Survey: Consumers still cutting back, just not on gas, pharmacy or grocery

BY Michael Johnsen

TORONTO — That trip to the local restaurant is off the menu for consumers today, as are furnishings and electronics, Empathica reported on Thursday, citing its latest Consumer Insights Panel survey of more than 6,500 U.S. consumers. One-out-of-3 shoppers surveyed reported that the economy is still very much top of mind for them. But "need" items — gas, pharmacy and grocery — are not seeing declines in purchase intent compared to findings from this time the previous year, the report noted.

“The economy is affecting American consumers just as we expected with specific segments continuing to be challenged,” stated Gary Edwards, chief customer officer at Empathica. “The economy as a whole is still on the mend, and although we are starting to see an uptick in the job market, it doesn’t necessarily mean consumers are eager to spend. Uncertainty still remains among consumers with continued caution around spending on nonessentials.”

Survey results show that consumers are cutting the least on gas with nearly 9-out-of-10 consumers spending the same or more. When it comes to grocery, only 1-in-5 consumers reported a spending reduction versus 25% who expect to spend more. The survey also found that 1-in-4 consumers are cutting spending on pharmaceuticals, with 60% spending the same and 15% actually spending more.

Top segments where U.S. consumers are cutting spending include:

  1. Fine dining (71%);

  2. Furnishing (69%);

  3. Electronics (65%);

  4. Bars (64%);

  5. Airlines (62%);

  6. Hotels (61%);

  7. Clothing (58%);

  8. Department stores (55%);

  9. Casual dining (50%);

  10. Home improvement (49%);

  11. Convenience stores (45%);

  12. Quick service/fast food (42%);

  13. Pharmacy (25%);

  14. Supermarket/grocery (18%); and

  15. Gas stations (16%).

The survey revealed that the top two reasons consumers are cutting spending include concern about taking on more debt and having to pay more for basic housing and utility costs, so there is less money to spend on other things. In fact, consumers’ top three areas of concern were the economy (31%), debt (25%) and job security (19%).

Despite financial difficulty, consumers are more optimistic on their financial situation when looking ahead. Results show that 1-in-3 consumers think their financial situation will be much better or somewhat better. Nearly half of consumers between the ages of 18 and 24 years have a positive outlook on their financial situation. However, this optimism declines consistently as we look across each age range, with only 19% of those older than 65 years feeling the same as their grandchildren.

“It’s understandable that older generations are more reserved with their discretionary spending,” Edwards said. “They have experienced several bouts of economic instability throughout their lifetime, while younger generations are more optimistic, technologically savvy and interested in immediate satisfaction. These factors showcase why this generation is eager to spend more on goods that will enhance their quality of life in the short term without necessarily worrying about longer-term retirement needs.”


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Q&A: Northern focus


Retail pharmacy veteran Frank Scorpiniti officially assumed the role of CEO of Rexall Pharma Plus in February. Now that he’s settled in North of the Border, Scorpiniti talked with Drug Store News about his new role and his insights on the Canadian retail pharmacy market.

DSN: What are your key goals as CEO of Rexall Pharma Plus, and how would you describe your leadership style?

Frank Scorpiniti: We have just gone through a divestiture of what was our banner business, our Drug Trading business, and our franchise business. So, we are now a retail chain drug organization with 420 stores, and we find ourselves entering into the next phase of growth for the business. We are keenly focused on developing the strategy for the future and have a laser focus on driving the customer experience. As far as style, I’d share more what I value than style. I value, with the leadership team, transparency, collaboration and accountability for driving the customer experience and for driving teamwork across the organization.

DSN: How does the Canadian pharmacy market differ from the United States?

Scorpiniti: We are in an environment where everybody has healthcare coverage and yet, sometimes receiving health care in our landscape takes a little more time. So pharmacists … are on the front lines in communities for health care but even more so in Canada. Because our pharmacists are so accessible, and they have a slightly broader scope of practice in Canada than they have in the United States, [they] are doing more things like initiating therapy for minor ailments without collaborative practice agreements. They are extending prescriptions without orders from physicians in instances where appropriate. I see expanding the role of pharmacists as a trend that will continue. …
There is one area that’s quite different here in the Canadian landscape versus the United States, and that is that our payer base is very consolidated. … In the Canadian market, it is two [payers] at best, and, in many instances, the government sets the reimbursement rates not only for government-reimbursed prescriptions, but for the private [payer] as well. So when there’s any movement in reimbursement rates from the government, it goes across the entire revenue base and creates a much more significant impact at one time than what we dealt with in the U.S. model.

Canada is facing several uphill battles, such as a reduction in generic prescription reimbursement rates and drug system reform initiatives. How is the company overcoming those challenges?

We are focused on efficiency. We are focused on building our revenue base in our stores. We are focused on driving new patient care models. We have a very robust program in Ontario now called MedsCheck, where our pharmacists are evaluating patients that take three or more chronic medications on a regular basis. [The pharmacists] are ensuring that those medications are working appropriately with one another, avoiding drug interactions and interacting with their prescribers where necessary. This is a … pharmacist-patient interaction that is reimbursed and appreciated by patients. … We are [also focused] on diversifying our profit model to enhance our front-shop contribution to our business through broader product offerings and more relevant offerings.

To listen to the full audio Q&A, click here.


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Watson challenges Lo Loestrin Fe patent

BY Alaric DeArment

PARSIPPANY, N.J. — Generic drug maker Watson Pharmaceuticals is challenging the patent protection of a contraceptive drug made by Warner Chilcott, Watson said Friday.

The company announced that it had filed a regulatory application with the Food and Drug Administration for norethindrone acetate and ethinyl estradiol tablets in the 1-mg/0.01-mg strength and ethinyl estradiol and ferrous fumarate tablets in the 0.01-mg/75-mg strength. The treatment is a generic version of Warner Chilcott’s Lo Loestrin Fe.

Warner Chilcott filed a patent infringement suit on Wednesday in the U.S. District Court for the District of New Jersey to prevent Watson from commercializing its product before the expiration of U.S. Patent Nos. 5,552,394 and 7,704,984, which will happen in July 2014 and February 2029, respectively, according to the FDA.

Under regulations governing generic drugs, the suit puts a stay of final FDA approval on Watson’s product for 30 months or until the companies settle the case.

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