Battling Amazon
In the wake of declining foot traffic and recent headlines that Walgreens has sold to a private equity firm, the dynamic drug channel could use a shot in the arm.
Data from NielsenIQ reports that drug stores experienced a 9.6% decline in sales in December 2024 and a 6.2% drop in January, year over year. What’s more, in 2024, the drug channel lost more than 100 million shopping occasions, driven largely by a shift toward competing outlets like Amazon.
As drug retailers rebuild traffic, let’s unpack potential strategies to boost business.
Cure what ails the drug store
In recent years, the channel has seen competition intensify from Amazon in key health and beauty categories. NielsenIQ data shows a significant drop in share of wallet, with Amazon earning nearly a quarter of shoppers’ share of wallet in the health and beauty categories over 52 weeks ending November 2024. Amazon gained three points during that span, whereas drug stores saw a slight decline and earned roughly 12% of the market.
Another issue facing the drug sector is a dynamic change in boomer shoppers. Historically, baby boomers have contributed the most dollars of any generation to the drug channel, but over the last two years, more than five million boomers have left the total market.
Those who are left are shifting their spend in health and beauty to Amazon, where boomer shoppers now spend more than 26% of their dollars. Categories like vitamins and supplements, hair care and adult incontinence are driving the largest increases at the online leader. Anti-theft measures like locked cabinets are also off-putting to shoppers, hindering in-store shopping, with 43% of surveyed consumers saying they’re less likely to return to stores because of them.
Bring excitement to the floor
Drug chains remain essential destinations for health, wellness and convenience, but to build more traffic, thee are changes to consider:
- Modernized in-store experiences. Consumers tend to view drug stores as purely transactional, a quick stop for prescriptions, but refreshing and vibrant layouts can revitalize the space. Partnering with new brands and adding new experiences like in-store beauty advisors remain a key opportunity to drive awareness that drug stores are shopping destinations.
- Compete on value. Margins are tight in drug stores, so companies need to be value-conscious without sacrificing margins. Private-label offerings can meet this need. Drug stores that present unique health, wellness and beauty products can become destination hubs, driving loyalty and growth.
- Be health and wellness ambassadors. Consumers trust pharmacists as health advisors. Experiences like immunizations, health screenings and chronic care management build shopper trust. Similarly, beyond OTC medications, drug stores can be the experts in offerings around mental well-being, sleep and active lifestyle products.
Change the perception of the chain
To drive traffic, drug stores must alter how consumers view the channel. Better delivery or pickup options broaden omnichannel reach, and standout beauty experiences attract more in-store shoppers. By embracing modern strategies, the channel can overcome challenges, increase relevance and secure long-term growth.
Jacqueline Flam is the senior vice president of beauty, drug & OTC for NielsenIQ.
