INSIGHTS AND PERSPECTIVES

Innovation doesn’t wait

BY Dave Wendland

For my final Drug Store News contribution for 2018, I wanted to wrap up my series on “The ideas I haven’t thought of yet,” with a focus on the topic of retail innovation.

Each day there’s another headline announcing additional store closures, slipping same store sales, or some hot new internet start-up capturing sales from the traditional brick-and-mortar market. However, buried deep inside the newspaper – well below the fold – there’s a different kind of story. A success story boasting of creativity and filled with enthusiasm. That’s what this article is about. Innovative approaches which are exceeding expectations and captivating the imaginations of shoppers.

Convenience
Who ever imagined that buying a car from a vending machine could be possible? Well, get familiar with Carvana, a leading e-commerce platform for buying, financing, and selling used cards. On December 13th the company unveiled its newest Car Vending Machine in Indianapolis joining other cities in Texas, Tennessee, Florida, North Carolina, Maryland, Arizona, Ohio, and Pennsylvania that already were home to similar seven story-high towers.

The company claims that by removing the traditional dealership infrastructure and replacing it with technology and exceptional customer service, Carvana offers consumers an intuitive and convenient online car buying and financing platform.

Where else has convenience surfaced in the physical retail space? Can anyone say Amazon Go? With reported plans to expand its network to about 3,000 cashier-less Go stores by 2021, the convenience store will truly become convenient.

Experience
If you want to see a busy retail store that still resides in many malls across America, think Lush Cosmetics. So what are they doing about it – they plan to triple the size of their average store over the next three years. This, according to reports in the Financial Post about a year ago stating, “The retailer, known for showcasing its unwrapped rainbow-hued like baked goods in baskets and on shelves at its 250 stores, is grappling with an enviable business problem: after seven years of double-digit same-store sales growth, many of its locations have become too crowded during peak shopping times.”

What is the draw? An atmosphere that is experiential, fun, and engaging. And they’re paying attention to the trends in the market by offering products free of preservatives to appeal to the vegan or gluten-free shopper.

Personalization
My favorite recent example of personalized shopping is from an unlikely mass market brand…Nike. A global brand, whose famous swoosh is as recognizable across the globe as McDonald’s golden arches, the bite from Apple’s fruit, or Google’s unique typography.

The retail landscape has shifted considerably over recent years, forcing Nike to consider innovative options such as their newest flagship program. Their new store design energizes the in-store experience and offers opportunities that consumers simply can’t get online, such as testing out new products in real sporting activities before buying. Most importantly, the store also bolsters Nike’s digital strategy with full integration with the Nike app, meaning that even if customers walk out without making a purchase, their data is stored and accessible, and a path to future purchases.

And, if it’s customization that the shopper wants, Nike’s NIKEiD customization service allows customers to design shoes unique to their tastes — at a premium, of course.

Expertise
Although I’m neither a fisherman nor a hunter, I love Bass Pro Shops/Cabela. Why? It’s largely because their staff is absolutely passionate about everything outdoors. They simply look like they are having a grand old time and are knowledgeable, engaging, and sincere. This winning attitude combined with one-of-a-kind displays and store imagery makes these environments nothing short of magical.

Their website boasts, “We are driven by our passion to inspire people to enjoy, love and conserve the great outdoors. We work together based on the essential values of respect, teamwork, quality and ingenuity to create extraordinary experiences for our customers and guests.” It is this unique attitude that makes their expertise shine.
Make no mistake, innovation is all around. All that a person has to do is look around at other industries and other consumer touchpoints and then apply it to the retail supply chain. Here are a few out-of-the-box examples to get your creative juices flowing. I’ll be eagerly watching to see what innovation you bring to your retail operation, your brand, or your team.

Washington, D.C. Metro
Although beleaguered by its share of challenges through the years, Washington Metro has also received its share of accolades, including best metropolitan transportation system in the country. What I believe is a learning opportunity for retail is the navigation system that makes traversing the vast subway relatively simple and painless. How can a similar navigation system be developed in the visual brick-and-mortar, virtual, or mobile space to ensure shoppers are managing their path to purchase as effectively as possible and being presented logical “connections” along their journey?

Pinkberry
Although other frozen yogurt shops could have been cited, the concept of providing healthy choices, customization, and unique experiences describe the Pinkberry operation. Shoppers not only demonstrate their loyalty by frequenting this shop, they also engage, promote, and encourage others to experience Pinkberry. What are retailers doing today to create this type of brand advocacy and evangelism?

Chick-fil-A
Certainly “please” and “thank you” matter. So does an organization that remains true to its values and extends their commitment consistently through the in-store experience, their social media, website, and all other touchpoints.
What’s most important to your retail operation? Are you so deeply committed to your core values that they are shared across all of your interactions with your shoppers?

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2018 policy in review: Pros, cons and promise

BY Lindsay Bealor Greenleaf

As 2018 comes to a close, many of us will spend a brief moment reflecting on the year, pondering our highs and lows, our successes and failures. The most motivated among us will take the extra step to identify areas of our life where there is room for improvement, like getting to the gym or finishing a column before the eleventh hour.

Rather than limit reflection to our personal lives, how about taking a trip down memory lane to revisit prescription drug pricing reforms?

Let’s start off on a positive note by recalling favorable policy changes and proposals.

In May 2018, the Trump administration proposed several positive policy changes in its drug pricing “Blueprint,” including: a proposal to modify the Anti-Kickback Statute safe harbor that allows for rebates; a proposal to require a percentage of rebates be applied at the point of sale to reduce patients’ out-of-pocket costs; and a proposal to promote value-based purchasing in federal programs by enabling tools like indication-based pricing.

A few months later, in September, Congress voted to prohibit “pharmacy gag clauses,” which is language middlemen known as pharmacy benefit managers insert into contracts with pharmacies that prevent the pharmacist from telling a customer when they can pay less for a drug by simply forgoing insurance.

It is ludicrous to think that using insurance could actually be worse for patients, and even more ludicrous that a pharmacist would be prohibited from helping them save money. Considering a recent USC Schaeffer study found that 23 percent of prescriptions paid at the pharmacy counter by commercially insured patients are overpaid, this reform to prohibit pharmacy gag clauses marks a significant win for patients.

However, this year also included several troubling policies put forth by the Trump administration.

In August, the administration enacted a policy change allowing Medicare Advantage plans to force seniors to “step through” an undesired drug before being granted access to the physician-administered therapy prescribed by their doctor. Beginning in 2019, this “fail first” policy will significantly harm patients suffering from some of the most complex and debilitating conditions, like cancer and rheumatoid arthritis.

In October, the Trump administration proposed the “International Pricing Index Model,” which would impose international reference pricing for Medicare patients’ physician-administered drugs.

Compared to the rest of the world, the United States places a high value on access to therapies, which is why Americans currently enjoy access to cancer treatments two years earlier than other developed countries. If the administration chooses to swap today’s payment design for a model that links to socialist countries’ payment designs, we are at risk of losing the speedy access to innovative therapies that we enjoy today. Americans could be forced to wait in line for cures, or worse: there will be nothing to wait in line for.

In November, the administration targeted longstanding patient protections in the Medicare Part D program by proposing to weaken the “Protected Classes,” which currently guarantee coverage for cancer, HIV, epilepsy, mental health and transplant-rejection drugs. A recently released proposed rule would allow plans to expand the use of prior authorization and step therapy, as well as exclude a Protected Class drug from coverage if its price increases faster than inflation. If finalized, this policy change would hinder access to treatments for Medicare’s most vulnerable patients.

While 2018 brought a mixed bag of reforms, we can find promise in the future.

With Democrats winning control of the House, we expect them to spend the next two years developing and voting on aggressive drug pricing legislation, including policies to allow the government to negotiate prices in Medicare, which is essentially government price setting, as well as expand the government’s power to seize patents if they do not approve of a manufacturer’s price. But with Republicans maintaining control of the Senate, it is unlikely that any of these ill-conceived policies will be enacted next year.

Since regulators are immune to the slowdowns that result from midterm election campaigns and the changing of the guard, we expect the Trump administration to continue its current pace of policymaking.

Going into 2019, we hope that the administration sets aside some time to observe the implications of recently enacted changes before barreling through with another series of reforms. Mindful observation and reflection is important, especially when it comes to policy, because it is difficult to assess how well one policy is working while numerous other policy changes are simultaneously underway.

Only by slowing down and measuring the effectiveness, as well as the consequences, of this past year’s policy reforms can we be confident that these changes are productive and protect patients’ access to critical therapies.


Lindsay Bealor GreenleafLindsay Bealor Greenleaf is director at ADVI, a healthcare consulting firm representing life science companies and healthcare provider organizations.

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Let’s rethink generations in 2019

BY David Orgel

There’s a generation gap that could get bigger in 2019.

It’s not about disagreements between different age groups. Rather, it’s a gap in terms of how generations are perceived versus the reality.

This is a crucial topic for retailers because they have worked hard to understand shoppers. However, there’s a temptation to make broad assumptions about how shoppers will act based on generational trends. Those insights only go so far. They can be too general, and often don’t account for ongoing consumer behavior shifts.

This will become a bigger concern as we move into 2019. That’s because retailers increasingly are counting on personalization strategies to address individual customer needs. Technology will enable personalization more and more. Nevertheless, getting to that point will be challenging if we’re relying on outdated assumptions about consumers and generations.

Recent consumer research from the Food Marketing Institute helps to underscore how quickly consumers are changing, and why we need to stay on top of generational realities. The findings are relevant to many types of retail channels. Here are a few key examples based on FMI’s “2018 U.S. Grocery Shopper Trends Report:”

  • Online shopping: If you think millennials lead the charge for growth in online shopping, you’d be right. That is, until now. Gen Xers and older consumers are driving growth for the first time, according to the report. It’s important to adjust thinking to realize how this trend is broadening to older generations. It’s likely that millennial behaviors have influenced older shoppers, who are taking the ball and running with it.
  • Transparency: There’s a general assumption that younger consumers are the most interested in transparency. However, the report data shows that baby boomers and Gen Xers also demand transparency from retailers and brands. In fact, these older shoppers are the most focused on at least one aspect of transparency: how honest and open companies are about business practices. The fact is, consumers across generations and other demographic markers are interested in transparency. This was corroborated by earlier industry research. “In this information age, consumers expect they should be able to find anything,” said David Fikes, FMI’s vice president of communications and community/consumer affairs. “Maybe this has been led by millennials, but everyone is adapting.”
  • Checkout experience: I tend to think younger shoppers are the ones populating store self-checkout lines, while older folks are willing to wait for cashiers. However, that assumption is not true. Shoppers overall are now prioritizing easy checkout, including through self-checkout or smartphone assistance, according to the report data. Consider that even matures, the oldest generation measured, have jumped on the self-checkout bandwagon.

I recently came across a clever way of looking at the generational topic. FMI’s Melaina Lewis, the association’s manager of communications, wrote a blog post called “I’m a 25-year-Old-Grocery-Shopping Boomer?”

The piece leverages gamification with a chart that takes readers through a number of questions and steps to determine, “Do you grocery shop like your generation?” The answers are calculated using the report’s data and insights, and the chart explains each user’s findings.

In Melaina’s case, she has shopped more like a baby boomer over the past year, compared to the millennial she is. That’s because her preference is to grocery shop in stores rather than online, even as she makes use of grocery store apps. This lines up with typical boomer patterns. The point is that consumers do not always walk in step with their own generations.

That’s why we should resolve to rethink generational perceptions in the coming year. This requires digging deeper into consumer data and better understanding which insights are relevant, and which aren’t. The best approach is to combine generational insights with more segmented or personalized data.

Retailers will find this to be a competitive differentiator. It will keep the focus on generations — not generalizations.


David Orgel is an award-winning business journalist, industry expert and speaker. He currently is the principal of David Orgel Consulting, delivering strategic content and counsel to the food, retail and CPG industries. To read last month’s column, click here.

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