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The Pharmacy Buisness Has Severe Brand Issues

By Tom Dougherty

The pharmacy business is one of the most troubled in a troubled category — namely retail. If ever there was a group of stores looking for an identity, not to mention a brand identity, the pharmacy business is it.

Think about how the industry has changed over the years. When I was young, local shops dominated the pharmacy business — mom and pop shops, if you will (read our blog about pharmacies). They sat on corners all around America and represented a small store with first aid medical products, watchbands, batteries, candy and prescription drugs. They were independently owned and operated and the proprietor was a recognized member of the community.

Consolidation swept over the industry and, eventfully, most of the small stores were either acquired by larger entities or driven out of business. The promises of large chains like Walgreens, CVS, Eckerd, Rite Aid, and countless others was profitability through efficiencies and the ability to advertise.

The Pharmacy Brand Business has Changed

Over the years, however, the pharmacy as we knew it - the purveyor of ethical drugs and over-the-counter drugs has changed. They became convenience stores manned by hourly employees and faceless pharmacists in the back that still sold the medical products we needed but made their money on the sale of tobacco and film developing. One of those markets has deserted them and they are left scrambling to find a new niche.

Enter into this foray the arrival of big retailers like Wal-Mart and Target, which promise savings and convenience and the supermarket pharmacy that promises the convenience of having your prescriptions filled while shopping for milk, flour and bread… Wait a minute… those same things are available in the pharmacy too.

Pharmacies - Looking For A Reason To Be

So what are the pharmacies today and how important are they? These are questions that all of the major chains need to be asking because their place in the mind space of consumer is cloudy at best.

However, they do occupy real estate. They continue to build as the draw of their brands contract and the scope of their real estate holdings is increasing. This is a signal that even CVS knows that its preference over Rite Aid and vice versa is limited to which side of the street they are occupying.

Don’t believe me? Take a look at their footprint. Undoubtedly, they will occupy real estate within 300 yards of a major competitor, and often right across the street. More often than not, they are also within three miles (which when I was a kid was walking distance) from a sister store.

They Have No Brand Power — None of Them

All this means is they know that the power of their brand is limited to a few-mile radius and, if someone else builds another pharmacy (or should I say, convenience store) between them and a new development, all the business will desert them. How many of us have our medical insurance information stored at more than one pharmacy because you never know which one will be more convenient at any given time.

As a brand strategist, this conundrum is vexing, and the answers are not simple. This is because making a brand viable and important is much more complex than just fixing marketing problems. The brand is the foundation for everything and, as a result, the new brand must, by definition, influence operations, marketing and, in the case of pharmacies, the category itself. No marketing slogan alone will fix the problem that the pharmacy business has dug for itself. In creating a viable brand we need to fix the model and develop a new category of retail store that meets a need, is seen as distinctive from competitive offerings and offers a reason to be that redefines an entire category.

How Do They Fix The problem?

CVS has taken a BIG STEP in deciding not to sell Cigarettes. Interestingly, we took this idea to RiteAid 15 years ago. They turned it down because it was such a profit center. This despite research that proved it would increase the RiteAid preference by double digits. What is interesting at this point is the process that needs be employed to find the answers. It starts with a blank slate, one where the proprietors are willing to slay all of the sacred cows. First, a need must be uncovered in the fabric of the target audience. Not a niche that someone else currently owns but a new need, one that represents a high emotional intensity in the customer we need to influence.

The only way to do this is by using an anthropological dig into pharmacy brands (read about brand anthropology) into the attitudes and issues surrounding modern life. What does the market covet and how is it best delivered in an emotionally meaningful way. What space needs to be occupied in the preceptive fabric of those that we wish to influence and how then can the new brand manifest those values in a tangible way?

These are not easy questions to find let alone ask, but they must be addressed by someone in the category — and soon. Otherwise the pharmacy businesses will bankrupt itself in an expanse in real estate. Real estate, by the way, that is worth less today then when it was purchased just three years ago. They will need to build every few hundred yards and at every intersection. If, as Napoleon once said that the logical end to defensive warfare is surrender, then pharmacy chains already have their hands on their heads. All that is missing is a white flag.

(Read some of our other thoughts on the Pharmacy Business here)