On the Front Lines of Health, Beauty and Convenience Drug Stores Profiler 2016 Brought to you by THE MEDIACENTER © 2016 THE MEDIACENTER. All rights reserved.

A Retail Channel Rippin’ It! According to Racher Press research, total US chain drug retail sales for 2015 were $298.02 billion, a 4.9% increase over 2014, with comparable-store sales +3.2%. For December 2015 and the 28-day sales period between Thanksgiving and Christmas, the industry reported sales increases of 4% and 4.1%, respectively, exceeding the National Retail Federation’s reported 3% increase for all 2015 holiday retail sales. In consumer packaged goods (CPG), drug stores experienced a 0.7% decrease in total 2015 retail sales and a 4.6% decrease in units, compared to +2.1% and -0.3% for supermarkets and +6.9% and +4.7% for convenience stores, respectively. MEDIACENTER

They Would be Giants The big industry news for 2016 is the completion of Walgreens Boots Alliance’s acquisition of Rite Aid for $17.2 billion during the second half of the year. This will result in CVS and Walgreens dominating the retail sector. According to data from Metro Market Studies and Barclays Research, the two giant retailers had at least a 50% combined market share in 70 of the top 100 US metro areas and as much as a 75% combined share in the 14 largest metro areas as of July 2015. Other major industry consolidations included CVS Health’s acquisition of almost 1,700 Target pharmacies, which boosted CVS’s store count, and McKesson Canada’s purchase of Rexall Health during March 2016. MEDIACENTER

High on the Pros, But Not the Stores Although nurses ranked first (85%) in the 2015 Gallup Honesty and Ethics in Professions poll, pharmacists were second at 68%, compared to 65% in the 2014 poll. Despite consumers’ high level of trust of pharmacists, drug stores scored 73 on the 2015 American Customer Satisfaction Retail Index (ACSI), or a 5.2% decline from 2014’s score of 77. Of the 7 health & personal care stores in the ACSI report, only Target improved its 2015 score (+3%) from 2014. Rite Aid was -12%; CVS, -5%; and Walgreens, - 4%. Kroger had the highest score at 81, which was unchanged, as was Wal- Mart’s, at 68. MEDIACENTER

Shopping Habits of Consumers in Misery A late-2015 consumer survey published in the February 2016 issue of Drug Store News found that 55.5% of the participating consumers shopped for cough-cold products at drug stores, 23.9% at big box/discount stores and 16.3% at grocery stores. Of the surveyed consumers, 34.2% said the primary reason they select a cough-cold remedy versus another is previous success with its use; followed by relieves symptoms immediately, 15.7%; and physician/pharmacist recommendation, 13.2%. When asked from where they learn about cough-cold products, 41.8% of the consumers said experts; 24.7%, peers/word of mouth; 11.0%, Website; 4.8%, magazines; 1.9%, social media; and 0.8%, books. MEDIACENTER

Everything to Look Your Best According to the May 2016 issue of Drug Store News, the foundation sub-category led the cosmetics category with $984.9 million in sales for the 52 weeks ending March 20, a 3.4% increase, at supermarkets, drug stores, mass merchants and similar retailers. Dr. Teal’s was tops in the bath fragrances and bubble bath sub-category, at $50.7 million, a 7.6% increase and a 30.1% share. Village Naturals Therapy jumped to #3 with a 31.5% increase in dollar sales to $13.1 million and a 30.2% increase in unit sales. Shampoo, at $2.198 billion, and hair conditioner/creme rinse, at $2.052 billion, were #1 and #2 in the hair care sub-category; however, shampoo and conditioner combo packs had the largest sales increase, at 66.1%, and unit sales, at 84.3%. MEDIACENTER

Vitals on Vitamins One- and two-letter private label vitamins sold 67.1 million units via any channel during 2015 and $425 million in dollar sales for the 3 months ending November 1, 2015. Nature Made was second at 40.4 million units and $352 million, respectively. Nature Made vaulted to #1 in the drug store channel with $132 million in dollar sales for the 3 months ending November 1, 2015; followed by private label brands at $129 million and Nature’s Bounty at $101 million. The 2015 Council for Responsible Nutrition (CRN) Consumer Survey on Dietary Supplements found that 78% of supplement users take a multivitamin; 32%, vitamin D; 27%, vitamin C; 18%, vitamin B/B complex; 13%, vitamin E; and 5%, vitamin K. MEDIACENTER

Advertising Strategies During the cold-and-flu season, drug stores may want to promote a “Cold Comfort Pack” that includes a number of other items that consumers buy when shopping for cough-cold products, with a qualifying purchase of a cold- cough remedy. Drug stores could consider a similar promotion prior to summer vacations, advertising a “Vacation Kit.” It could include Band-Aids and an antiseptic cream, sunscreen, moisturizer, anti-bacterial wipes, etc. According to the data from The Media Audit (page 4 of the Profiler), TV’s reach and targeted email campaigns would appear to be the best combination to build brand awareness and promote specials with adults, 18+, who shop drug stores. MEDIACENTER

New Media Strategies Drug stores have an excellent opportunity to create and share information about vitamins, OTC products and health and beauty items that help consumers use them effectively and safely, which would create stronger engagement and loyalty than “pitching products.” Much like the ASCI survey results on page 2 of the Profiler, drug stores can create and conduct polls, as email campaigns or posted to social media, asking consumers similar questions. Give each participant a digital coupon. The pharmacy staff can volunteer to address school or other children’s groups about the safe use of OTC medicines and the hazards of taking others’ prescriptions. Post photos and/or video of these events especially on Instagram and possibly Snapchat. MEDIACENTER

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