Where do we go from here? The industry weighs in

10/15/2020

It’s crystal ball time. 

As the mass retail world gears up for the crucial fourth quarter, while still looking ahead at the COVID-19 pandemic and the damage it has caused the economy and the industry, Drug Store News has reached out to a number of key industry executives to get their feedback on the state of the industry. 

There is little doubt that the immediate future holds many concerns for retailers and suppliers in the industry. Still, many industry executives are optimistic that the industry will rebuild over time, and even the next few months can be strong. 

“It is a very uneasy time for the consumer,” said Joseph Juliano, vice president of marketing at Prestige Brands. “Consumers are concerned about their health, their family and economic future. Brands need to follow consumers and address their needs. In addition, to a portion of consumers moving to e-commerce, many are looking for self-care solutions. With the ever-changing consumer, the OTC category needs to continue to evolve and bring health and wellness solutions.”

Here is what a number of other key industry officials had to say about the industry over the near-term and longer, and what they are doing to help retailers build for the future:

Gene Cavacini senior vice president and COO, McKesson
As the healthcare system responds to a global pandemic, McKesson continues to focus on meeting the needs of our customers in this unprecedented and rapidly changing environment. Our vision is unwavering — to improve care in every setting. And with our 185-year legacy of serving patients, we have the expertise and knowledge across the healthcare supply chain to best serve front-line workers and the patients that depend on us.  

We’re proud to expand our existing partnership with the Centers for Disease Control and Prevention to support the U.S. government’s Operation Warp Speed team as a centralized distributor of future COVID-19 vaccines and ancillary supplies needed to administer vaccinations. It’s a meaningful way our company is supporting public health in the United States. 

In addition to future vaccine distribution, we continue to monitor the supply chain closely and we are actively working with manufacturers, industry partners and government agencies to anticipate shortages, and acting swiftly to address supply continuity. We also are leveraging data, analytics and insights to not only respond but better predict demand. We’re working hard to have the right product availability and selection where and when it’s needed most. 

I’m also deeply proud of the McKesson teammates on the front lines as an essential part of delivering health care. We have operated our facilities 24/7 throughout the pandemic and have made significant investments to continue operating without interruption. We understand the critical nature of the global healthcare supply chain, and we have dedicated the teams and resources necessary to help healthcare providers and first responders provide the highest quality care to those in need.  

As the nation experiences new spikes, and we anticipate a formidable flu season with the added complication of COVID-19, the need for COVID-19 testing is being answered by front-line healthcare workers like pharmacists. Health Mart is offering free COVID-19 test collection at select pharmacies across the United States through a partnership with the Department of Health and Human Services and eTrueNorth. Health Mart is providing these testing options to rural and underserved populations. Currently, more than 150 Health Mart pharmacies are offering a testing solution. Community pharmacies already play an important role as a local healthcare provider, and we expect this role will expand as a vaccine and treatments for COVID-19 are discovered. 

Whether it’s future vaccine distribution, caring for our customers or helping patients through testing programs, we know the work we do is essential to health care and we care deeply about doing this work well.

Brian Owens senior vice president, Kantar
Inclusion and diversity have evolved in the last few years from a moral responsibility to a business imperative. Kantar Purpose 2020 study highlighted that over a period of 12 years, the brands with high perceived positive impact have a brand value growth of 175% versus 86% for medium positive impact and 70% for low positive impact. Kantar Inclusion and Diversity Index found that one percentage increase in racial diversity in an organization can correlate to a nine percentage increase in net sales. This means that all winning brands and retailers must re-examine their purpose if they look to attract support and grow with Black shoppers. 

Kantar Futures 2019 Monitor estimated the purchase power of U.S Black consumers at $1.4 trillion dollars, projected to grow to $1.8 trillion by 2024. Yet, brands continue to underinvest in Black consumer needs, even as the demographic group’s purchasing power grows. Furthermore, according to a 2019 Nielsen Diversity Intelligence Series survey, Black consumer-focused media spend declined from 2017 to 2018, even as these Black consumers maintained high levels of engagement. This means that brands aren’t investing enough at retail to connect back to the lives of Black shoppers. Converting Black shoppers is not only a purposeful opportunity, it is also a financial gain.

Below are eight ways to better connect with Black shoppers or other communities of color at retail: 

  • Elevate your organization’s Black consumer and shopper insights, foresight and intelligence;
  • Reprioritize brand portfolios to meet the new Black consumer needs states
  • Re-examine your brand’s value proposition to better support Black values, not just their skin color;
  • Make disruptive media investments focused on advocacy, hygiene and maximizing spending;
  • Invest in new research that embraces and calls out regional differences across Black communities;
  • Invest more in Black shopper mobile and population health data for real-time responsiveness;
  • Remove all promotion redemption restrictions to make it easier for older Black shoppers to shop; and
  • Remake marketing/sales organizations to depend more on diverse thinking and backgrounds.

Monica Turner. president of sales, North America, Procter & Gamble
Our industry is constantly disrupted but was changed in unprecedented ways in the past six months. The role of business in society has forever changed, and P&G stepped up and stepped forward as a force for good and a force for growth.

 At P&G, we established three clear priorities. First, protect the safety of our people. Second, serve people with our essential health, hygiene and cleaning products. And third, however possible, support communities in need.

 Even more so during times of uncertainty, we need to double down on our strategic choices. 

 At P&G, we are focused on our portfolio in categories where performance drives brand choice. We continue to strengthen our innovation across price tiers, with the aim of delivering noticeably superior performance and superior value. We want to ensure that our consumers are able to purchase their trusted brands at the right pack sizes and right price points.

We also believe in “constructive disruption” to drive growth and create value. It is our long-term strategy, which includes lean innovation processes to improve speed to market and success rates of new products; disrupting the brand-building ecosystem to enable one-to-one mass marketing; and leveraging digitization and data analytics to drive greater efficiency and effectiveness of our operations. During the pandemic, we had to innovate our operations to respond to a heightened need for health, hygiene and cleaning products. An efficient, agile and resilient supply chain meant being able to reach more consumers at a time when they needed these brands the most.

Winning in this highly competitive industry requires the willingness to adapt and the ability to create the future. And in this current environment, agility and a mindset of constructive disruption are even more important to serve consumers and be a force for good and a force for growth in our communities.

Joann Marks, CEO, CosPro Marketing
The beauty industry traditionally bounces back from recessionary periods. The “Lipstick Factor” is holding true in the case of the current pandemic, although it might be better to call it the “Mascara Theory” because, while lip sales are currently down (likely because of masking), mascara sales are booming. We’ve also seen great increases in nail, skin and hair color/care — anything that has a DIY theme. 

As our white paper on COVID-19 reports, what brands should do during the pandemic is reach out to consumers on a more emotional basis. Some 83% of consumers surveyed are more likely to support brands that help others during hard times. They will remember these companies and develop lasting loyalty to them.

The challenge right now is not being able to interact with customers by touch and testing, and I love how creative many brands have become in response. We have found ways to do no-touch sampling, such as our tutorial coupon book, and added tools to our Beauty Advisor interaction kits that help customers find their shades, using shade charts, online color matching and nail wheels. We will get back to in-store events in 2021-22, but brands need to plan on continuing safety precautions for many months to come.

We’re seeing the rapid evolution of a new normal, where social distancing mandates are redefining how businesses interact on the human level. Large-scale telecommuting is here to stay, as many Fortune 500 companies have seen that they can do business with lower overhead. COVID-19 is also transforming how people shop. Before, women mostly shopped on their way home from work; now they may opt to go mid-day when traffic is lighter. Working from home also requires less makeup — except for Zoom days — so how do we boost color cosmetic sales? It’s going to require even more demonstration and sampling to keep customers engaged.  

COVID-19 is proving to be a learning experience for our industry, spurring innovative new ways to interact with customers and a more personal approach to sales. These shifts will remain long after the pandemic has passed. 

Greg Farrar, CEO, ECRM
The pandemic has caused an inflection point in the industry, speeding up the adoption of tools that keep us connected during a time when in-person options are severely limited. This includes tools for more effectively connecting with supply chain partners, tools for connecting with consumers and tools for connecting with each other. Because, the fact of the matter is, while safety is paramount and restrictions on travel and in-person gatherings are necessary for everyone’s protection, business must continue moving forward. 

Virtual meetings, which previously took a back seat to meeting in person, have become a critical part of doing business, and consequently plans for adopting virtual tools that were further on the horizon have been greatly accelerated. ECRM is a case in point. We had approximately 100 in-person Efficient Program Planning Sessions, or EPPS, planned for 2020; and all those scheduled for March and later have been successfully converted to virtual. And much like any digital technology, virtual is undergoing rapid and constant improvement. Indeed, the ECRM Connect Platform of today already has evolved with new features that greatly enhance the quality of the experience since we launched it in May. Consequently, even once the pandemic passes, virtual face-to-face meetings will continue to be a part of our service offerings.

As an industry, we are only in the early stages of using virtual tools, yet retailers and suppliers alike already have recognized their effectiveness, vast efficiencies and expense-savings they offer. The key to their continued successful adoption will be the willingness to fully embrace the technology, and to continually seek out the best ways to leverage it.

Sure, we’re all looking forward to being able to meet in person, however we’re still facing an uncertain future when it comes to the pandemic. But one thing is certain: Regardless of how soon we can meet in person, virtual tech is here to stay. 

Todd LaRue, vice president of sales, Bausch + Lomb Consumer Healthcare, and chair, CHPA’s Retail Liaison Committee

Americans are in the process of reappraising what’s important to them, alongside a mass retail industry that will need to adjust to shifting values in order to weather the storm ahead. Mass retailers will now require a greater focus on client engagement to reconnect with customers in addition to a heightened need for stakeholder listening. We’ve been working to ensure our communications and actions are aligned with the growing sense of control and empowerment that customers are currently seeking in these difficult times.

With more than 20 million Americans unemployed, the public also will expect mass retailers to conduct themselves with an appreciation of this new economic reality. We already are seeing consumers putting a premium on retailers that focus on problem-solving and community support. Consumers will be interested to see how the entire sector demonstrates that it is on their side. Stores, distribution facilities and supplier networks are faced with significant challenges given today’s demand, so it’s essential that retailers reengineer everything from procurement to customer service in addition to redeploying some products and resources to better support online orders.

 

Doug Hoey, CEO, National Community Pharmacists Association
With much of the world thrown into chaos in recent months, community pharmacy has proven, yet again, that it has a steady hand. That it is essential to the health of its community — accessible and agile every day, all the time, in crisis or not.

Community pharmacists have been doing their part and the National Community Pharmacists Association is ardently advocating to position community pharmacists to play a major role by administering COVID-19 vaccines in the near future. Now, it’s time for the politicians in Washington to do their part and help ensure that the neighborhood pharmacy safety net can serve their communities during the pandemic and beyond.

NCPA’s Essential campaign is aimed at making sure independent pharmacy is represented in future coronavirus relief packages. We’re advocating for five pandemic-related measures, at a minimum, to protect essential businesses, in addition to the urgent need for critical pharmacy direct and remuneration reform:

Liability protections for small businesses that operated in good faith and followed CDC guidelines;

Improvements to the Paycheck Protection Program, allowing businesses that received PPP loans to deduct eligible expenses from their taxes and qualify for the Employee Retention tax credit;

Recognition of pharmacists as healthcare providers, so they can be compensated for services they provide, including administering coronavirus tests;

Federally subsidized hazard pay for front-line workers; and

Tax credits to offset increased expenses on PPE and sanitation products.

Independent pharmacies have always played an integral part in local communities. In 2020, we’ve put on our masks and PPE and demonstrated that our businesses and skills are essential components of everyday life. Pats on the back are nice, but the essential relief and payment model reforms they’ve earned and deserve are needed for these essential healthcare providers. NCPA will keep pushing, and we hope you will too.

Terry Thomas, executive vice president and COO, Unilever USA
If 2020 has taught us anything, it is that we must all remain flexible. This rings true across all aspects of our industry and business. With the rapid change in shopping behaviors and lifestyle trends driven by the fear of the unknown, we must adapt quickly to not only mitigate risk, but more importantly, build trust with consumers and serve people and our planet in sustainable ways.

In times like these, people are not only seeking safe and convenient shopping environments, but something more innate — a sense of security. The uptick in health and hygiene products will not subside, but more likely shift to more natural, “better for you and better for the environment” clean living solutions as people settle into a new normal, just as they have with at-home cooking and self-care routines. This also means we must adapt to serve consumers with robust omnichannel options, including buy in store, pick up online and home delivery. For those financially constrained and seeking financial security right now amidst layoffs and an economic downturn, we must reimagine our definitions of and how we deliver value to different people.

This flexibility mantra has not only pushed us to address the needs of the shopper, but also of the communities in which they live. From supporting our own employees in personalized ways and helping tackle the root causes of social injustice to playing a prominent role in ensuring the essential needs of the most vulnerable and directly impacted are met. We must continue to positively impact society as the full implications on education, mental health and the economic crisis are yet to be fully understood.

In short, now more than ever, we have to think beyond the bottom line to address the immediate needs of today, while leading change now for a more sustainable future.

Stephen J. Ubl, president and CEO, Pharmaceutical Research and Manufacturers of America 
The biopharmaceutical industry is fighting COVID-19 through testing, repurposing existing medicines, and developing new medicines and vaccines. We are well positioned to respond thanks to our experience with similar diseases, investment in key technologies, ability to manufacture and distribute treatments and vaccines at scale, and our market-based system in the United States. 

But one area where we have an opportunity to better serve patients is clinical trials. To that end, our companies have collaborated in new ways to respond to COVID-19, and partnerships that typically take months to plan are now coming together in a matter of weeks. These efforts can reduce a vaccine timeline, save resources and, possibly, save lives.

Our work to find a vaccine is moving quickly, but we can’t wait until vaccines are in hand to build trust with the public. Historic wrongs and systemic challenges often keep Black and brown communities from participating in clinical trials that provide earlier access to potentially lifesaving medicines and high-quality care. We need to work together with physicians and other stakeholders to encourage patients who represent the entire diverse U.S. population to participate in clinical trials. This is critical, not only for COVID-19 trials, but also for diabetes, congestive heart failure and other diseases that disproportionately affect diverse populations. 

We also need to improve patient access and affordability to treatments and vaccines, while avoiding harmful policies that create barriers to innovation. I believe that by working together, we can close the gaps in health care and improve patient outcomes.

Brian Sullivan, senior systems sales manager for USA and Canada healthcare
solutions, KNAPP

When COVID-19 became a reality in North America, order volumes shot up exponentially. Customers with 30-day scripts suddenly switched to 90-day refills by mail. In-store behavior changed virtually overnight as customers who traditionally enjoyed a personal interaction with their pharmacist were suddenly ordering online and picking up at off-hours to avoid crowds. The digital touchless store went from being a planning consideration to an overnight imperative. 

KNAPP works with its customers in this new reality in several ways. First, we offer scalable systems designed to address production surges — and drops. Retailers’ first reaction was echoing the same chorus. “We never want to be in this position again.”

Projects that were planned for a five-year horizon have been accelerated, with expectations for an operational solution cut in half.  With added pressure on labor, touchless solutions and the need for more automation at an all-time high, we are partnering with clients to ensure that healthcare retailers can profitably meet their customers’ new and changing requirements. 

KNAPP provides the most automated solutions available for central fill, mail, long-term care and specialty pharmacies. Using such modular sub-systems as our ATD high-speed pill dispensers, KNAPP-Store automated storage and retrieval systems, and “Covariant AI” — artificial intelligence and cloud-based applications working seamlessly with our Pick-It-Easy Robots — enable KNAPP’s customers to surge up and down with changing customer demand.

We also offer digital and touchless retail stores. KNAPP’s retail customers have created pharmacy micro-fulfillment centers, or MFCs, using our Apostore in-store automated systems. Combined with our digital Aposcreens for ordering and Apostore 24/7 terminals for round-the-clock order pickup, our retail pharmacies’ customers are able to pick up orders in off-hours with no human interaction required. 

At the same time, these stores provide automated hub and spoke solutions, servicing multiple neighboring stores in a highly productive and scalable cluster. Customer flexibility can be increased significantly, while our retail partners reduce their costs and can deliver added products and services, as well as increase their revenues. 

Jason Mitchell, co-founder and CEO, Probulin and HempFusion
It’s a challenging time, but an interesting one for companies like ours that make probiotics and CBD hemp extracts.  

Right now, immunity is king. As the connection between gut health and immunity becomes more known, consumers’ understanding of probiotics also have become more sophisticated.  They’ve learned CFU count isn’t nearly as important as a delivery system that allows probiotics to survive their journey to the gut — and they want products that deliver results. Our unique, scientifically studied delivery system, MAKTrek 3-D, helped Probulin become the fastest-growing probiotics brand in the natural channel. 

The most unique opportunity, of course, is CBD. Continuing lack of clarity on CBD supplements by the FDA has kept most drug stores’ fingers on the pause button, and countless states have now propagated their own laws. This makes it difficult for larger retailers to sell CBD, and allows less reputable brands to flourish. 

That said, as we rapidly approach the end of 2020, there are hints of both enforcement discretion by the FDA and bipartisan legislation in the works. 

Fortunately, we’ve always been about knowledge and compliance. Our CMO serves as president of the U.S. Hemp Roundtable, the industry’s leading legislative organization. We’re participating in the largest human observational liver and reproductive toxicology study ever done on CBD. We’ve put significant resources into testing and documenting the safety and consistency of our products, partnering with our exclusive supplier on Self GRAS Affirmation — including NOAEL, or No Observed Adverse Effect Limit — for all ingestible CBD products, as well as testing and NOAEL for all topical CBD products. 

And the demand for CBD grows. In SingleCare’s 2020 CBD survey, 33% of Americans said they’ve used CBD — 64% of them for pain, 49% for anxiety and 42% for help with sleep. So, we introduced a line of OTC drug-registered topicals for relief from pain, eczema and acne. We also offer CBD supplements with partner ingredients for sleep, energy and stress. 

Looking forward, one thing feels clear: Neither probiotics nor CBD are going away; they’re only getting started. And we’re ready for it.

Kristen Abreu, vice president, customer business development, drug, Crossmark
When the clock struck midnight on Jan. 1, 2020, did your New Year’s resolutions include stocking up on toilet paper and tuna fish? Probably not. Who could have predicted that a few short months into the year, disinfecting wipes would become a status symbol or that buying basics like hand soap and pasta would require queuing up in long lines? Or that many shoppers would be afraid to even enter a store? The retail landscape certainly has changed.

Retailers and CPG companies that quickly pivot to help their customers meet this time will be rewarded with shopper loyalty long into the future. (Easier said than done.)

Take disinfecting items. Typically, hand soap, hand sanitizer, wipes and bleach are managed by different category managers and merchandised separately in neat 4-ft. sections. But today’s shoppers care more about getting all of their disinfecting needs in one quick trip — and they don’t care who owns the category P&L. They resent having to walk three additional aisles to find masks after already locating soap. We must break down previous merchandising barriers to meet these evolved needs.

Think about internal processes: go-to-market planning, strategy sessions, category approvals, SOPs and the like. These processes worked with six-month lead times, but they’re useless when action is demanded now. The historical syndicated sales data we rely on depicts consumer behaviors that no longer exist. Are your supply chains that were based on full truckloads still the right model, if shelves are now empty? Those previously “set in stone” reset, revision and new item launch schedules require an urgent update. And decision-makers must be empowered to make choices based on these new realities.

Finally, consider the significantly changed definition of what it means to care for your friends and family as a host. No outdoor, socially-distanced gathering is prepared without complete disinfection of surfaces prior to the event. And hand sanitizer must be offered prominently at any backyard barbecue, right beside single-serve beverages. Masks for guests are now as important as those single-serve snacks. So ask yourself: When you set your Labor Day displays, did you include these new necessities, along with your go-to paper plates and condiments?

Our industry has always thrived when we anticipate and meet shopper demands. Today’s climate requires new thinking, evolved norms and even broader flexibility. But those who are up to the challenge can continue to thrive into the future.

Lisa Badgley, senior vice president, pharmacy and retail operations, Walgreens
Consumer behavior and expectations are rapidly changing throughout this pandemic. Driven by increasing unemployment rates and economic uncertainty, as well as the desire for increased safety and convenience, consumers are more focused on affordable services and products, community care and digital solutions. And we anticipate many of these behaviors are here to stay as consumers adopt new technology and services that make it easier and more convenient to get the products and services they need.

Walgreens anticipated many of these changes well before the pandemic and had a strong foundation from which to accelerate innovative solutions. For instance, customers are asking for delivery and curbside pick-up options more than ever before as another measure to stay safe during the pandemic. At Walgreens, we already had several partnerships and pilots in place with companies like FedEx and DoorDash so we were able to rapidly expand the availability of these services to meet increased demand.

During the pandemic, remote access to pharmacists and healthcare providers has been critical to the ongoing health of our communities. Through our digital solutions, like pharmacist chat and Walgreens Find Care, we have been able to continue providing trusted pharmacy support while connecting patients to even more healthcare providers, all from the comfort and safety of their home.

As consumers emerge from the pandemic, they’ll continue to rely on these innovations and Walgreens is well prepared to provide our customers services, products and care when, where and how they need it.

X
This ad will auto-close in 10 seconds