HRG

By Dave Wendland

There are differences to how products move through the supply chain and are ultimately shelved and promoted at chain drugstores versus independent pharmacy. I’ve outlined a few of the variations below.

Depth

Chain drugstores often carry far deeper inventory levels than their independent pharmacy counterparts. Why? It’s partly a result of next day delivery offered by an independent’s distribution partners, and partly because the independent’s focus is on the prescription side of their business. Ensuring that wholesalers have sufficient product inventory and are aligned with offering incentives for greater depth of merchandising at retail are two pathways to increasing the odds of product availability at independent pharmacies.

Breadth

Focused on more acute patient needs and special medicinal items, independents are uniquely positioned to bring value across health and wellness departments. In contrast, Placing most-often recommended categories near the pharmacistchains may emphasize beauty, general merchandise, and seasonal in a far more expansive way. Neither is wrong, just different. In 2014, HRG identified independent pharmacy growth categories and the types of products that fared best in independent pharmacy stores versus chain drug.

Location

Placing most-often recommended categories near the pharmacist in an independent pharmacy setting has been proven to generate increased sales. Chain drug retailers typically don’t have the flexibility to move departments according to what might be the most recommended departments at a particular store. Location matters.

Promotions

Chains may rely heavily on advertisements, in-store promotions, and specials, while independent pharmacists are more likely to be in the aisles directly counseling patients and helping them select products that treat a specific acute need. Providing educational and support materials to independent pharmacists to better equip them in directing patient choices may be far more effective than focusing on general advertisements to generate traffic to that channel.

New Items

It may seem that chains have an advantage when introducing new items because items are sent to all locations in one fell swoop. Some manufacturers are surprised by the efficiency of healthcare distributors and the speed and ability to move product out to their independent pharmacy customers. Planning ahead with new items and ensuring wholesalers are well-informed and have access to inventory as soon as it’s available can help manufacturers effectively ensure their product reaches independents. Once in store, independents have the merchandising flexibility and ingenuity to place that item in multiple (prominent) locations without slotting fees or placement concessions.

Both market segments are important and both segments have idiosyncrasies. Whether a new-to-market blockbuster or a tried and true item, the key is to delve deeply into both channels and determine the most productive way of collaborating to make your product stand out on shelf.