Retail needs to get really personal
You only think you know me.
Those are words a retailer never wants to hear, especially after tailoring marketing and assortments to consumer needs.
The desire to get more targeted has the industry excited about a new era of personalized marketing. You think local marketing is cool? Personalized marketing is far more powerful. It’s generating buzz across retail channels, from mass market to hard goods to grocery.
Just to be clear, much of the momentum is driven by competitive threats. “It’s due in no small part to Amazon, which is presenting shoppers with items based on their past purchases, browsing, and wish lists,” said Gary Hawkins, a former retail CEO and an expert on consumer loyalty at retail. “So to compete with that, retailers need to become adept at personalization and relevancy.”
Retailers vary widely in these capabilities, with such companies as Kroger, Walgreens and Nordstrom often cited as leaders.
Why didn’t years of retailer loyalty programs manage to accomplish the kind of personalization we are now talking about?
A big reason is technology. It’s only now that new technologies, such as artificial intelligence and machine learning, are advancing capabilities. The excitement is about more customized solutions for everything from consumer products to healthcare, combined with better ways to deliver offers to customers, including through digital coupons, apps and digital wallets.
New developments also are starting to make personalization more affordable and less labor intensive. The era in which retailers need to employ large, expensive teams of data analysts may be coming to a close due to software advances that boost personalization capabilities, said Hawkins, a strategic advisor to digital solutions company Birdzi, which focuses on this strategy.
Personalization has the potential to address some of the most important consumer needs, delivering convenience to time-starved shoppers through on-demand products, or relevant healthcare solutions to consumers based on specific conditions.
The health and wellness potential can’t be overstated, especially in the face of overwhelming U.S. health challenges, much of it due to chronic conditions.
Personalized wellness has the opportunity to bring together healthcare and food to address this problem, according to a white paper by Hawkins and Dr. Marcus Sredzinski, COO and EVP of Medical Security Card, LLC.
“It bridges the chasm by leveraging nutrition science, big data, artificial intelligence, machine learning, and consumer technology to guide each person to foods and products beneficial to their individual health condition,” according to the paper.
Despite all the promise of personalization, we can’t count the benefits before they materialize. There will be hurdles to overcome. First, if products and offers aren’t relevant, it will turn off consumers, maybe for a long time. Second, it’s not just products that need to be personalized, but also prices.
“Usually the price element is not personalized,” said Graeme McVie, chief business development officer of Precima, a data-driven solutions company. “It’s often done by type of customer at the micro-segment level. But you need to truly get to price by item by customer.”
Roadblocks aside, personalization needs to move forward, because the potential benefits are so great. In fact, this strategy may help determine where consumers will shop in an omnichannel world. Personalization should be a province of tech-savvy online retailers, which have loads of data about their customers. However, it could also be a key strategy for brick and mortar retailers to attract shoppers to physical stores. Retailers need to create relevancy at all shopper touchpoints, including in-store, web, tablet, mobile app, and other platforms, Hawkins emphasized.
Ready or not, personalization will happen. And the generation everyone’s trying to reach, Millennials, will probably be the most receptive of all, as long as it makes a difference in their lives.
If it doesn’t, we’ll hear about it, loud and clear. The marketing may be personal, but consumer feedback these days is rarely private.
David Orgel is an award-winning business journalist, industry expert and speaker who was the longtime chief editor and content leader of Supermarket News. He is currently the principal of David Orgel Consulting, delivering strategic content and counsel to the food, retail and CPG industries.
Tech titans: It’s all about the customers with Alibaba and Amazon
Whole Foods founder John Mackey once said, “It’s competition that forces companies to get out of their complacency.” For Whole Foods’ new owner, Amazon’s Jeff Bezos, and Alibaba’s Jack Ma, that’s not the case. For them, innovation starts with the customer. The impending struggle between these two global giants will directly impact consumer health care and most everything else.
Both companies are pleasing customers globally and will inevitably compete. Bezos, who acquired Whole Foods, observed, “If you’re customer-focused, and you’re already the leader, customers are never satisfied.” Ma is more direct, “Forget about your competitors, just focus on your customers. He also has been quoted saying, “Never ever compete on prices, instead compete on services and innovation.” In the HR realm, Ma is a maverick, “Don’t hire the most qualified, hire the craziest.”
Vision aside, the two companies were even named in a somewhat similar fashion. Ma, during a visit to San Francisco, liked Alibaba — founded in 1999— as a good name. He asked a waitress what Alibaba meant. She said, “Open Sesame,” and indeed, the company opens the world up for small-to-medium-sized companies. Meanwhile, Bezos initially thought about naming Amazon, founded in 1995, Cadabra, short for “abracadabra,” but the name was soon discarded as too similar to “cadaver.” Bezos then settled on Amazon, the world’s longest river, and was strategically helpful in the early Internet days when website listings were commonly alphabetical.
As a U.S. consumer healthcare brand owner, what do the missions of these retailers mean? Essentially, it means that any global aspirations and channel pricing discipline will be framed by one or both of these companies. Of the two, Alibaba is probably the longer-term one to watch. Interestingly, Amazon utilizes Alibaba as its infrastructure engine in China. Meanwhile, Alibaba is studying the U.S. market and how best to enter it. Of the two, Alibaba is the larger. Alibaba’s online sales and profits surpassed all U.S. retailers, including Walmart, Amazon and eBay, combined since 2015, and has operations in more than 200 countries. And some parts of Alibaba, notably its e-payment system Alipay, are not part of the traded stock. In short, if U.S. brand owners worry about the so-called Amazon effect, a bigger storm is on the horizon.
Alibaba, though, has a structural advantage. With TMall and Taobao — Amazon and eBay equivalents — as key interacting divisions, the company’s data, marketing clout, pricing insight and, ultimately control, capabilities, as well as the ability to create, shape and direct efficient logistics are unprecedented. China’s restrictions on the Internet also have sharpened Alibaba’s content. Chinese consumers look to TMall as one of the definitive consumer healthcare information sources. It could be argued that Alibaba, along with other Chinese e-commerce platforms, also serve as their markets’ WebMD.
Coinciding with Alibaba’s structural strengths, the Chinese consumer healthcare market is poised to overtake the United States as the world’s largest, sometime within the next 10 years. While it is difficult to measure the conventional market sizes, China’s traditional Chinese medicines market is both huge and difficult to measure. The Chinese market is larger than the legacy U.S. framework. In short, Alibaba has structural strengths, while leveraging its domestic soon-to-be largest consumer healthcare market.
As a U.S. consumer healthcare brand owner, what is a strategic response? To quote one of my inspirations, Yogi Berra, “The future ain’t what it used to be.” A long-term (what is long-term?) U.S. consumer healthcare strategist must both understand Amazon now and Alibaba very soon — and certainly before it’s too late. When will it be too late? It’s hard to say, but when you consider Alibaba is a teenager and Amazon is in its early 20s, the window is potentially closing fast. Or as Yogi once said, “You’ve got to be very careful if you don’t know where you are going, because you might not get there.”
Ed Rowland is a Drug Store News Contributing Editor covering global issues. As the principal of Rowland Global LLC (rowland-global.com), he believes in the promise of global business and supports companies in their strategy, tactics and execution of international growth initiatives.
Preparing for the next generation of independent community pharmacy
Independent pharmacies have positioned themselves as leaders in communities across the nation by offering personalized attention, education and healthcare services at a moment’s notice. This level of service has established a legacy of care that patients can rely on when they need it the most.
However, all independent pharmacy owners will reach a point when they must ultimately transition out of their businesses. The ever-shifting healthcare landscape, new competitors entering the market, changes in third-party payer plans, shrinking reimbursement and the health of an owner or their family members are all scenarios that could lead an owner to sell sooner than expected.
While it may be difficult to consider retirement or transitioning out of their business, independent pharmacy owners who start planning an exit strategy years in advance have a better chance of connecting with the right buyer and securing a more favorable deal. It can take a long time to find a qualified buyer who shares the same values and passion for independent pharmacy, which is critical to maintaining patient and staff continuity through the transition.
In my experience working with independent community pharmacy owners across the country, I’ve identified three ways owners can map out their exit strategy and ensure their legacy endures for future generations, even if they are no longer the ones behind the counter.
1. Surround the business with trusted experts
Independent pharmacy owners who engage experts with the skills needed to develop and execute a seamless exit strategy are better positioned to maximize the value of their business when they are ready to transition, especially if they do so at least two years in advance. Business coaches, acquisition advisors, accountants, financial planners and attorneys are vital resources that can help owners plan for their exit, while allowing them to keep their focus on what is most important — their patients. Pharmacy owners should spend time with these experts to give them a clear understanding of what they would like to accomplish through their ownership transition. By doing so, that trusted team could provide the guidance and support that will bring a seller together with a like-minded buyer, who will serve their community with the same level of dedication.
2. Determine the value of the pharmacy
Independent pharmacy owners should be able to gauge what their business is worth by having accurate, detailed and organized records. This information will help generate a realistic estimate for what the pharmacy might command in the marketplace, and ensure buyers feel confident that they are acquiring a reliable business. Having solid answers to questions about average prescription volumes, gross margins, etc., can quickly calm the most common concerns that a buyer might have. Without these details, the perceived value of the pharmacy is likely to decrease, jeopardizing the business’ true value and potential earnings upon the owner’s exit.
3. Improve issues for today and the future
Pharmacy owners should also work with their team to remedy any existing issues that could deter a prospective buyer from acquiring the business. From such superficial issues as outdated fixtures, bad lighting and worn carpeting to more serious problems as narrow profit margins, inaccurate financial statements and declining prescription counts, every detail is significant and can contribute to a declining business evaluation. However, with enough lead time, support and elbow grease, owners can make modest improvements now that have a big impact on the overall value of their business when they are ready to sell.
Community pharmacy owners have plenty of options when it comes to exiting on their own terms. If they take the initiative and plan wisely, it is possible to get the full value for their business and preserve their legacy of care in their community for decades to come.
Charlie Le Bon is the director of pharmacy ownership services at AmerisourceBergen.