For drug store shoppers, products within personal care, household needs and grocery are in their physical and digital carts as much as items from prescription medicines and pharmacy, the channel-leading categories, according to a recent study from the Acosta Group. With channel growth credited to consumers' focus on health and wellness during the pandemic, drug stores have continued to drive traffic. According to consumers, drug stores are favored over grocery stores, mass retailers and online for pharmacy and medical needs (64%), providing an easy, convenient experience (59%) and delivering a fast trip experience (53%), the Acosta Group reported. Brick-and-mortar shopping National drug store sales reached $53 billion by mid-February, reflecting the third consecutive year of growth, according to NielsenIQ in March. The top three drug chains, Walgreens, CVS and Rite Aid, contribute 87% of channel sales, with a total of more than 20,000 stores, according to Kantar. Physical stores account for a majority of sales in the drug store channel, and one in three shoppers live less than one mile from a drug store. Most also belong to the retailers' loyalty programs, with a smaller percentage actively using the digital app. “Overall, drug loyalty programs are highly accessed, can be a trip driver and purchase driver for featured/promoted products, and are a great way for retailers to stay engaged and connected to their shoppers,” Kathy Risch, Acosta Group’s senior vice president of consumer insights and trends, told Retail Leader Pro. Some data point about consumer loyalty for drug store loyalty: Most shoppers from each of the three key retailers belong to their store’s loyalty program: 88% of CVS shoppers, 83% of Walgreens consumers, 72% of Rite Aid customers. Of those who shop at an online drug retailer’s website, 17% cited that a main reason they do so was “for the retailer’s digital app, convenience, loyalty program, etc.” 79% of shoppers said that their drug store’s shopper loyalty program completely or somewhat meets their expectations and needs. According to the Acosta Group, three categories represent the leading in-store purchases: 71% pick up prescriptions. 70% shop the pharmacy area for non-prescription needs. 69% buy groceries, personal needs or other needs for themselves or their families, with candy, snacks and household items such as hair care, body care and paper products, as top buys. Drug store consumers are frequent shoppers, with 58% shopping drug stores two-to-three times monthly, the Acosta Group found. In the past year, one-third of younger shoppers increased their number of store trips. Signaling a continued focus on health and wellness, 33% of total drug store shoppers are also using in-store medical services more this year. While medical services and the pharmacy are the primary trip drivers, 66% of shoppers waiting on their prescriptions will leave the pharmacy area and venture into the center store to shop around. Key in-store benefits include: 57% of shoppers noted convenience. 51% noted good promotions and sales – though this was less important to Gen Z and males. 44% noted the ability to quickly shop for what they need. Drug shoppers thrive on promotions and getting the best prices at a small-format store that offers convenience of a quick trip, Risch said. Supporting data: Drug store shoppers said “good promotions” were the No. 2 reason they shop physical drug stores, which ranked after the top channel driver store location. When asked to compare all stores visited for personal/household needs, drug stores came in second only to traditional grocery (53%) as a channel shopped at for its good promotions. Drug shoppers are less attracted to shop this channel for its prices, with just 25% of shoppers citing “good everyday low prices” as a main reason they shop either physical or online drug stores. When asked to compare all stores visited for personal/household needs, drug ranks lowest vs. other channels with only 27% of shoppers saying they shop these stores specifically for “good everyday low prices.” 68% of shoppers say that their drug store’s shopper deals offered “completely” or “somewhat” meet their expectations and needs When asked open-ended questions on “Why is this your preferred retailer?” and “What drives you to shop at drug?” promotions and good deals are top mentions. Likewise, when asked “What could drug do better?” more promotions, lower everyday prices, and longer expirations on coupons were top mentions. Consumers said opportunities for improvement include adding more staff members, reducing out-of-stocks and improving the online ordering experience. Online drug store sales While 60% of drug store shoppers have used a drug channel online site, millennials and Gen Z shoppers are currently more likely to purchase on these sites than other generations, according to the Acosta Group. The leading online purchases: 61% of shoppers purchase groceries or other household items. 55% order prescriptions for pick-up or delivery. 49% shop the pharmacy area for other needs. These shoppers said that it was easy to shop at drug stores online, but only about half said that the online ordering process fully met their expectations. And while edited in-store selections were appreciated, online shopping provides an opportunity to introduce more new products, the Acosta Group said. Similar to in-store shoppers, drug store retailer’s online sites benefits include: 38% noted good promotions and sales. 30% named the convenience of the shopping experience. 30% said the ability to quickly shop for what they need. Growing the channel Moving forward, the Acosta Group study found that retailers will benefit from ensuring adequate staffing to maintain shoppers' preference for the channel's "quick trip" format. In addition, ensuring a broad assortment, especially across health and beauty care, and avoiding out-of-stocks will drive sales for non-pharmacy needs like grocery and personal care. Additionally, more can be done to leverage loyalty programs, digital apps and online shopping, encouraging shopper retention and engagement, and providing retailers' best customers the best promotions, the Acosta Group said. While the Acosta Group didn’t ask future importance in this study, its findings infer that impulse and quick-trip categories will remain important. As drug stores offer more health and beauty categories also are projected to grow as drug stores offer more products from this category than other channels along with more variety, more special items, more education on them, counselors in-store, etc. “Drug retailers would be wise to feature, reward, promote, etc. on these top-selling categories to keep them important,” Risch said. What's next: Drug stores and convenience stores are increasingly overlapping in assortments and purpose for consumers. Drug stores have done well in snack and beverage options and have even tested prepared foods that could be further explored. Driving higher e-commerce penetration is key for both sectors as well for these smaller, daily purchases.

Monthly
Subscription

TRIAL
SUBSCRIPTION

ANNUAL
Subscription

Monthly Subscription

TRIAL SUBSCRIPTION

ANNUAL Subscription

Monthly
Subscription

TRIAL
SUBSCRIPTION

ANNUAL
Subscription