As the lines between shopping and healthcare continue to blur, retailers are uniquely positioned to capitalize on the growing demand for convenient, affordable and personalized healthcare services. Health consumers value their convenience and access and, at the same time, trust their consistent value and selection, putting grocers in a unique position to expand health and wellness offerings through digital business transformation.
What’s changed in the retail healthcare space? While major retail players have already built longstanding pharmacy businesses and customer relationships supported by these attributes, major healthcare industry shifts in 2023 are prompting consumers to look at nontraditional providers for vaccines and testing. In 2023, the retail healthcare industry witnessed several significant acquisitions, highlighting the growing convergence of healthcare and retail sectors. Amazon's acquisition of One Medical, Walmart's acquisition of VillageMD and CVS Health's acquisition of Oak Street Health were among the most notable events, demonstrating the increasing role of retailers in providing accessible and consumer-centric healthcare services. These acquisitions signal a shift in the healthcare landscape, as retailers leverage their vast resources and customer bases to disrupt traditional healthcare delivery models.
At the same time, the American healthcare system is facing turbulence from many angles, from healthcare workers’ strikes across the country to the concerning trend of rural hospital closures, which is negatively affecting patient experiences. These challenges highlight the need for innovative solutions to improve access to quality healthcare, particularly in underserved communities.
Retailers have the opportunity to amplify their market position in 2024 and take advantage of the growing role they play in consumers’ lives through the frequency and consistency of in-store shopping visits, amplified by data and more compelling digital tools.
Pete Groves describes the top predictions, opportunities and challenges for the retail healthcare space in 2024
Pete Groves describes the top predictions, opportunities and challenges for the retail healthcare space in 2024
Across the health and wellness landscape, the most ambitious retailers are building out omnichannel prescription services with stronger telehealth and in-person medical services. However, these services require digital skills and technological capabilities that many enterprises are struggling to scale with sufficient speed. While health and wellness represent a major growth opportunity, the pursuit includes challenges and considerations executive teams need to deliberately address.
“What’s exciting about retail healthcare in 2024 is that we’re seeing retailers provide services and products in unexpected in unique ways. From consumer electronics retailers like Best Buy to specialty ethnic grocers, there are really no limits in terms of retail sectors getting involved. However, retailers need to remember that health and wellness is a long game. Those that dive in without the right partnerships, expertise and technological backbones will burn out quickly without the profit they’re looking for.” -Pete Groves, Senior Managing Director
In a nutshell: Prescription drug spending is soaring, and consumers demand a seamless digital buying experience. How can grocery retailers replicate the in-person care of local pharmacies online as pharmacy locations close their doors?
“We’re comfortable with pharmacies being more or less everywhere. Consumers expect their prescriptions from their closest retailer or shipped directly to their house. Pharmacists, as the most accessible healthcare professionals, are the cornerstone of this convenient and patient-centric care model.” – Pete Groves, Senior Managing Director
The opportunity
More than two-thirds of Americans take at least one prescription drug, which accounts for 12 percent of personal health care spend nationwide. Yet prescription access, and the prescription purchase experience itself, is fragmented. Whether it’s disjointed fulfillment experiences across channels or pharmacist and drug shortages in both rural and urban areas, an omnichannel digital pharmacy experience is becoming a necessity for consumers. In 2023, the demand for weight control drugs specifically, like WeGovy and Ozempic, skyrocketed and will continue to increase as these drugs mature. In fact, almost half (45 percent) of Americans say they’d be interested in taking a safe and effective prescription weight loss drug. But it’s not just prescription drug fulfillment that consumers are looking to retailers for; it’s digital and personalized purchase experiences, either through subscription services or digital pharmacies. From Amazon’s RxPass to Rite Aid’s partnership with Google Cloud technologies, retailers are branching out to create more personalized and consistent prescription purchase experiences that match all-around heightened e-commerce expectations for on-time, on-demand retail healthcare.
The challenge
Just like grocery delivery, online, mail order prescription fulfillment will reduce foot traffic and grocery retailer visits, changing the nature of the in-store path consumers walk. How can retailers ensure that the lack of in-person visits won’t reduce the connection and care that many experience with their local pharmacist? A critical component of a successful omnichannel experience is replicating the cross-sell and data-gathering possibilities typically presented in-store with a digital experience that replicates the feeling of connection and care that many shoppers appreciate with their local pharmacist. At the same time, a Bloomberg study revealed that weight loss drugs may be reducing grocery basket sizes—underlining how important it is for retailers to connect pharmacy and grocery consumer insights to target shoppers with the right offers, keeping basket sizes large even for customers that are slimming down.
In order to combine customer and patient records across healthcare services, prescription fulfillment and grocery purchase history, retailers will not only need a sophisticated data strategy and customer experience journey design but also potentially the use of a “super app.” This type of platform, a multifunctional, all-in-one digital platform that can integrate a wide range of services delivered directly to consumer smart phones, has potential use cases in financial services, apparel retail and more. While no retailer has yet released a super app to combine health and wellness offerings, CVS has publically discussed building one to increase digital engagement.
Unlocking Pharmacy, Health and Wellness: The Retailer’s Playbook Three actionable ways to drive customer loyalty, patient engagement and profit through health and wellness offerings. Download
In a nutshell: Rural patients struggle to make it to the doctor’s office, but their nearest pharmacy, grocery or specialty store is probably close by with better hours. Retailers need to automate the omnichannel experience for in-store health services to take market share from traditional health clinics.
“Grocers have a dedicated customer base going to the store every week because they need food. Traditional healthcare providers have the opportunity to take advantage of this massive physical store footprint.” – Scarlett Lok, Senior Client Partner
The opportunity
The acceleration of healthcare workers leaving front-line roles, adding to an already understaffed industry, has created care settings (hospitals, doctors offices and urgent care clinics) that are intolerable for consumers. Long scheduling loops, long wait times on the day of visits and overall adverse experiences are pushing consumers to reconsider a range of services. And that’s if patients can even get there. Rural residents live an average of 10.5 miles, or 17 minutes, away from the nearest hospital, and thus far retail clinics are, for now, almost exclusively an urban phenomenon, with just 2 percent of the locations in rural areas, according to reporting from Axios. Retailers, especially those with the ability to provide great digital experiences, are in a prime position to fill a growing care gap with “last-mile” healthcare services. Three-fourths of all Americans live within five miles of a Dollar General, and even more live within 10 miles of a Walmart, two established retailers that are already utilizing their massive store footprints to create healthcare partnerships. Retail wellness visits encompass anything from minor injuries to blood tests to physical exams or vaccinations. There’s a huge bracket of younger consumers open to convenience options (only 55% of Gen Z has a primary care doctor), and parents and older adults alike are seeking the convenience of in-person and telehealth services.
The challenge
Many physical retail spaces are not created with this kind of care in mind; even the huge vaccination surge during COVID-19 had many make-shift corners turned into care settings that now need to be redesigned. While innovative solutions like trailer or parking lot pop-ups are useful in a pinch, they don’t feel comfortable to many customers as a reliable service. Delivering care onsite requires a wide range of new capabilities and workflows not native to all players. But with a clear strategy and experience-design approach to expand care settings, retail health can play a major role in a consumer-oriented transformation of the sector.
In a nutshell: While high-income customers have eagerly embraced food-as-medicine, cost of living increases have driven the average consumer away from health and wellness-focused food and products. Retailers need to up the ante through promotions and partnerships.
“So much attention is paid to healthy eating, and the level of conversation has risen—mass grocers are natural leaders to take this “back” from higher-end specialty grocers and to make this a holistic part of the shopping experience, in every community.” – Pete Groves, Senior Managing Director
The opportunity
More consumers than ever before are factoring their health and wellness into their diets and their overall food purchasing decisions. Research shows that most grocery shoppers actively seek out food and beverage products that will support their overall health. However, many consumers believe they can’t afford a healthy diet. According to a national Cleveland Clinic survey, the most common barrier to a healthier diet is that almost half of Americans (46 percent) view healthy food as being more expensive. Food retailers should provide increased incentives, like promotions, rewards and free health services for purchasing health products. In fact, a recent study showed that customers who engaged with a Kroger health dietician at a physical grocery store for in-aisle education and shopping practice had a greater adherence to a prescribed diet than the control group.
The challenge
Health and wellness food content, unlike other types of food content, requires some sophisticated messaging personalized to segments and their core needs, especially as the complexity of allergies and aversions has grown so substantially. Moreover, retailer relationships with packaged goods companies can complicate the ability to freely steer preferences or trials of products in a purely consumer-oriented approach. Sector leaders will work to build a strong base in segmentation and targeting, as well as mobile experience pre-shop and in-store as a value-added part of the family diet.
In a nutshell: The majority of Americans feel let down by the U.S. healthcare system—and much of this frustration is tied up in payments, i.e., health insurance. Retailers have a $25 billion opportunity to not only solve the biggest healthcare industry hurdles for their customers but become trailblazers in this new market.
“The U.S. healthcare system is complex and expensive for so many Americans, and traditional healthcare services are leaving many behind. We see a major opening for relevant retailers to be a trusted and straightforward digital “access point” for many communities that are too often overlooked by the major healthcare players.” – Scarlett Lok, Senior Client Partner
The opportunity
Approximately 28 percent of Americans reported delaying medical treatments for themselves or a family member because of rising costs, according to a report from the Federal Reserve, but the treatment dollar amount isn’t the only culprit behind the widespread lack of access to healthcare. A lack of pricing transparency, outdated communication processes and little to no digital patient engagement lead to missed appointments for many Americans. More than 70% of U.S. adults feel the health care system is failing to meet their needs in at least one way. An outdated healthcare experience contributes to a $150 billion industry cost for missed medical appointments and the almost 1 in 5 Americans (18%) that haven’t seen a doctor in five years or more. Retail health clinics can help patients avoid medical sticker shock and gray areas when it comes to insurance coverage through easy-to-understand, upfront pricing for different health services. Retailers are also well-positioned to create accessible digital experiences that engage historically underserved patient demographics.
The challenge
Building on public interest in in-store retail healthcare services, retailer-sponsored health insurance and retail healthcare CX investments are a “segment” focus that is massively under-indexed in most strategic plans. There is a clear path to providing simple pediatrics, wellness services and payment options that take traffic and activity away from larger, traditional providers and will benefit immensely from the simple customer orientation and experience design that so many retailers rightfully claim as a strength. Some more ambitious plans include going “all in”—integrating disparate sources of patient data, building out cohesive omnichannel engagement, implementing complex electronic medical records and, of course, providing insurance. But retailers can still serve these segments well with a simple, straightforward care approach (including partnerships with insurers) that delivers a critical service to communities and a healthy, profitable business.
In a nutshell: Grocery retailers have the opportunity to serve health professionals with a seamless B2B experience, but the B2B medical supply segment is fragmented, making it challenging to create loyalty in a new market.
“Home Depot and Lowe’s have done a great job of creating a specialized experience for contractors, while also serving DIYers, and they have loyalty programs that make their “B2B” play very compelling. Grocers have the opportunity to do the same with a variety of B2B health and wellness segments—from home health aides to nutritionists and other health professionals.” – Pete Groves, Senior Client Partner
The opportunity
So far, grocery retailers have placed their focus on breaking into direct-to-consumer (D2C) health and wellness market opportunities, largely not prioritizing business-to-business (B2B) medical supplies and medical devices markets currently dominated by wholesalers. But the U.S. home healthcare services market alone, which includes physician care, nursing care, medical social services and physical, occupational and speech services, is massive. A growing demand for at-home items like bed safety rails, commodes or even bandages and disinfectants is being fueled by an increasing geriatric population, as well as a rise in chronic conditions like heart disease, stroke and cancer. The home health market is predicted to expand to 153 billion by 2029, yet it’s still hugely fragmented with small players and largely independent contractor employees. Grocers are positioned to serve health professionals with a seamless B2B experience that's more digitally mature than those of traditional B2B medical suppliers in the space. Loyalty programs for non-professional caregivers, who make up almost ¼ of U.S. adults, a key part of this opportunity. As many decide to “age-in-place" and require home health services, grocers can tap in with targeted advertising and recommendations and prioritize messaging to these critical intermediaries much as other sectors have done with skilled, hands-on practitioners walking the aisles.
The challenge
The B2B medical supply segment is fragmented and diverse. Creating loyalty in a brand-new market will require a new e-commerce experience and changes in store operations. Modern data practices can accelerate each retailer’s ability to deliver these services well and stand out among the many players who offer similar wares. A strategic approach will help retailers elevate insights within this market opportunity to help create frictionless, omnichannel shopping experiences that make health professionals feel at home and eager to come back with loyalty.
Consumer interest in health and wellness is only increasing, especially as inflated healthcare costs are driving the necessity of preventative care above more expensive symptom management. In 2024, grocers will face new challenges in balancing consumer experience, sensitive patient information and new partnerships to expand retail health and wellness offerings. The top players can carefully carve out their niche through a deep, data-driven understanding of their customer’s needs and health goals and use this understanding to provide expanded physical and digital experiences.
Pete Groves Senior Managing Director at Publicis Sapient Let's connect
Scarlett Lok Executive Client Partner Let's connect