Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- Overview
- The role of drug stores
- What you want to know
- What we see
- The role of technology
- What you want to know
- What we see
- The beauty opportunity
- What you want to know
- What we see
- The food and drink opportunity
- What you want to know
- What we see
- What it means
The Market – What You Need to Know
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- Pace of sales growth slows
- Prescriptions are big business
- Aging population presents an opportunity and a threat
- Americans’ efforts to prioritize their health and wellness is a plus for drug stores
- Consolidation drives change
Market Size and Forecast
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- Positive market conditions fueling expected growth
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- Figure 1: Total US drug store revenues and fan chart forecast, at current prices, 2013-23
- Figure 2: Total US drug store revenues and forecast, at current prices, 2013-23
Market Breakdown
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- Growth occurring in the largest sectors: prescriptions and health/beauty
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- Figure 3: Share of total US drug store revenues, by segment, at current prices, 2018
- Figure 4: Total US drug store revenues and forecast, by segment, at current prices, 2013-23
Market Perspective
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- Mergers and acquisitions only make the big guys bigger
- CVS Health and Aetna
- Amazon steps into the healthcare industry
- Acquisition of PillPack
- Partnership with Berkshire Hathaway and JPMorgan Chase
- Launch of personal medical devices
- Walgreens and Rite Aid
Market Factors
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- An aging population presents opportunities
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- Figure 5: Number of households, by age of householder, 2008 and 2018
- Holistic health and wellness approaches become the norm
- Obesity gets worse
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- Figure 6: Prevalence of obesity among US adults aged 20 and over, 2008-18*
- Number of uninsured Americans cut in half
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- Figure 7: Prevalence of Americans who are uninsured,* 2005-17
- Health care costs rise faster than average incomes
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- Figure 8: Median household income, by race and Hispanic origin of householder, in inflation-adjusted dollars, 2007-17
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- Figure 9: Household income distribution, shares by age of householder, 2017
Key Players – What You Need to Know
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- Drug stores look to add convenience and accessibility
- Rite Aid is feeling very exposed
- Exploring new partnerships and targeting opportunities
What’s Happening?
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- Evolution is underway as drug stores test new store formats
- Walgreens
- CVS
- Membership programs could help to mitigate channel leakage
- Walgreens
- CVS
- Drug stores are trialing delivery programs
- Walgreens
- CVS
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- Figure 10: CVS direct mail featuring delivery services, June 2018
What’s Struggling?
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- Rite Aid needs a turnaround
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- Figure 11: Rite Aid stock price, February 2019
What’s Next?
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- More to smile about: dentistry comes to drug stores
- Catering to seniors
- Walmart and Anthem
- Amazon and AARP
- Incentives for wearables
- Walgreens and Microsoft team up to tackle the future of healthcare
- Increasing employee productivity through digital devices
The Consumer – What You Need to Know
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- Drug stores are losing shoppers
- Men are a prime target
- Nearly half of consumers are multichannel shoppers
- More than a place for healthcare and medicine
- Battle for beauty share heats up
- Good place for quick fill-in groceries
Retailers Shopped
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- Key highlights
- Leading drug stores sandwiched in the middle
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- Figure 12: Retailers shopped – Inside versus outside channel (net), December 2018
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- Figure 13: Retailers shopped, December 2018
- Mass merchandisers and Amazon garnering younger consumers
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- Figure 14: Retailers shopped, by age, December 2018
- Price wars, rather than income level, dictate where consumers shop
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- Figure 15: Retailers shopped, by household income, December 2018
- While grocery stores are gaining overall, they are likely losing share of multicultural consumers to Walmart
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- Figure 16: Retailers shopped, by race and Hispanic origin, December 2018
- Limited options for rural consumers
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- Figure 17: Retailers shopped, by geographic area, December 2018
Items Purchased by Channel
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- Key highlights
- Opportunity to create stronger associations with drug stores and nonmedical items
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- Figure 18: Items purchased by channel – Select categories (net), December 2018
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- Figure 19: Items purchased, by channel, December 2018
- Opportunity to increase basket size or number of trips
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- Figure 20: Repertoire groups of items purchased by channel – Drug store, December 2018
- Men are a prime target
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- Figure 21: Repertoire groups of items purchased by channel – Drug store, by gender and age, December 2018
- Figure 22: Items purchased by channel – Drug store, by gender and age, December 2018
Method of Shopping
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- Key highlights
- In-store shopping preferred
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- Figure 23: Method of shopping, December 2018
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- Figure 24: Retailers shopped, by method of shopping, December 2018
- Enhancing the in-store experience
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- Figure 25: Method of shopping, by generation, December 2018
- Catering to multichannel shoppers
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- Figure 26: Attitudes toward drug store websites, by generation, December 2018
Attitudes toward Shopping at Drug Stores
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- Key highlights
- Drug stores catching up from an omnichannel perspective
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- Figure 27: Attitudes toward drug stores’ digital capabilities, by generation, December 2018
- Parents are looking for little conveniences
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- Figure 28: Attitudes toward drug stores’ digital capabilities, by parental status, December 2018
- Retail clinics not seen as comparable to one’s own physician
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- Figure 29: Attitudes toward retail clinics and in-store seminars, gender and age, December 2018
- Apathy may impede drug stores’ ability to change perceptions
Drug Store Beauty Opportunity
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- Key highlights
- The landscape
- Drug stores should go after grocery stores for share of beauty
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- Figure 30: Total US retail sales growth of beauty products, by channel, at current prices, 2013-18
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- Figure 31: Top five retailers shopped for beauty and personal care products, June 2018
- The consumer
- Women 18-34 should be a targeting focus
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- Figure 32: Drug store beauty shoppers, by gender and age, December 2018
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- Figure 33: Willingness to try new beauty products, by channel, February 2018
- Natural, multipurpose, and clean beauty are trending topics
- Results-oriented approach to beauty buying
Beauty Attributes by Retailer
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- Key highlights
- Price and product selection important attributes, but drug stores fall short comparatively
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- Figure 34: Beauty attributes by retailer, December 2018
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- Figure 35: Correspondence analysis – Symmetrical map – Beauty scorecard, December 2018
- Drug stores more likely to be associated with inclusive product lines among multicultural beauty shoppers
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- Figure 36: Product variety attributes by retailer, by race and Hispanic origin, December 2018
- Retailer-specific highlights
- CVS key beauty initiatives
- Walgreens key beauty initiatives
- Rite Aid key beauty initiatives
- Walmart key beauty initiatives
- Target key beauty initiatives
- Amazon key beauty initiatives
Desired Beauty Offerings at Drug Stores
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- Key highlights
- Samples, selection, and services play to the masses
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- Figure 37: Desired beauty offerings at drug stores, December 2018
- Females 18-34 and moms core targets for any new drug store beauty initiatives
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- Figure 38: Desired beauty offerings at drug stores, by age of women and parental status, December 2018
- Convenience-oriented services can draw in more men
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- Figure 39: Desired beauty offerings at drug stores, by men 18-44, December 2018
- Personalized services appeal to non-Hispanic Black beauty consumers
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- Figure 40: Desired beauty offerings at drug stores, by race and Hispanic origin, December 2018
Drug Store Food and Drink Opportunity
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- Key highlights
- The landscape
- A secondary consideration, not a destination
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- Figure 41: Purchase incidence by channel – Any shopping (net), April 2018
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- Figure 42: Channels shopped by item, April 2018
- The consumer
- More quick fill-in grocery trips needed
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- Figure 43: Attitude toward drug stores as a grocery option, by age, December 2018
- Price, convenience, and fresh products influence where people shop
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- Figure 44: Top five channel drivers, September 2018
- Addition of healthy foods aids in perception changes
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- Figure 45: Attitudes around drug stores’ healthy food assortments, by gender and age, December 2018
- Catering to organic shoppers and those with special diets
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- Figure 46: Attitudes toward food/drink shopping at drug stores, by gender and age, December 2018
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Fan chart forecast
- Consumer survey data
- Repertoire analysis methodology
- Correspondence analysis methodology
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – The Market
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- Figure 47: Total US drug store revenues and forecast, at inflation-adjusted prices, 2013-23
- Figure 48: Total US drug store revenues, by segment, at current prices, 2016 and 2018
- Figure 49: Drug store sales and forecast of health, beauty, and personal care products, at current prices, 2013-23
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- Figure 50: Drug store sales and forecast of health, beauty, and personal care products, at inflation-adjusted prices, 2013-23
- Figure 51: Drug store sales and forecast of food and beverages, at current prices, 2013-23
- Figure 52: Drug store sales and forecast of food and beverages, at inflation-adjusted prices, 2013-23
- Figure 53: Drug store sales and forecast of general merchandise, at current prices, 2013-23
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- Figure 54: Drug store sales and forecast of general merchandise, at inflation-adjusted prices, 2013-23
- Figure 55: Drug store sales and forecast of other* products, at current prices, 2013-23
- Figure 56: Drug store sales and forecast of other* products, at inflation-adjusted prices, 2013-23
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- Figure 57: Population by age, 2013-23
- Figure 58: Americans who are uninsured, by age, 2016-17
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Appendix – The Consumer
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- Figure 59: Drug stores shopped – Past four weeks, August 2013-18
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- Figure 60: Drug store shopping frequency – Past four weeks, July 2017-August 2018
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- Figure 61: Retailers shopped by retailers shopped – Part one, December 2018
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- Figure 62: Retailers shopped by retailers shopped – Part two, December 2018
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- Figure 63: Interest in beauty trends, by age, February 2018
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- Figure 64: Interest in beauty trends, February 2018
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