Customers are already getting used to adopting digital technology to manage their health, whether it be the government’s Medicare app, the MedAdvisor app for prescription management, or retailer apps like Chemist Warehouse’s Health @ Your Fingertips or Amcal’s health management app. Pharmacy purchases would be a natural extension of managing one’s health via digital platforms.
The economics of pharmacy retail also support digital engagement. Many FMCG brands sold in pharmacies have high margins and the FMCG industry is keen to partner with retailers to engage digitally with consumers.
Most pharmacy chains have not yet capitalised on personalisation due to the cost and complexity of the technology. Cloud-based software, however, creates the opportunity for retailers of all shapes and sizes to access highly sophisticated personalisation technologies in cost effective ways.
I expect to see three opportunities flourish in pharmacy retail in the future:
1. Using loyalty rewards to promote health outcomes
Many pharmacy chains now offer health management apps, which are typically siloed from other parts of the customer experience, in particular the loyalty program. Canada’s biggest retailer, Loblaw, has integrated loyalty into its health and wellness app, PC Health, which launched in 2020. After downloading the app, users are taken through a 25-question onboarding flow that leads to a personalised set of health resources and free health programs that help customers build healthy habits. Users can earn loyalty points by completing activities linked with positive health outcomes, for example completing an online course to help you boost your mental wellbeing.
Loblaw has also announced its intention to continue developing its app to make it the “front door to healthcare” for Canadians, offering both healthcare services and incentives to boost health outcomes.
2. Merging above-the-line and below-the-line promotions
Currently there is a big divide between “above-the-line” and “below-the-line” promotional spend in pharmacy. FMCG brands and pharmacy retailers typically manage these through different teams with different budgets. Digital technology provides an opportunity to merge these two areas of advertising into fully measurable “through-the-line” activity, with huge financial benefits.
While the majority of advertising spend across retail is now digital, promotional spend by pharmacy retailers and brands has not followed. An obvious example is the paper catalogue printed by some pharmacy retailers but funded largely by FMCG brands. These lead to environmental waste, for sure. Also, being storewide and offering only generic promotions, they mean customers potentially miss out on more personalised promotions that would have been more relevant to them as well as costing the retailer less. Thus, the potential win–win of personalisation gets missed.
In other markets we are seeing the emergence of personalised digital offers, which I believe provide a better model for the pharmacy sector for managing promotions. In this emerging model, each customer is issued a personalised digital catalogue and receives a unique coupon for the product(s) on promotion. Retailers and FMCG players gain access to a new source of data as individual redemptions can be tracked in real-time, and customers get tailored opportunities that work for them.
3. Instore subscription programs
The last few years have seen rapid growth and innovation in the use of subscriptions, from meal delivery services such as HelloFresh to media content from the likes of Netflix.
Subscriptions work for customers when they have predictable demand and are happy to be loyal to a particular retailer or service. These conditions suit pharmacy retail, since customers will visit a pharmacy store regularly to get a repeat prescription or replenish a product they use consistently throughout the year. Subscriptions offer a great opportunity for a pharmacy retailer to ensure the customer keeps coming back to their store. New parents, for example, might be offered the opportunity to subscribe to a baby club for 12 months, with discounts offered on categories like nappies, wipes, formula and related products.
Most pharmacy retailers can’t deliver a subscription program to customers shopping in physical stores because they don’t have the tools to build a personalised digital connection. If they wanted to run a one-to-one subscription service, their existing technology wouldn’t allow them to deliver it at the checkout. However, cloud-based technologies are increasingly giving bricks and mortar retailers access to the same digital marketing technologies that Amazon and the e-commerce pure-plays take for granted.
How to get started
The simplest way for a pharmacy retailer and its brand partners to get started in mass personalisation, for a modest investment, is to collaborate on “through-the-line” promotions. These offer an immediate opportunity to save money and simplify their current approach to promotions. And, most importantly, they provide high-value, real-time, targeted solutions to customer needs.