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Wasson rewind: Advancement of pharmacy by the numbers

BY Rob Eder

There was something that jumped out at me during the one-hour interview with Walgreens president and CEO Greg Wasson that helped set the tone for the massive, 86-page exclusive report on the company that appears in this issue. It had to do with Wasson’s vision for the role of community pharmacy in the future of 
health care.


“I want to be clear, I mean community pharmacy — not community pharmacists,” he said. “Because community pharmacy encompasses not only the role of pharmacists within the store, but for many of us that are co-locating nurse practitioners and physician assistants, and in some cases physicians, in their stores, it means expanding the scope of services a community pharmacy can provide, and expanding that 
even further.”


There are signs that the future is already upon us. The state of Massachusetts, which in many ways has been the learning lab for health reform, in August passed a new cost-containment law that aims to reduce health spending in the state by some $200 billion over the next 15 years. Among other key measures, the new law expands the services that can be provided in a Massachusetts retail clinic to the full scope of practice for a nurse practitioner, including diagnosis and treatment, management and monitoring of acute and chronic disease, and wellness and 
preventive services. 


When you do that, basically 80% of all primary care can be provided in a community 
pharmacy setting. According to 61% of DrugStoreNews.com users who participated in a late August/early September reader poll, the new law will likely be a model for other states that will look for the best ways to lower costs and expand access 
to care. 


There are other signs that the future is already here. Take, for instance, the Centers for Medicare and Medicaid Services’ interest in partnering with Walgreens, CVS, Walmart, Sam’s Club and Thrifty White, among others, to drive better awareness for the free annual wellness visits Medicare recipients became eligible to receive in 2010. Only 6% of seniors actually took CMS up on the offer in the first year. 


And even prior to this, seniors had emerged as a growing segment of the retail clinic patient population. According to the highly popular Rand study, which is being featured in the September 2012 edition of Health Affairs — seniors made up almost 15% of retail clinic patients between 2007 and 2009, up from 7.5% in the period from 2000 to 2006. Indeed, the findings are based on 3-year-old data in a sector of health care that is changing dramatically every day


There had been a 102% increase in clinic visits in each of those years.


You can expect those numbers to climb even higher in the years ahead. Wasson 
certainly does.


Rob Eder is the editor in chief of The Drug Store News Group, publishers of Drug Store News, DSN Collaborative Care, and Specialty Pharmacy magazines. You can contact him at [email protected].

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Millennials determine future of retail

BY Jeff Weidauer

It turns out that the Baby Boomer generation was just the opening act. The Millennials are here, and the world changed overnight, at least for marketers. Brand loyalty is out the window, transparency rules and convenience is king. Millennials are savvy about marketing, and they want what they want when they want it. 


The Millennial generation is roughly defined as those born from 1982 to 2001. These are the children of the Boomer generation, and are sometimes referred to as “Echo Boomers” or “Generation Y.” They outnumber the Boomers, the oldest of them are just hitting 30, and they are beginning to flex their economic muscles. There is little doubt that over the next decade the Millennials will be the driving economic force. 


Everything that we used to know as marketers appears to be up for grabs, from flavor profiles (this generation was raised in restaurants from which they developed very sophisticated palates) to packaging (cans are old-fashioned, but pouches and cartons are hip) to the shopping experience (the “fun” factor is a critical element in the shopping decision). 


Digital media — which gets a lot of attention on its own — is important, but as a medium rather than a novelty. This is a generation that grew up with computers and online access, and sees connectivity as just part of daily life. Digital access is an expectation and cost 
of entry. 


Price remains a primary component in the Millennial decision-making process, but with a twist. This group came of age in the worst economic times in recent history. But in addition to low price, there’s now an expectation for an emotional connection as well, and price is viewed more holistically as part of an overall value equation rather than a stand-alone determinant. 


All of these factors are enough to keep even the most experienced marketer awake at night. The good news is that there is time to experiment, learn and adjust. The hard part for most marketers is in making the necessary changes to their thought processes and being willing to adapt to the needs of this challenging new market. 


For drug stores, opportunity abounds. Drug stores already have convenience going for them, which is a big plus for Millennials. In fact, according to a recent SymphonyIRI study of Millennials, drug store spending is currently about 13% above average. This generation is just beginning to form shopping rituals, so there is time to influence those patterns before they are set. Despite their relatively modest financial status today, according to Pew Research, Millennials are expected to generate about $65 billion in consumer packaged goods sales over the next 10 years. 


There are three major initiatives that drug stores can begin to undertake today to capture more of 
this market: 


1. Pay close attention to Millennial shoppers. This cohort is very much still developing in terms of loyalties, behaviors and rituals. As with the Boomer generation, this growth will happen in ways that are unexpected in many cases, and the best strategy is to be open to those changes and willing to 
respond accordingly.


For example, Millennials are currently very value conscious, but as the economy improves and they move into higher-paying jobs, this behavior may change. Financial adviser Jefferies recently coined the term “YEMMie,” for young, educated, millennial moms. They will be a driving force for the entire generation, and will set the direction for much of the shopping behavior.


2. Combine digital/mobile media with other 
media. Make sure all communications are integrated, consistent in their message and relevant to this audience. They will check the price, but will also include convenience and other value-added considerations into the decision process. Focus on making an emotional connection via all media elements, including the 
store itself. 


3. Partner with CPGs on packaging and product. Green, sustainable and out of the ordinary pay big dividends here. Take a look at store brands and make sure they reflect this direction as well; that will help to set the tone for the store overall. Think outside the can and box, and look for innovative packaging that stands out and provides unique benefits. 


The next few years will show which retailers are going to prosper with the Millennial generation and which will be seen as part of the “old guard.” The challenge will be to keep up as this generation matures both intellectually and financially, and remaining part of the consideration set will be an ongoing learning experience for all retailers. The good news is that drug stores are already ahead of the game, so now is the time to get proactive and keep that advantage gap.


Jeff Weidauer is VP marketing and strategy for Vestcom International, a Little Rock, Ark.-based provider of integrated shopper marketing solutions. He can be reached at [email protected], or visit www.vestcom.com.

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Simplifying the sales tax

BY Michael Johnsen

As of Sept. 15, California became the eighth state in which Amazon.com will levy sales taxes on purchases made by residents in that state. Pennsylvania joined that group two weeks prior. Add to that the five states that don’t have any sales taxes, and that’s 13 states where national brick-and-click retailers are competing on a level playing field with the pure-play online retail juggernaut. 


But that still leaves 37 states where Amazon.com sells merchandise at a discount ranging between 2.9% and 6.875%. And given the recent GroupM Next study that found 45% consumers will shop in-store but buy online for as little as a 2.5% savings, those are 37 states where many brick-and-mortar retailers have become a little out of sorts over the whole online sales tax collection issue. “With an estimated $24 billion going uncollected each year, this disparity is threatening jobs provided by local retailers and is getting worse as more shopping moves online,” noted the National Retail Federation.


According to a 1992 Supreme Court decision, states can enforce sales tax collection on remote sellers if that seller has a physical presence in the state. “This issue didn’t start online; it started with catalog sellers,” Rachelle Bernstein, NRF VP and tax counsel, told DSN. “What the Supreme Court said was the problem was a commerce clause [issue] — there are 7,600 different sales tax jurisdictions between states and local governments,” she said. For example, one county might enforce a sales tax on a hat, where another county would exempt sales taxes on the purchase of a hat. With that many jurisdictions, remote sellers in many cases would have to go down to a SKU level to determine whether or not a sales tax should be collected, Bernstein said, so the Supreme Court ruled that in order for states to impose sales taxes on products sold by remote sellers, they would have to simplify the process. 


Two federal bills in Congress are currently under consideration: the Marketplace Equity Act in the House and the Marketplace Fairness Act in the Senate, which would simplify the process on a national scale. Though not identical, the two bills would mandate simplification requirements — such as creating a single sales tax authority within a state or states providing software that facilitates collection — that would be applicable to remote sellers only. 


According to the company’s latest annual report, Amazon.com is in favor of federal legislation that would require sales tax collection under a nationwide system. 


While price and convenience are two significant competitive elements that favor online retailing, there is one advantage card being increasingly played by brick-and-click retailers: multichannel retailing.


“Today’s consumer increasingly is on the go and wants to be able to shop with a start-anywhere, finish-anywhere mentality,” noted Ian Kahn, PricewaterhouseCooper director, regarding PwC’s annual survey on the evolution of multichannel retailing. So the combination of the ease-of-use associated with shopping online with some of the exclusively in-store experiences can make for a very compelling proposition, Kahn said. 


According to the GroupM Next research, customers who interact with an associate are 12.5% more likely to purchase in-store. “Nearly 10% of purchasers we surveyed chose to complete their purchase in-store, no matter the price discount offered,” stated Patrick Monteleone, GroupM Next director of research. “The key for marketers is to identify the next 10% — the group of customers [who] are sensitive to price, but can be swayed to stay in-store.”

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