The Dollars and the Indies: Pt. 1

September 13, 2013By Focus on the Pharmacy Front End Blog, Independent Pharmacy

Posted by Jenny Kosek

Dollar General just received the 2013 Company of the Year in Retail award at the 11th Annual American Business Awards. With a 48% share in the dollar channel[1], it’s no wonder. While consumables lead sales in the dollar channel, OTC products are gaining strength. Not nearly done competing, dollar stores are now adding pharmacies, and small pharmacy should be watching what develops. 

Once thought to be repositories for low-end, outdated merchandise, the recession boosted the dollar channel’s relevance as consumers’ wavering brand loyalty led them to seek convenience and low prices first and foremost. Dollar stores (be they Dollar General, Dollar Tree, Family Dollar, etc) slipped in next to big-box retailers and lured consumers who wanted a quick shopping experience and attractive value. No vast parking lots, no long lines, fewer items but lower prices-consumers began flocking to these stores in lieu of the large chains.consumers visiting dollar retailers

As HBW sales grew in those stores, Dollar Tree sought ways to expand their offerings. Accordingly, Dollar Tree’s Deals store launched its first in-store pharmacy in spring of 2012, complete with home delivery services. While Deals’ experiment has yet to become a trend, it stands to reason that other dollar retailers may step into the pharmacy game in order to compete and gain additional shopping trips from other channels.

If you’re an independent warily watching dollar stores spring up in your community, the solution to retaining your customers is simple: be better than the dollars. Consumers are visiting dollar retailers for convenience and cost considerations, so make sure your store is easily shoppable and your prices competitive. And while retail is buzzing about the dollar channels’ ability to offer low price products with no frills, no one is mentioning their customer service, which is telling. Customer service has not traditionally been part of the dollar channel equation, as it is in small pharmacy. Keep your customer service superior, and your customers will be more inclined to stick with you.

[1] OTC Retailing 2012: U.S. Alternate Channel Analyses and Opportunities

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