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Forging ahead

Sure there are obstacles, but every problem has a solution, right?

If you look at the numbers, retail pharmacy faces strong headwinds and obstacles to overcome: an over-saturated retail footprint, labor shortages, inflation, front-end competition, PBM pressures. What’s more, retail pharmacies of all sizes are experiencing most of the
same issues.

Bill Ladwig, SVP of pharmacy at Lewis Drug in Sioux Falls, S.D., told our reporter that the situation is unprecedented. “The big boys have always been strong while many regionals were wiped out,” he said. “But when you see problems across the whole front, it’s apparent there’s a critical concern.”

These challenges may seem insurmountable, but surely there are solutions. Our cover story this month takes an issue-by-issue look at the challenges the industry faces and what observers think retailers could do to solve them. Our reporter, for example, found that retailers are exploring cost-plus pricing models, supporting PBM-regulating legislation, seeking expanded scope of practice for pharmacists and other ideas.

The bottom line is that solutions to these challenges will not be simple and will require strategic thinking, similar to the one some retailers are considering now: shifting the front end.

About two decades ago, drugstores’ front ends were enlarged to offset declining pharmacy margins, but today, e-commerce has redefined convenience, making some categories less important and harder to compete with e-commerce giants. “The entire model was built around convenience and being there and everywhere,” said Matt Hamory, partner and managing director at AlixPartners.

“There was a period when this made sense. But customers don’t think of convenience that way anymore. I open my phone and with two taps can get something delivered.” But there is a shift starting to happen. “You used to see everything from summer pool floaties to cosmetics,” Brian Nightengale, EVP and president of healthcare solutions at Inmar Intelligence, told us.

“Retailers are shifting the front end from convenience to being a health and wellness destination, bringing in clinics and health and wellness products. We’ll see more of that.” 

The industry will need to consider more ideas like this one if it has any chance of survival. 

More Blog Posts in This Series

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