Dive Brief:

• Pharmacy operations are becoming an increasingly important part of grocers’ business strategies, according to Drug Store News. The number of supermarkets pharmacies is growing, as are dollar sales and the department’s overall share of retail prescriptions filled, data shows. Albertsons’ acquisition of Rite Aid, DSN writes, is just the latest example of how highly grocers value the health benefits and increased sales pharmacy can provide.
• Supermarket pharmacies are set to benefit from the growing connection between food and medicine. Grocery stores are also delivering top-notch customer service in order to solidify shopper loyalty. According to the J.D. Power 2017 U.S. Pharmacy Study, supermarket pharmacies led all pharmacy channels in customer satisfaction.
• But high costs, staffing challenges and the complexities of the work could be keeping grocers from fully capitalizing on the opportunity in pharmacy, according to Drug Store News.

Dive Insight:

The benefits of a supermarket pharmacy extend well beyond the department itself. As a health destination, it can boost customer loyalty and attract valuable customers into stores. According to industry consultant Gary Ellis, every new prescription filled translates to $43 in additional sales across other departments.

As consumers look to eat healthier and grocers amp up their selection of fresh produce, better-for-you meals and other selections, the pharmacy becomes a natural extension of a grocer’s core mission — and not just an outpost for filling prescriptions. This is why retailers are working hard to make their pharmacies even more visible, and to tie them together with their other food and health offerings. As Drug Store News points out, Hy-Vee positions its pharmacy, store clinic and store dietitian in close proximity to one another, and employs health concierges to guide customers to the appropriate service.

Further strengthening supermarket pharmacies’ positioning is the growing connection both consumers and the medical community are making between food and medicine. Medical schools like Loma Linda University in California offer training in “lifestyle medicine,” which emphasizes food choices in disease prevention. Doctors these days are likely to recommend fresh produce, lean meats and grains in addition to prescribing medication. NPR recently highlighted a “Shop with a Doc” program where physicians offer to walk the grocery aisles with consumers, pointing out healthful selections.

Albertsons’ Rite Aid purchase, which is expected to finalize this summer, is a testament to the growing importance of pharmacy to grocers. With that deal, Albertsons gains valuable pharmacy systems and expertise that it can bring into its stores.  

Other grocers are hiring away pharmacists and focusing on additional services and technology. Schnucks has installed cardiovascular health kiosks in 95 of its pharmacies, while Publix recently partnered with a Florida healthcare system to provide in-store "telehealth" rooms where customers can connect with off-site doctors and other treatment providers. Wegmans, a leading northeast grocer, just added health kiosks that gather information like body-mass index and blood pressure, and send data to store pharmacists.

To fully leverage a pharmacy’s capabilities, retailers have to manage costs and effectively promote the department. They also need to make their pharmacists visible to customers. Supervalu, for one, recently offered 90-minute store tours with pharmacists and store dietitians.   

The Food Marketing Institute found that pharmacy sales account for around 3% of grocery store sales, or about 6% to 9% of store revenues for chains with a heavier pharmacy presence such as Kroger, Albertsons and Publix. Grocers will look to increase those percentages, but clearly the true value of pharmacy lies in its ability to establish retailers as health destinations.